Best place to put lump sum of money

em92_2

I'm not sure if this is the right place to put this question or if I should be asking this question at all, but I am totally lost with all the different accounts you can put your money into.

I am 18, and I've got £45,000 from an injury claim, and I want to put it into savings to earn as much money as possible. £40,000 could be locked away for 3 years, but I need to be able to access £5,000 any time without penalty and I would not consider stocks and shares ISAs as I do not want any risk involved.

Would it be best to spread my money around in different accounts? Would I be taxed on my savings? I also don't mind how you can access your account, and online only would be fine.

What account(s) would you suggest I put my money into?

calypso_rhapsody

Hi em

Are you a tax-payer? If so, you should use up your Cash ISA allowance for this year. If you are not, but may become one soon it may still be worth doing - interest in an ISA is tax free but you can only put so much in in any tax year ... so once the year is done (5 April) you can't put more in. Nor can you take money out and put money back in if it takes your inputs over the limit.

If you don't pay tax and don't expect to then you need to compare the ISA rates with the rate you can get on non-ISA accounts. And if so, don't forget to complete R85 forms so you can get your interest on any savings accounts paid without deduction of tax.

I'd also suggest that you look at the NSandI 48th issue - it's index linked, a 5 year product but can be accessed without penalty after a year. It is tax free so not such a good buy for a non-taxpayer but it does protect your cash from erosion by inflation. £15k maximum per holder.

Your £5k should go in an instant access (or at least easy access) account - i think the current top payer is Coventry's poppy account paying 3.1% but you can only make 4 withdrawals in a year. You might also keep some cash here earmarked to go into next year's ISA ....

The balance probably in a 3 year savings account or you might do a mix of 1 and 3 years if you think interest rates may go up within the 3 years.

Look at the top savings accounts page on this website. Do make sure that you diarise to review accounts when bonuses or guarantees expire (typically 12 months but check the terms carefully).

Good luck - hope you are recovered from the injury which i guess was pretty serious given the sum involved!