When I speak to potential clients who have very little experience of investing, the main reason they give for never having invested before is because they don’t want their money locked up. 

There’s something worrying about not being able to get your hands on your money whenever you want it. What if you need it for emergencies? You want to spend it or give it away? 

It’s actually very rare to find money locked up inside an investment, particularly if you stick to the more mainstream investment structures. 

Let’s look at how investment access works and what to avoid if you don’t want your money locked up.

What happens when you invest and how to avoid having your money locked up

For most people, when you first start investing you will probably either open a general investment account or if you’re looking to be tax efficient, a stocks and shares ISA 

In either of these accounts, you could hold shares directly in listed public companies from all over the world or you could buy units or shares in large funds that spread your money amongst potentially thousands of global companies, bonds or commercial property. 

It will take a few days for your money to order, buy and for the trade to settle before your account shows as holding your investment. You will then see its value fluctuate day to day. 

Now, if your investments are held inside a general investment account or stocks and shares ISA you can withdraw your money at any time.  

The process will look a bit like this: 

  • Order placed to sell your shares.  
  • Shares are sold on the open market. 
  • Money then settles into your trading account. 
  • Money then transferred out of your trading account and into your bank account. 

This whole process from placing the order to sell to getting the money into your personal bank account can take around 10 working days.  

So, you always have easy access at short notice and there is no money locked up.

The investment structures to avoid having your money locked up


When investing there are a few ways you could find your money locked up: 

  • Liquidity – Investing into something that is hard to sell as there is no buyers or a ready-made market to trade it.  
  • Age restrictions – Some investments have rules that mean you need to be a certain age before you can withdraw from an investment. This is to incentivise you to save and invest. 
  • High penalties to exit – Some old fashioned investment products have high charges loaded into the deal and penalise you if you decide to cash out early.

Let’s explore these a little further.  

Investing into structures like structured products, Enterprise Investment Scheme (EIS) qualifying companies and Venture Capital Trust (VCT) funds will mean you find your money locked up for potentially years.  

This is because no one wants to buy your shares second hand. They don’t get the tax benefits or product features that a person does when you invest into these structures at the start.  

For structured products there will usually be a fixed term and therefore you will be able to withdraw your money at this point and what you get back will depend on the performance of the underlying investment.  

For EIS and VCTs the only way you are able to get your money out of these types of investment is to hope that one day they are big enough that other investors want to come in and buy your shares. Or that the management team want to buy your shares off you. 

When it comes to age restrictions this mainly impacts pensions and Junior ISAs.  

You are not able to withdraw from a pension until minimum pension age 55 (changing to 57 in the next few years) unless suffering serious ill health. This is to incentivise you to save for retirement.  

For Junior ISAs, a child is not able to release funds from their Junior ISA until they are 18 unless they are suffering serious ill health. 

Finally, some investments from insurance companies called investment bonds, tend to have old fashioned charging models. They will either have very high initial charges when you first invest or will apply penalty charges if you decide to withdraw your money in the first 5-6 years.  

The key point in all of this is that investing does not mean you need to fear having money locked up.  

We would always advise having cash on hand outside of investments for emergencies and opportunities anyway but after that only investments into real assets are going to beat inflation over time and deliver returns that build real wealth. 

Don’t get caught in the wrong investment product at the wrong time. Please book a free no obligation initial call and we will be happy to explain what solutions you should be considering for your own unique circumstances. 


Risk warning:

Stock market linked investments and any income from them, can fall as well as rise and is not guaranteed. Any figures quoted are for illustrative purposes and should not be taken as a forecast or guarantee. Past performance should not be seen as an indication of future returns and clients may get back less than they have invested.