The best place for your life savings

John Fitzsimons highlights the best savings accounts for significant sums of money.

Now my wedding is out of the way, the big priority for me and my new wife is to start building up a decent savings stash.

While we only have a little bit put aside, we aspire to have a signficant safetynet, which is why my eye was caught by a question posted in our Q&A section by fodigie - where is the best place to put £100,000?

It was while considering the options for such a large sum of money that I came across a question from Zippy09 along similar lines, only likely involving even more money. Zippy09 is in the process of selling his home, to move into a rental property, and wants somewhere to place the money before he buys his next property.

So if you are like either of these two readers and have a large sum to invest, where's the best place to put it?

Divide and conquer!

The first thing to remember is that the UK's Financial Services Compensation Scheme (FSCS) only covers the first £50,000 of a saver's money in any single institution.

As such, with the continued uncertainty over the security of various banks, it is undoubtedly a good idea to place your money in at least two separate accounts in order to be 100% secure.

The exception to this rule is any account or bond with NS&I, which is backed by the British Government and so is 100% secure.

Invest with Investec

Like Fodigie, I'm guessing most of you would prefer not to have to shift your money around all the time, trying to get the absolute best deal.

If so, and you have £25,000 to invest, you should head straight to the Investec High 5 account, a deal I've raved about for absolutely ages now. This nifty little account pays the average of the top five savings accounts, so while you never get the absolute best deal, you are guaranteed to get a great rate at all times.

It's currently paying a very attractive 3.36%, and is an account geared up for deposits of this kind - but you do have to have a cool £25,000 to invest! And your money is definitely secure - while Investec is a South African bank, it is a member of the FSCS so your money is protected under the UK scheme.

The big downside is, you have to give three months notice before withdrawing your funds.

Completely easy access

But what if you want instant access to your money? In property buyer Zippy09's case, this is likely to be particularly important.

The instant access account paying the top rate currently is from the AA, paying a variable rate of 3.3% AER, which includes a bonus of 2.8% for 12 months for maintaining a balance between £50,000 and £100,000. If you put in less than £50,000, the rate drops to 3.15% AER. But if you put in more than that, you'll have invested more than the FSCS compensation limit. So the optimal sum is £50,000 - and not a penny more, or less.

If you have £50,000, this account is pretty good, but even then, it wouldn't be my first choice.

Instead, I'd prefer to go with the ING Direct Savings Account. Yes, it pays a slightly smaller rate of interest at 3.2%, but that 3.2% is guaranteed for the next 12 months. An easy access account with a guaranteed rate! That has to be worth going with! However, it does mean that in 12 months time you will again have to find a new home for your money, supposing you haven't found something to spend it on.

You can open the ING account with just £1. Note that this account isn't open to existing customers and that the money invested is protected by the Dutch Central Bank's Deposit Guarantee Scheme, which covers savings up to €100000 (currently £90,221), and not by the UK's FSCS.

Locking that money away

Traditionally the best way to get a great return on your cash is to lock it away for at least a year.

The top paying accounts for a one year bond are the Super Bond Issue 14 accounts from Bradford & Bingley, Abbey and Alliance & Leicester, paying 5%. However, I hate these accounts, as they each require you to open a separate savings account with that bank, as well as invest an identical amount in a qualifying investment product. Not a good deal.

Similar requirements are in place with the Private Client Bond from Carter Allen, and the one year bond from Nationwide Building Society, both paying 4%.

In truth, the best one year deal that doesn't involve you having to open other accounts is the National Savings & Investments (NS&I) Guaranteed Growth Bond Issue 48, a one year bond paying 3.95%.

You can invest between £500 and £1m, and the safety of all the money you invest is 100% guaranteed by the British Government.

However, the rate is only about 0.6% higher than the Investec account, and 0.75% higher than the ING account. Is it worth locking your money away for a year, for a such a small increase in the return you'd receive? I'm not sure.

If I was in the lucky position of having £100,000 and I wanted be able access to my money with minimal fuss, like Fodigie and Zippy09, I think I'd put half my cash in the Investec account, and the other half in the ING Direct account.

Mind you, this would earn me £675 less in interest than if I'd gone with the NS&I bond. On a £100,000, small differences in the rate really do add up!

But what would you do? Why not share your thoughts via the comment box below? Or, follow Fodigie and Zippy09's lead and head over to Q&A to ask other lovemoney.com members for hints and tips about how to make the most of your stash of cash!

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More:  Build up your savings.