Holding cash used to mean sacrificing returns. But in today’s high-interest rate environment, short-term savings strategies have become both safer and more rewarding. Whether you’re saving for a house deposit, school fees or an upcoming holiday, making smart decisions with your cash can protect your capital and still deliver meaningful returns. 

In this guide, we’ll walk through why cash can be a powerful short-term tool and the three most effective ways to manage it. 

Why Not Just Invest in Equities?

At Permanent Wealth Partners, we strongly believe in long-term equity investing to grow wealth. Equities historically outperform all other asset classes and remain a critical component of any long-term portfolio. 

However, equities come with volatility and short-term market fluctuations can expose you to sequencing risk, the danger of needing to withdraw funds during a downturn. 

 If you have near-term funding needs, such as tuition or a house deposit, you need capital stability, not market exposure. 

Three Short-Term, Low-Risk Options for Your Cash

1. NS&I Bonds

NS&I (National Savings & Investments) products allow you to lend money to the UK Government, offering near risk-free returns. 

Key Benefits: 

• Government-backed = extremely secure 

• Fixed or flexible access options 

• Guaranteed interest returns 

Types of NS&I Products: 

• Fixed Bonds (1–3 years): Higher returns for locking funds 

• Easy Access Accounts: Lower returns, but instant liquidity 

Tax Note: Interest on NS&I bonds is taxable in the year the bond matures. Use your Personal Savings Allowance where applicable. 

🔗 Visit NS&I to explore options 

2. Term Deposits

Term deposits (also known as fixed-term savings) are available through banks, building societies and now investment platforms like Transact. 

Key Benefits: 

• Higher interest rates than traditional savings accounts 

• Terms from 6 months to 3+ years 

• FSCS protection up to £85,000 per bank per person 

Tip: Consolidating these within an investment platform allows you to manage all investments in one place. 

Important: Funds are locked for the duration of the term. Early access may not be possible depending on the product terms. 

3. Platform Cash Accounts

Holding cash directly within your investment platform offers flexibility, visibility and moderate returns. 

Key Benefits: 

• Immediate liquidity 

• Interest paid monthly (rate varies) 

• Cash held in wrappers (ISA, GIA, SIPP, etc.) 

Note: Rates fluctuate monthly and are typically lower than term deposits in exchange for instant access. 

Example: Transact currently offers competitive rates on platform-held cash (subject to change). 

How to Choose the Right Cash Strategy

Ask yourself: 

• When do I need access to this money? 

• Is capital protection more important than growth? 

• Am I willing to lock funds away for higher returns? 

Each strategy has trade-offs between return, liquidity and risk. Your individual plan should reflect your timeline and personal financial goals. 

Related: Why NOW is the Best Time to Start a Financial Plan 

Final Thoughts & Disclaimer

The landscape for cash savings has shifted. With higher base rates, it’s now possible to earn meaningful returns without sacrificing capital safety. That said, what’s best for you depends on your personal goals, liquidity needs and tax situation. 

Book a 15-minute, no-obligation call to discuss the best short-term strategy for your cash. 

Schedule a Cash Strategy Consultation 

Or email us at: hello@permanentwealth.co.uk 

Disclaimer: This article is for informational purposes only. The options mentioned are not financial advice. Returns and conditions vary by provider. Please review all product documents and consult a qualified adviser for personalised recommendations. 

FAQs 

Q: Is holding cash a good idea right now?
A: Yes, with higher interest rates, cash can earn meaningful returns while preserving capital. 

Q: What’s the difference between NS&I and term deposits?
A: NS&I is backed by the UK government, while term deposits are offered by banks and may offer higher rates but come with different risk and access profiles. 

Q: Can I access my money in a term deposit early?
A: Usually, no. Terms are fixed. Some products may allow early withdrawal but often with penalties. 

Q: What’s the safest way to hold cash in the short term?
A: NS&I products and FSCS-protected term deposits are considered among the safest options. 

Ammar Takhatwala