Where to save and invest a lump sum of money

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Received an inheritance or bonus? Find out where to save a lump sum of money to meet your short and long-term financial goals.

2 December 2025 | 3 minute read

Receiving a lump sum of money – whether it’s from a house sale, business sale, inheritance, or bonus – has the potential to create exciting opportunities and long-term financial security for you and your loved ones. However, it can be difficult to know where to put a cash windfall, particularly in times of market and economic uncertainty.

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The decision that’s right for you will largely depend on what you want to do with your money, as well as your needs and goals, which we can help you assess. In the meantime, here are some of the main options to consider.

Cash savings account

A cash savings account is a good choice if you want to use your lump sum to fund short-term goals – a holiday or new car perhaps – or if you’re not quite sure what to do with it yet. By holding your lump sum in a cash savings account, as opposed to investing it in the stock market, you won’t run the risk of your money falling in value just before you need to access it.

If you don’t need your money for several months, you may wish to consider a notice or fixed-term savings account, as these may offer higher rates than easy-access savings accounts.

It’s always worth shopping around to find the best rate on your savings, as a difference of only 0.5% could have a big impact on large sums of money.

UK government bonds

If you want to use your windfall to fund a medium-term goal, UK government bonds (‘gilts’) could be an attractive choice. Gilts are secure savings vehicles that are guaranteed by the government and listed on the London Stock Exchange.

Gilt interest is taxed as income. However, gilts are completely free from capital gains tax (CGT), which means you don’t have to pay CGT on any profits you make when you sell or redeem the gilt. This is particularly useful for higher and additional-rate taxpayers, who would otherwise pay CGT at 24%.

Stock market

For longer-term goals, such as retirement or leaving a legacy for the next generation, you may wish to invest some of your lump sum in the stock market. Although the stock market is volatile, history shows that it tends to outperform cash and bonds over long periods. You should be comfortable committing your money for at least five years, ideally longer. This will hopefully give your investments time to recover from any stock market downturns.

One way to reduce risk is to spread your money across different asset classes, such as equities, bonds and cash, as well as across sectors and regions. This is because different assets, sectors and regions tend to perform differently to one another in a range of market conditions. At RBC Brewin Dolphin, we can help you build a diversified portfolio that suits your needs and attitude to risk.

Investment ISA

If you haven’t already used up your Individual Savings Account (ISA) allowance this year, investing your lump sum in an Investment ISA will give it the opportunity to grow over the long term, while also shielding it from CGT and income tax. If you sell investments outside of an ISA, you could be charged tax on the profits you make above your annual CGT exemption. And if your investments pay dividends or interest, this could be included when calculating your overall income tax bill, potentially pushing you into a higher income tax bracket. 

The ISA allowance is currently £20,000. It is a ‘use it or lose it’ allowance, which means you can’t carry it forward from one tax year to the next.

Pension

Another option is to make the most of your annual pension allowance. You can invest up to £60,000 or 100% of your UK relevant earnings (whichever is lower) into pensions each year and benefit from income tax relief, up until age 75. Income tax relief provides an immediate boost to your personal pension contributions, helping to supercharge how much money you have at retirement.

In some circumstances, you might be able to ‘carry forward’ unused annual allowances from the previous three tax years. The rules around carry forward are complex, so make sure you seek advice.

Bear in mind that your pension annual allowance might be lower than £60,000 if you earn a high income or have already flexibly accessed your defined contribution pensions. We can help you work out how much your annual allowance is and whether making a pension contribution is the right choice for you.

Next steps

At RBC Brewin Dolphin, we’ll help you understand which types of savings and investments suit your individual needs and goals, so you can feel confident you’re making the right decision with your money. Where appropriate, we’ll build a diversified investment portfolio that works hard to help preserve your money’s purchasing power and grow your investments over the long term. Let our ideas help you plan for the future with confidence.

Find out more from our dedicated support team by calling us on 020 7246 1111. Opening hours are Monday to Friday 9am to 5pm.


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The value of investments, and any income from them, can fall and you may get back less than you invested. This does not constitute tax or legal advice. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. You should always check the tax implications with an accountant or tax specialist. Investment values may increase or decrease as a result of currency fluctuations. Information is provided only as an example and is not a recommendation to pursue a particular strategy.

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