Cash is an essential part of any investment portfolio - you may want to use savings accounts, term deposits or money market funds.


Cash is an essential part of any investment portfolio, so it’s crucial to have some tucked away for a rainy day or emergency. Normally it’s sensible to hold the equivalent of three to six months’ expenditure. If you don’t, you might be forced to sell investments at a loss if you need access to cash.

Doing more with your cash

Cash isn’t risk-free. You should get your money back but high inflation and low interest rates can soon eat into its buying power. So to make sure your cash earns as high a return as possible, you might want to use some of the following:

Savings accounts

If your money’s in a current account, it’s probably not gaining much – if any – interest. Transfer it to a savings account and you’ll earn a small amount of interest without tying up your money.

Term deposits

These usually offer a higher rate of interest than standard savings accounts. However you have to agree to leave your money in for a fixed period of time. And if you withdraw your money early, you will have to pay a penalty.

Money market funds

These are not cash investments or savings accounts. They carry the risk of you losing your money. Basically, these funds aim to earn you a better return than bank interest rates. They do this by holding a mix of investments – e.g. some deposits, term deposits and short-term securities  that earn interest but can fall in value.

Though they can earn you a better rate than cash savings accounts, returns are not guaranteed and you could get back less than you invest. You might be required to defer withdrawals.

Investment accounts

Some investment providers offer interest on cash held in investment accounts such as Investment ISAs and SIPPs while you decide which investments are right for you. These accounts are primarily designed for those who want to hold investments but if you want to hold cash because you’re uncertain of market conditions, or need time to decide what to invest in, you’ll receive interest on cash balances of £1,000 or more held in a Barclays Stockbrokers Investment ISA or SIPP.

If you only want to hold cash in your ISA, then you’ll be able to find higher interest rates in cash ISAs, and you can now transfer from an investment ISA to a cash ISA. Alternatively you may consider savings or deposit accounts.

You’ll find details of the cash interest rates we offer here.


Jargon buster

Inflation - a general increase in prices and fall in the purchasing value of money.

Interest - the money you can earn by depositing money in a savings account. You can also earn interest on some types of investments where you are lending money to a company or government, e.g. gilts and bonds. 

Securities - the general name given to shares, bonds and similar investments.

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More about cash

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Our dedicated Client Service Team can help you get started. They won’t be able to give you advice on whether an investment is suitable for you, but they can answer questions about procedures and help you get started.

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