What to do with a small lump of cash?

[The Beaver King]

Hi folks; some advice if possible?

I'm getting made redundant at the end of Feb and will be getting a modest payout when I leave. I've allocated some of it to frivolous things, but I want to bank £5,000 with a view to build on it for a future house deposit.

My situation is that I currently rent with my girlfriend and we'll be looking to buy a place in roughly 3 years time. The lump sum will be the start of a savings pot; which we will pay into monthly (roughly £400/500 a month).

I'm guessing an ISA might be the best bet; but I'm not sure what kind to go for. I'm risky by nature, so I am tempted by a Stocks and Shares ISA, but most of these stat that you really need to keep it going for 5 years.

Would I be better playing it safe and going with a fixed rate and just leaving it? Best rate seems to be about 2.5% for 3 years.

Maybe something else that I hadn't considered?

Thanks

[Johnnytheboy]

Completely IMHO but stick it in a bond for the period you're not going to touch it for.

[gregf40]

You can get 4.4% fixed for 3 years with LandBay: https://landbay.co.uk/lenders/

Beats any ISA and very little risk.

[The Beaver King]

Awesome.

Thanks for the advice guys; will do some looking

[Johnnytheboy]

Side advantage is it's inaccessible.

[ellroy]

Peer to peer lending is VERY far from no risk. Counterparty risk? Credit risk? Default figures?

OP ask yourself this if Banks are offering around 1% instant access, why are they offering 4 times this level? For the good of their health?

3 years is short term, cash ISA and term deposits if available within them are your friend at the level you're talking about.

[condor]

Have you got another job lined up? If not, you might need that money to fund a business venture.
I'd suggest sticking it in an easy access cash ISA straight away ( at end of Feb when you get it). New Isa year starts early April, gives you a bit of time to think and you haven't lost the previous years ISA allowance.

[silverous]

gregf40 said:

You can get 4.4% fixed for 3 years with LandBay: https://landbay.co.uk/lenders/

Beats any ISA and very little risk.

I'm not sure I'd agree with very little risk, it is also not covered by FSCS so you wouldn't get your money back if it all went belly up as you would with an ISA/Bank deposit.

[The Beaver King]

condor said:

Have you got another job lined up? If not, you might need that money to fund a business venture.
I'd suggest sticking it in an easy access cash ISA straight away ( at end of Feb when you get it). New Isa year starts early April, gives you a bit of time to think and you haven't lost the previous years ISA allowance.

New job lined up and on a decent sized salary increase from my current place, so something has gone horribly, horribly wrong if I need access to it

[nyt]

If you can be bothered fulfilling the condition (2 standing orders out, more than £500 per month) then stick it in a Santander 123 account.

£24 a year charge but 3% interest along with other benefits.

When you have a new job and now that you won't need it you can think again.

[gregf40]

silverous said:

gregf40 said:

You can get 4.4% fixed for 3 years with LandBay: https://landbay.co.uk/lenders/

Beats any ISA and very little risk.

I'm not sure I'd agree with very little risk, it is also not covered by FSCS so you wouldn't get your money back if it all went belly up as you would with an ISA/Bank deposit.

Not sure how it 'could all go belly up'...you are providing finance for numerous mortgages secured against buy to let properties with low LTV's.

If you want sub inflation returns - then stick it in an ISA. If you want to actually make something you have to accept some degree of risk - as the OP said he is willing to

[gibbon]

gregf40 said:

Not sure how it 'could all go belly up'...you are providing finance for numerous mortgages secured against buy to let properties with low LTV's.

If you want sub inflation returns - then stick it in an ISA. If you want to actually make something you have to accept some degree of risk - as the OP said he is willing to

The question has to be, who is the end user for these things? Once the company of taken their arrangement hair cut etc then I guess the end user is getting funding at around 5%? With a good credit history and decent LTV ration you can currently fund BTL at circa 2.5%. So why pay double? I can only assume that the borrows don't have access to cheaper loans.

Draw from that whatever conclusion you wish.

I am not bashing the idea of it, just pointing out some observations about the perspective risk v return.

[LouD86]

Pardon, is this PH? Coke and Hookers, obviously!

[silverous]

gregf40 said:

Not sure how it 'could all go belly up'...you are providing finance for numerous mortgages secured against buy to let properties with low LTV's.

If you want sub inflation returns - then stick it in an ISA. If you want to actually make something you have to accept some degree of risk - as the OP said he is willing to

Providing any finance to someone is a risk - the risk that they default for example. I'm not suggesting an ISA is suitable for the OP but disagreeing with simply questioning your assertion that it is low risk.

[EddieSteadyGo]

gregf40 said:

You can get 4.4% fixed for 3 years with LandBay: https://landbay.co.uk/lenders/

Beats any ISA and very little risk.

Don't want to make a big deal out of this, but as you are an investor in this company, this isn't a strictly impartial suggestion to the OP.

It may be a great investment opportunity for the OP, but it would be worth declaring an interest when promoting a particular course of action, imo

[gregf40]

EddieSteadyGo said:

Don't want to make a big deal out of this, but as you are an investor in this company, this isn't a strictly impartial suggestion to the OP.

It may be a great investment opportunity for the OP, but it would be worth declaring an interest when promoting a particular course of action, imo

I am both an investor and and lender through them

[trowelhead]

gregf40 said:

I am both an investor and and lender through them

I was wondering why this is your default reply to most investment related threads

In seriousness though, will check out land bay. Currently using assetz capital.

[trowelhead]

OP - as you are clear that you need the cash in 3 years time - a cash isa is probably your best bet.

Edited by trowelhead on Monday 12th January 22:15

[gregf40]

trowelhead said:

In seriousness though, will check out land bay. Currently using assetz capital.

Cheers - not as high interest rates as AC off the top of my head but it has security which very few P2P lenders offer which makes it attractive to those wanting lower risk

Lots of information here for anyone interested in P2P lending/saving:

http://www.moneysupermarket.com/savings/peer-to-pe...

[Landbay]

Hi I am a representative of Landbay and while I am not going to make a pitch for our site and product here - I would like to highlight one key i error that the above comment has made. We are regulated by the FCA - all P2P platforms are covered by an interim permission - the register can be found here : http://fca-consumer-credit-interim.force.com/CS_Re... and if you type in our number (661952) you will see the appropriate permissions that we hold. We are also a member of the P2PFA.