With so many different offers around, it’s hard to know where best to invest your money for good returns, especially with a large lump sum.
A simple option is looking into savings accounts.
However, the UK economy has suffered through the recession and post Brexit, and the latest news from ThisIsMoney has found that there is not a savings account that offers a rate above inflation (2.7%).
According to MoneyFacts, the best rate of interest is offered by the NS&I Investment Bond at 2.2%. There are still regular savers (such as monthly savings accounts) that beat the inflation rate, but these require money put in every month.
Not the best option for an easy lump investment of £90,000.
What type of savings account you choose will depend on your financial needs; for instance, a instant-access savings accounts (unlimited withdrawals) offers lower interest rates but the most flexibility.
Fixed-rate savings accounts, such as fixed rate bonds, offer higher interest rates but offer far less flexibility for your finances.
If you are saving for a younger person, you might consider a children’s savings account. These accounts usually offer better rates and can help them get higher rates of interest in the future with loyalty saving accounts. The best way to invest money will depend on your needs, but fixed-rate savings accounts offer the best savings rates.
ISAs are a good savings option and offer higher interest rates than savings accounts; however, like the fixed-rate savers, they offer less flexibility (unless you get an instant access cash ISA).
There are different ISAs on offer depending on your needs.
They are similar to a savings account, apart from the fact that there is a limit on the amount you put in, but you do not pay tax on the interest you earn.
You can put £20,000 a year into a cash ISA, so this will involve dividing up your £90,000 lump sum into yearly instalments (though over time you could invest the total amount). A fixed-rate cash ISA can offer a slightly higher interest rate but at the cost of less flexibility.
Returns on cash ISA’s are currently low, and you may be able to get better rates by using either specialist current accounts for large sums, which are not available to all.
Investing Into Your First Property
The government also introduced the help to buy ISA to help new homeowners; however, there was later controversy surrounding this when it turned out the ISA could not be used for deposits, the main struggle for first-time buyers.
Because of this, If you are not buying a property within the next 12 months it would make sense to look at the new Lifetime ISA.
Some Things to Remember
There are a lot of options out there, make sure to do research on the best UK savings rates before investing.
Bear in mind that times of political uncertainty, such as Brexit, the recent snap election and the hung parliament result, have an effect on interest rates and investment opportunities. In this sense, fixed-rate savings are always a gamble and will depend on whether the UK economy is set to improve or not.
Remember to consult your financial needs and flexibility carefully.
With a sum of £90,000 you can invest in a variety of places in order to ensure flexibility; however, investing a lump sum wisely can earn you more over the long term.
When looking for investment opportunities, get expert advice on investing.
Taking into account your financial needs, an advisor will be able to help you decide on the best way to invest. It’s also recommended to consult an FCA-approved financial adviser before investing your money if you have no experience of financial products.