What to do with a lump sum

If you receive a lump sum, start by thinking about your financial goals, any debts and whether you have enough money set aside for unexpected costs. Options can include keeping some money accessible, paying down debt, contributing to a pension, saving through a fixed term deposit account, or considering investments for longer-term goals. The right approach will depend on your circumstances, timeframe and how much access you need to your money.

Getting a large lump sum of money, whether from an inheritance, bonus, redundancy, or a prize can feel exciting and life changing. It also means that there are important choices to be made. Taking a little time to plan how to invest a lump sum or what to do with it can help you protect your money and use it in a way that can help support your future goals.

Take time before making any major decisions

When you receive a lump sum of money, it’s easy to feel pressure to act fast. But stopping for a moment is one of the best things you can do. A short pause helps you avoid quick decisions and gives you time to think about what you want your money to do. For example, improving your financial security, preparing for future costs, or helping family.

Before choosing an option, check whether there are any deadlines, tax considerations, fees or access restrictions connected to the money or to the product you are considering. If you are unsure, consider speaking to an appropriately qualified financial adviser or tax adviser.

Know your priorities

Before you decide what to do with your lump sum, think about your short, medium, and long-term goals. Some people want an emergency fund; others plan to work on their home or retirement savings. Knowing your priorities makes it easier to choose the right option and avoid spreading your money too thin.

If you can’t decide whether or not to take a long-term approach, take a look at some of the benefits of saving money long-term.

It may help to consider three practical questions: when might you need the money, how important is certainty, and how comfortable are you with the value changing? You do not have to put the full lump sum in one place.

Lump sum saving and investment options

There are several ways to use or hold a lump sum. The options below are presented for general information only. They are not personal financial advice or a recommendation to choose one option over another.

Keep an emergency fund

Keeping part of the money in an account you can access can provide a buffer for unexpected costs. Check the interest rate, withdrawal terms and whether any limits or fees apply.

Pay down debt

Using part of a lump sum to reduce debt may lower the amount of interest you pay. Check whether early repayment charges or other conditions apply before making a payment.

Contribute to a pension

A pension is designed for retirement savings and generally limits access until later life. Contributions, charges, investment choices and tax treatment can vary, so consider getting professional advice.

Shares, ETFs and investment funds

These options give exposure to financial markets. Their value can rise or fall, access times and charges vary, and returns are not guaranteed.

Property

A lump sum could be used towards buying property or improving an existing property. Consider the purchase costs, ongoing costs, tax, maintenance and the fact that money held in property may not be quickly accessible.

Government bonds or State Savings

Government-backed savings or bond products may offer fixed or variable terms. Check the provider, term, access rules and product-specific protections before committing your money.

Easy access or demand savings

These accounts are designed to allow withdrawals without locking money away for a fixed term. Interest rates, notice requirements and withdrawal conditions can vary.

Fixed term deposit accounts

These accounts hold money for an agreed period at a fixed interest rate. They can provide certainty about the rate, but access may be restricted during the term.

How the options differ

Explore low risk ways to invest your lump sum or protect it

If certainty is important to you, savings and deposit products are among the options you can compare. A fixed term deposit account pays a fixed rate for an agreed term, while easy access or demand savings accounts are designed to provide greater access. Compare the rate, term, withdrawal conditions, tax treatment and applicable deposit protection before deciding.

If you’re looking for more information, please see our blog on what is a deposit account? with information on the different types of accounts available.

Why fixed term deposits are popular

Fixed term deposit accounts allow you to place a lump sum for an agreed period at a fixed interest rate. This means you can calculate the interest due under the product terms, before tax, if the money remains in the account for the full term. Access conditions vary, so check the product terms before opening an account.

Balance access and security

Before placing money in a fixed term deposit, consider how much you may need to keep accessible for everyday spending or unexpected costs. Some people choose to keep part of their money in an easy access account and place another part in a fixed term account. This is a general example, not a recommendation.

Bankinter Deposit Plus has many benefits, including the ability to access 25% of your funds after the initial 8 weeks. So, you can save your money for a set period but also have the flexibility to access 25% of the funds if there is an emergency. See all the Bankinter Deposit Plus benefits.

Product features, rates and terms can change. Check the Bankinter Deposit Plus product page for the latest information before applying.

Frequently asked questions

Is a deposit account safe?

Deposit accounts do not normally move up and down with financial markets. Eligible deposits may also be protected by a deposit guarantee scheme. In Ireland, the Deposit Guarantee Scheme protects eligible deposits up to €100,000 per person per institution where a covered institution is unable to repay deposits. Check which scheme applies to your provider and whether your deposit is eligible.

Do I pay tax on deposit account interest?

Deposit interest paid or credited to Irish residents is generally subject to Deposit Interest Retention Tax, known as DIRT. Revenue states that financial institutions deduct DIRT before paying the interest. Exemptions can apply in certain circumstances, so check Revenue guidance or seek tax advice if you are unsure.

Is a deposit account better than a savings account?

A deposit account is a type of savings account. The more useful comparison is between account types, such as easy access, notice and fixed term accounts. The main differences can include the interest rate, how quickly you can access the money and whether the rate is fixed or variable.

What is a demand deposit account?

A demand deposit account is an account that allows you to access your money without committing it for a fixed term. It may also be described as an instant-access or easy access savings account. Rates and withdrawal conditions vary by provider.

What is a fixed term deposit account?

A fixed term deposit account holds money for an agreed period and pays a fixed rate of interest under the account terms. Access may be restricted until the end of the term. For more information, feel free to check out our guide to deposit accounts.

Is a deposit account a savings account?

Yes. “Deposit account” is a broad term that can include demand, notice and fixed term savings accounts. Each type has different access and interest-rate features.

How does a fixed term deposit account work?

You place a lump sum in the account for an agreed term at a fixed interest rate. Interest is paid in line with the product terms and is generally subject to DIRT where applicable. Check what happens at maturity and whether early access is available.

What is the difference between a demand savings account and a term deposit?

A demand savings account is designed to make money available without a fixed lock-in period. A term deposit holds money for an agreed period at a fixed rate, so access is usually more restricted. Rates and conditions vary.

What is an instant-access demand account?

It is a savings account designed to let you withdraw money without waiting for a fixed term to end. Some providers may apply transaction limits, notice rules or other conditions, so check the account terms.

Bankinter rates:

You can find all our latest rates on our website on the Fixed-Term Deposit Account page, and choose the best rate to suit your savings goals.

• Interest is subject to Deposit Interest Retention Tax (DIRT), where applicable, at the prevailing rate on the day interest is paid. For more detailed information on DIRT, visit the Revenue site.
• Customer deposits up to a maximum value of €100,000 per person per institution are protected by the Deposit Guarantee Scheme. Learn more about the Deposit Guarantee Scheme (DGS).