Where should I put lump sum

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I’m due to receive a lump sum from the sale of my property soon of around £40k. I won’t be buying a new property for 1-3 years. I already have an emergency fund so I would like to put this money somewhere that I can’t touch it.

Can anyone recommend where I should put it? I can’t bear the thought of investing and potentially losing money so I’d like something nice and safe. Is premium bonds the best way, or would I real terms ‘lose’ money if I wasn’t to win?

NS&I income bonds or premium bonds.

Due to inflation , you’ll lose money in real terms in any savings account. It’s a tricky situation for someone in your position. All you can do is reduce the amount you lose.

Have a look at the rates available on MSE. Plenty of better options than premium bonds, which are paying 1.4%. You can get a one year fix at 2.61% or more if you fix for longer.

Open a Chase current account and then the associated savings account.

Premium bonds

Thank you, I will look in to fixed rate savings accounts.

If I receive more than £40k (I’ll know the exact amount I’m due to receive within the next couple of weeks), I may think about investing a few thousand. I’m not sure if it would be worth it though and have no idea where to begin!

If it’s only for 3 years then keeping it in cash is probably your best bet. Investing in shares would be too risky IMO, if you want use the money in 3years time. At the moment the best bet is probably one year fixed interest accounts, given how fast interest rates are increasing. If you can be bothered, put a quarter of the money every 3 months in to a one year fixed rate, so you get the benefit of the increasing rate. It is hassle, but could be worth it in the current climate

There is a Nigerian prince I would like you to meet ...

Wouldn't invest it right. Markets are performing poorly atm. Put it somewhere low interest but secure.

*now

Premium Bonds.

There’s a thread on here.

Never seen the attraction of premium bonds, even more so now, when you can get a far higher return from fixed interest savings accounts. Yes there is the very remote possibility you might win a large amount, but most don’t, and you are guaranteed a better return from fixed interest accounts, at the moment.

😂😂😂😂

Premium bonds! Get those maxed out then move to an ISA.

If you select the right, stable company with good prospects for the future, strong trading model, products worth buying, customer loyalty wtc, then now is a good time to buy, because it's at the bottom of the market.

A lot of company stocks are currently undervalued because of adverse global economic conditions, but these things are cyclical, so buying at the bottom and riding out the bad times could stand you in good stead rather than buying at the top. A mistake so many investors make is buying at the top, losing their nerve when times get rough and panic selling at the bottom.

Thing is you need guts of steel to hold your nerve, bide your time for conditions to turn around.

Stocks are a long term investment so I know I'm digressing from the subject of this thread, which is about short term investment of 2-3 years, but it's worth making the point.

Main options are:

Keep in the bank. 100% safe but you'll lose money because we have high inflation going on.

Invest in a tracker fund. But because you need the money in three years you may well lose money (as we are likely going into a recession and the markets will be down)

Invest in premium bonds. Your money is 100% safe and you are entered into a lottery so you may win some money and you may win nothing.

Put in a savings account with interest. Your money will be safe but the interest that you get on the money will be like 2% per year.

Really tough position to be in because of inflation. I don't think there is a good answer!

Can anyone think of a better option?

Do not put it in premium bonds unless you've already maxed out your personal interest tax allowance and Isa. The chance of winning won't match the interest rates.

If you haven't maxed out your allowance then put it in a fixed rate account for 2 years at 3%

Sorry, but no-one knows if we are at the bottom, markets could fall another 20%, 30%, or even more, so the comment that we are at the bottom simply isn’t right.

Anyway, as you say, as the OP is looking at a 2-3 year timeframe, shares don’t really fit.

The chance of winning won't match the interest rates.

My wins have outperformed interest rates over the past 18 months.

i expect Premium Bonds will become a better investment if the reverse the trend of the past 5 years where the Govt reduced the prize values and number of prizes available due to low interest rates, but this should change at some stage (not sure when this is just my guess based on the past).

Sorry, but no-one knows if we are at the bottom, markets could fall another 20%, 30%, or even more, so the comment that we are at the bottom simply isn’t right.

I haven't said we are at the very bottom right now, what I've said is that shares are undervalued, and many have lost value in real terms, and yes indeed the value could fall further, but it's like house prices, stocks will recover and regain more value, history has shown that over time the stock market does outperform other investment vehicles,
.

The canny investor just needs to know when to hop in and when to hop off.

Sorry @Daisychain01, but your exact words are ‘now is a good time to buy, because it’s at the bottom of the market’, can’t see how to interpret that in more than one way?

I agree that in the long term, the stock market has been the one of the best places to put your money,

With reference to your point about hopping on and off, most investors get it very wrong as timing the market is, on the whole, a mug’s game. If you have managed it, then great, but you would be one of the few, as most don’t make a success of it over the long term.

I know two people recently who have been given £30k and £40k. Each sought financial advice and both were told but PB.

Premium bonds. I have around £30k and probably make around £25 every other month on average. Occasionally I get £50 or £100 some months.

The canny investor just needs to know when to hop in and when to hop off.

”Just” is doing some heavy lifting in this sentence 😂

I’m still buying shares, because I have a 20 year timeline. OP, who wants the cash back in 1-3 years and has no appetite at all for risk, should steer well clear.

I live our premium bonds makes the beginning of the month a bit more exciting! This month I won 7x £25 and they are doing better than my isa.

But interest rates are now higher than 18months ago.

Martin Lewis (money saving expert) is very clear that premium bonds only offer value if you happen to have exceptional luck and need the tax free interest!

Fwiw I'm about to pull mine out as I have £40k in and have made just £25 in 6months. That's 0.12% interest instead of the 1.5% / £300 I could get in instant access over 6 months.