If you’ve got £150,000 in cash and you’re trying to figure out what to do with it next, this article is designed to help. Whether you’ve inherited it, earned it as profit from selling a property or business, won it, or built it up over the years, you’ll find helpful information below.
In this article, we:
Disclaimer: We’re here to help, but the contents of this article are for informational purposes only. They do not constitute financial advice. For that, you should consult a qualified independent financial adviser.
Having £150,000 cash can mean different things to different people. For some, it presents an ideal opportunity to generate passive income and build wealth. For others, it helps clear debt and establishes a firm financial footing. This means that when it comes to answering the question of “what should I do with £150k in cash?” — it largely depends on your starting point.
Before deciding to save, spend, or invest your £150k, it’s worth taking a step back and looking at the bigger picture.
For example, if you have loans or credit card debt, you might want to pay those off first. And if you don’t have an emergency fund in place (3-6 months of expenses saved to be used in an unexpected situation, like redundancy or ill-health), you might want to put a portion of your £150k towards that, too.
On the other hand, if you’re in a comfortable position, own your own home, and have a well-stocked emergency fund, you could use the £150k to achieve some longer-term goals, such as taking early retirement.
Ultimately, whether it’s better to save or invest £150k depends on your short- and long-term financial goals — and your appetite for risk. A diversified investment portfolio of shares and bonds will generally outperform savings rates in the long run, potentially earning a greater return on your money. Likewise, buying a rental property may give you a revenue-generating asset that can be sold further down the line.
However, before you buy property or invest in the stock market, you need to consider how much access you’d like to have to your cash and how much risk you’re willing to take.
Investments and property value can go down as well as up, and to see the benefit of buying shares or real estate, you may need to be prepared to leave your money alone for 10-15 years (or sometimes longer). That’s why it’s often a good idea to balance saving and investing for the best of both worlds.
Note: We can’t advise you on how to invest your money — that’s a conversation to have with your financial adviser. However, if part of your plan is to save some of your £150k, we do know a thing or two about that. Let’s take a look at your options.
We’ve split this section into three parts, covering common saving scenarios. Namely short-term access, long-term gains, and tax-free savings.
There are several reasons why you might want quick access to your savings:
With the above in mind, there are two options: Easy Access Savings Accounts and Notice Savings Accounts.
1. An Easy Access Savings Account gives you complete flexibility with your money, letting you withdraw funds as and when required (often without any penalties or charges, although this depends on the provider). This flexibility makes Easy Access accounts a popular choice for an emergency fund, as you have quick access to your cash should life throw you a curveball.
2. A Notice Savings Account is similar to an Easy Access account, except you have to give the provider notice before withdrawing money. This notice period tends to be between 30 and 90 days, although it can be longer (typically, the longer the notice period, the higher the interest rate you’ll be offered). Putting money into a Notice account can give you flexibility while benefiting from a higher interest rate. This might work for you if you can plan your withdrawals and time them to cover an upcoming expense.
Important note: Many flexible savings accounts come with variable interest rates, meaning the rate can go up and down. Also, the interest rates attached to these accounts tend to be lower as your money isn’t locked away long-term to earn higher returns.
While keeping some of your savings within easy reach can be a sensible option, if you want to maximise your interest returns, you must be prepared to play the long game.
A Fixed-Rate Savings Account helps you do just that by locking your money away for a set period (called a “term”) to earn a fixed interest rate.
For example, let’s say you put half of your £150k into a 5-year fixed-rate account at 5%. If the interest compounds annually (meaning you earn interest on the interest accrued plus the initial £75k), you’ll have £95,721.12 after 5 years.
You typically can’t add to your savings pot during this time; however, you can access your cash. The downside is that you’ll probably be charged an early withdrawal fee, which could offset the interest you earn.
If you plan to save some or all of your £150k, you may have a tax bill coming your way. That’s because while almost everyone gets an amount of interest they can earn tax-free each tax year (6 April to 5 April), anything earned above that amount is subject to Income Tax.
To find out what you can earn tax-free, you should check your Personal Savings Allowance (PSA), which is based on the Income Tax band you’re in:
However, to reduce your tax liability, you could save a portion of your £150k in an ISA (Individual Savings Account) as part of your wider savings plan.
That’s because you get an ISA allowance each tax year, letting you save up to £20,000 (for the 24/25 tax year) and earn interest on it tax-free.
Note: We don’t typically offer ISAs via the Insignis Cash Platform; however, it’s always helpful to understand your options when you have £150k cash. This is why we’ve outlined the different types of ISAs below.
1. Cash ISAs: A tax-free cash savings account where, depending on the provider, you can have instant access to your money, limit access to a certain number of withdrawals, or lock your money away for a fixed term on a fixed interest rate.
2. Stocks & Shares ISAs: With an S&S ISA, your money is invested rather than saved, which can result in higher returns. However, as with any investment, there’s risk attached. The value of your investments can go down as well as up.
3. Innovative Finance ISAs: An IFISA is an ISA that lets you invest in peer-to-peer lending. It works by lending your money to borrowers in return for a set amount of interest. P2P lending matches you directly with borrowers via an online portal, cutting out the middleman. This can result in higher interest rates than traditional savings accounts. However, like the S&S ISA, your money is at risk, and IFISAs are not subject to FSCS protection.
4. Lifetime ISAs: A LISA is a type of ISA launched in 2017 to help people save towards their first home or retirement. Unlike the other three listed above, you’re limited to saving £4,000 in a LISA in a single tax year. The government then adds a 25% bonus, meaning if you max out the full £4,000, you’ll have £5,000 with the bonus before interest is added. An individual must be over 18 but younger than 40 to open a LISA. If you opened an ISA during this period, once you turn 50 you cannot pay into the account or earn the 25% bonus. Cash can only be withdrawn from a LISA if the holder is (a) over 60; (b) terminally ill or (c) to buy a first house (worth £450k or less). Withdrawal for any other reason means the holder incurs a 25% charge.
Note: You can open multiple ISAs each year. However, the total amount deposited across all ISAs cannot exceed your ISA allowance.
When dealing with a large sum of cash, you’ll want peace of mind that it’s secure in the (albeit unlikely) scenario that your bank fails.
The Financial Services Compensation Scheme (FSCS) is the UK’s answer to this common concern. It protects an individual’s savings if a bank, building society, or credit union fails. The scheme guarantees up to £85,000 per person, per institution, meaning you'll be reimbursed up to that amount. It’s worth noting that banks/building societies in the same group count as a single institution for the purposes of FSCS protection.
So, when you have £150k to save, you’ll need to spread the money across at least two banks (each with distinct banking licences) to ensure you’re fully protected. For example, by depositing £50,000 in three different institutions, you can protect the entire amount under FSCS rules, preventing loss should one or more collapse.
Alternatively, you could open a joint savings account with another eligible depositor to claim up to £85,000 each for a total FSCS protection level of £170,000.
You have a couple of options when searching for the best interest rates for £150k. You can shop around by checking comparison sites and calculating how much interest you could earn (depending on the terms and conditions of each account).
Or, you can simply ask your financial adviser about Insignis. When you save your cash in accounts through our award-winning savings platform, you can access market-leading interest rates from over 3,500 savings products and 50 banks and building societies.
We make comparing, switching, and managing savings accounts effortless. Find out more here.
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