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Lump Sum Investment Calculator

Calculate how much interest your lump sum could earn over time

Use our lump sum savings calculator to work out how much your savings could be worth in the future. This calculates how your savings will grow over time and the impact of compound interest. You may also be interested in our monthly savings calculator.


Lump Sum Savings Calculator

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Popular options to consider for lump sum investments:

Fixed rate bonds - a fixed rate of interest for a fixed period of time. Your capital is not at risk.

Shares and investment funds - learn how to use an investment platform to invest in shares. Capital at risk. 

Stocks and Shares ISAs - a tax-efficient way of investing in the stock market. Capital at risk. 

Investing your money - learn more about investing in shares, renewable energy, property, gold as well as many other areas. Capital at risk.

What is a lump sum?

A lump sum is a single, usually significant, sum of money. In terms of savings accounts, it’s an amount that’s invested in one go, rather than being “drip fed” in over a period of weeks, months or years. This can have an impact on the savings account you choose, and the resulting interest that you earn.

What’s the best thing to do with a lump sum of money?

This depends on your priorities. Putting it into savings is the obvious answer, whether that’s as a short-term home or long-term investment. You may want to use the money to provide an income in and of itself, whereby you live off the capital, or you could use the interest to supplement your income. Or, you could think long-term and keep it invested for several years, giving you a nest egg for the future.

You could even put the full amount into your private pension, thereby securing your retirement income, provided the sum in question won’t put you over your annual allowance. There’s also the option of investing elsewhere, such as into the stock market or property. However, these both come with additional risks and there’s the chance your original investment could lose value, so it’s always worth speaking to a financial adviser before making such a decision, particularly for those who have suddenly come into a large amount of money.


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What is the best savings account for a lump sum?

This will all come down to what you want to achieve from your savings. The main options are:

Depending on the size of the lump sum you may be able to use the interest generated to supplement your income, such as by opting for a monthly income savings account and getting the interest paid away into your current account. This has the benefit of keeping the original capital intact while giving you a regular cash boost, though bear in mind that the effects of inflation may erode the value of the original sum over time.

Another option is to use the amount to provide an income directly, in which case being able to access your money is key – perhaps keeping it in an easy access account where you can dip into your savings pot whenever you wish. Or, you may want to invest in a fixed rate bond, which will allow you to watch your initial investment grow with the benefit of compounding. This option gives you limited access to your funds, or often none at all, but has the benefit of generating more interest over the long term, with savings rates typically being higher on fixed bonds than easy access accounts.

It’s important to remember that investing a truly significant lump sum in a savings account could result in you being taxed on the interest earned if it exceeds the Personal Savings Allowance (PSA), which is where an ISA can come in.

If you haven’t used your ISA allowance for the year and the lump sum amount doesn’t take you over the £20,000 annual limit, investing in an ISA – be it a monthly interest account, easy access or fixed rate ISA – could be an ideal solution. This way, all interest earnt is entirely tax-free and will continue to be so for the duration you keep your money invested, regardless of what happens to savings rates and the PSA in future.

However, where you ultimately choose to save your lump sum will depend on how much you have. Make sure to bear in mind that the Financial Services Compensation Scheme only protects £85,000 of savings per person per banking licence, so if you’ve got a bigger sum than this, you may want to split it between different banks, or opt for an NS&I account which is 100% backed by the Treasury. Find out more about the FSCS and similar schemes by reading our depositor protection scheme guide.

Why use a lump sum investment savings calculator?

Before you decide on a savings account in which to deposit your lump sum, you’ll want to know how much you can earn from it. This lump sum savings calculator will help you precisely calculate the amount of interest you’ll receive by contributing a lump sum of money to your savings account, helping you see if your preferred account is right for you. Ideally, the lump sum savings calculator will be used in conjunction with our savings charts – especially our fixed rate bond and fixed rate ISA charts – so that you can see the impact different interest rates will have on your savings.

How to use the lump sum investment savings calculator

Our lump sum investment calculator is very easy to use. All you have to do is add the amount you plan to invest in the first box, the annual interest rate in the next box, and finally the length of time this interest rate will apply for in the bottom box. Once all the boxes have been filled in, click on the ‘calculate’ button and the amount your investment will be worth after your chosen time period will be automatically calculated for you, assuming you don’t withdraw any of the money you saved or any of the interest you earned.

How will a lump sum affect my benefits?

A lump sum could have a significant impact on your eligibility to claim certain means-tested benefits, as the amount you get typically depends on your income and any savings you may have. These include Universal Credit, Housing Benefit, Pension Credit and Council Tax Support, which are all designed for those on low incomes and take into account any capital you have (including savings accounts, investments, Premium Bonds and property), which means if you are in receipt of a lump sum payment your entitlement may be reduced, or you may not be able to claim at all.

Generally speaking, you won’t be able to claim for the majority of means-tested benefits if you have over £16,000 in savings, and if you have over £6,000 (or £10,000 for Pension Credit), the amount you’re eligible for will begin to reduce. Most benefits won’t consider savings below the £6,000 threshold. If you need to claim benefits but are worried about the impact of a lump sum payment, make sure to seek support. Citizens Advice could be a good place to start.

Different types of lump sum

Unfortunately, redundancy is becoming more common following the Coronavirus pandemic, which means an increasing number of people will be in receipt of redundancy pay. The amount received will often need to be used to provide an income while the recipient finds a new position, which means keeping the money in an accessible account could be preferred. It’s worth pointing out that if you’ve lost your job, redundancy pay won’t count towards your eligibility for the new-style Jobseekers Allowance, though it may still impact other means-tested benefits.

  • Lottery wins. Lottery wins are exempt from tax, which means you won’t be lumbered with a huge bill after receiving your winnings. Nonetheless, anyone lucky enough to win big on the lottery will have a lot of decisions to make about what to do with the cash. Buy a property? Invest in a fixed rate bond? Donate to charity? Depending on the amount won, it could be prudent to speak to a financial adviser about the best course of action.
  • Inheritance payments can often attract inheritance and/or income tax on any profits generated from it, depending on the value of your loved one’s estate and your current income threshold. This is a complex area, so again, speaking to the experts would be recommended.
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Ashley Seager

Digital Marketing Manager

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