Lum sum to invest for a short period

Bowies

Hello,

We have recently sold out house and are moving in with parents to buy on a new Redrow estate when the houses are built. We have a large sum of money from the sale of our home that we need to put into savings for a deposit on our next house. We will be adding to this while living with parents so where's the best place to invest our money?

The only negative we have is we are unsure on how long we will be investing the money as the time scales for the build are unknown.

All advice is appreciated. Thanks in advance.

droopsnoot

That's the biggest problem with investing - unless you're very lucky you really need to be able to leave it in place for a reasonable amount of time (minimum five years, probably more than that) in order to make the most of the market, and to negate the cost of making the investment in the first place. Another issue is that if you find yourself needing to have the money back at quite short notice, you may find that the value is a bit low at the time and possibly lose money - it's helpful to be able to time the point where you cash out your investment to maximise return.


Depending on the amounts involved, you might want to have a look at the various interest-bearing current accounts and regular savings accounts, which can give a decent return on a fairly substantial balance especially if you can take advantage of joint accounts. Plenty of threads on here about the options there.

dunstonh

When you invest, you know you are going to get good periods, bad periods and nothing periods. You have to average these out. The problem is that you don't know if the next year is going to be good, bad or nothing.

So, when you invest for a short period, you have a very high risk chance of suffering a loss. An economic cycle is around 10 years nowadays. So, anyone investing less than 10 years is not going to get the full benefit of the cycle. You may get lucky and get a good bit of it. However, you may suffer the bad bit and do you really want to risk your house deposit on that?

Archi_Bald

The usual recommendation for keeping large sums of money ready for a house purchase in the next couple of years is to put it into an NS&I account.

xylophone

A maximum of a year or so?

Realistically there is no alternative to holding it in cash or one way or another.

You could keep the lot (and add to it) in NS&I Income bonds - the interest rate is not good and will reduce to 1%.

Or between two of you, you could move £100,000 + into high interest current accounts and use savings accounts for the rest.

Eco_Miser

The easy way is NS&I, the higher return way is all of these accounts. Lots of discussion about the detail on that thread and elsewhere.