We've just sold our house. We had been planning on buying another immediately, but our purchase fell through and we have now moved into a rental. Consequently, we have >£100k of cash on hand and are feeling a little nervous about it!

Our priorities, in order, are:

  1. Safeguard the money (especially considering the slightly increased chance of a global recession)
  2. Have ready access to it, for when we find a property to purchase
  3. Make enough interest to beat inflation

What are some of our options? What are the pros and cons of each?

We are based in the UK, but are not eligible for a LISA, as we will not be first-time buyers. (And neither of us will reach retirement within the next year.)

  • 3
    #3 shouldn't be a hard requirement. Think of a slight loss relative to inflation as the cost of getting #1 and #2. – chepner Jul 31 '20 at 14:17
  • @chepner Sorry, I should have been clearer. That list is sorted by descending level of priority - i.e. #3 is the least important. – Tom Wright Jul 31 '20 at 15:11
  • @yoozer8 We are not eligible for a LISA (as suggested by the accepted answer on that question) since we would not be first-time buyers. – Tom Wright Jul 31 '20 at 15:12
  • Interest rates are so low, it's barely worth worrying about this sort of thing in the present era :/ – Fattie Jul 31 '20 at 17:03
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    It didn't apply to the closed-as-duplicate question (because that OP already had money in them), but one possibility (partially alluded to by dr.blochwave's comment) would be NS&I Premium Bonds. They're as safe as can be, and instant access. The current "prize fund rate" is 1.4%, and fully loaded (£50,000) you should get close to this on average (I'm just over 1.5% averaged over the last five years). Of course, being random, you could get less (but probably not much worse than many "instant access" rates)... and of course you could win a million! – TripeHound Aug 2 '20 at 13:39

Usual thing for this setup is to put it in £85k blocks (current FSCS max per intuition) in order by best interest rate at UK banks covered by FSCS. Some crossover in what these banks are so make sure you check they are not owned by same parent company etc and you are over exposed.

Right now that roughly tracks/falls behind inflation depending on exactly what you intend to buy.

If you start to get into territory of millions+ you will run out of banks, and you start to be better off buying and rolling short term government bonds/bond funds that are very liquid and basically behave like cash, but this is hard/costly on small amounts of money and often pays worse than savings accounts.


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