I have recently come to a settlement agreement with my employer, to terminate my contract. As part of the agreement, I am expecting to receive a pay off in one lump sum.
I do not have any immediate needs for this amount, and have saved enough myself while I've been working to tie me over for a couple of months until I find new employment, as my rent and other regular expenditure are all relatively cheap.
So what I'm looking for is to find out how I can best invest this money in the mean time. I can afford to lock it away for a while, but would like to buy a house in maybe about 5 years time- so would need it available for a deposit then.
Ideally, I am looking for as low risk a way of saving/ investing as possible, but obviously want to get as good a rate as I can.
What would people suggest?
As requested in the comments/ answers- I am living in the UK.
My situation is- I graduated from University in 2013, and am currently in my second job since graduating (first was a 6 month contract that was extended by a couple of months, and I've been in the second one just over 18 months), I also had an industrial placement year during my third year of university, so have just over 3 years of professional experience.
I say that I'd like to buy a house in about 5 years time- this is just a rough guess... I actually have no idea when I will be looking to buy a house. My thoughts at the moment are that I will probably go travelling for a year or so, now that I've had a couple of years working since graduating.
When I'm done travelling, I will be looking for a permanent job- that's when I'll be looking to buy a house (rent is dead money...). I am willing to put this lump sum into something for longer than the time I will be travelling (i.e. the 5 years I mentioned), as I already have enough saved for a reasonable deposit on a house- so when I find permanent employment, the regular income will cover the mortgage repayments. However, unless there are rates out there that really make it worth investing for longer than 5 years, I would be happy to put it into something for just a year or two, until I have finished travelling- and re-assess then.
I already have a reasonable amount saved (before the settlement is paid)- and that's currently spread around a few different current accounts that are all earning roughly 3% or more (i.e. higher than the current rate of inflation). I am earning interest on the maximum balance for each of these current accounts- but since I am now expecting to receive a reasonably sized lump sum, I want to put it somewhere where I can make it work for me while I am not earning a wage.
I have recently started looking into opening a stocks & shares ISA as a potential way of investing, but don't know if this would be a good idea...?