best short-term investment for large sum

bilee

Hi,
i'm due to come into some money soon as a gift, roughly £20,000. i want to use this money as deposit for my first flat when i start flat hunting next May.
where can i put the money between now and May 2008 to ensure a) it is safe, b) i can access it easily when the time comes, c) i'm not putting it in a high risk market and d) to hopefully get some return on it?

i am considering premium bonds but not so keen on savings accounts as it only needs investing for about 6 months, and i don't want to gamble on stock markets.

thanks

Aegis

Over 6 months you'd almost certainly be best to put it into an online savings account with a ~6.4% interest rate. With Premium Bonds you'd play maybe 5 times and run a very real risk of winning nothing in that time, while in a savings account you will definitely "win" about £600-650 before tax.

If you aren't using your cash ISA and aren't likely to do so before the end of the year, some of your money could go there to protect it from income tax on the interest.

dunstonh

i am considering premium bonds but not so keen on savings accounts as it only needs investing for about 6 months, and i don't want to gamble on stock markets.

This made me laugh. You dont want to gamble on the stockmarket but will gamble on premium bonds instead.

You timescale is such that you shouldnt invest the money at all. Stick with savings accounts.

beingjdc

dunstonh wrote: »

This made me laugh. You dont want to gamble on the stockmarket but will gamble on premium bonds instead.

I think this is reasonable! Invest £20k in premium bonds for six months and in the worst case scenario you have £20k at the end of it. Invest it in the stock market and in the worst case scenario you might have £15k or less.

Aegis

beingjdc wrote: »

I think this is reasonable! Invest £20k in premium bonds for six months and in the worst case scenario you have £20k at the end of it. Invest it in the stock market and in the worst case scenario you might have £15k or less.

Well, you'd have to have a major crash for that to happen, but in any case 6 months is insufficient for stockmarket investments, and I'm sure that no-one would recommend it. I believe dunstonh was simply pointing out that Premium Bonds are essentially gambling your interest rather than being a decent investment product.

In all likelihood, your capital would decrease slightly in real value because of inflation in any timescale you kept Premium Bonds for, while in a high-interest savings account at the best available rate at present, you are guaranteed to beat inflation unless the economy completely changes in that short time.

[Deleted User]

bilee you really need to read martins guides before you post, it answers all your questions.