£5,000 to invest. What would you do?

[clippityclop]

An unexpected inheritance has come our way and after paying for a couple of things we are left with £5k to go into long term savings. Are pemium bonds worth it?

You won’t lose any money but you’re not likely to become particularly wealthy. £50 here and there was what an ex boyfriend’s parents used to get, and they had around the same amount invested if memory serves me correctly.

Have your mortgage and all credit cards been paid off?

I think £50,000 is the limit and Martin Lewis said the closer you get to that figure the more likely you are to win, and the further away you are the less likely you are to win. My Mum has £50,000 in and in a year she won about £200.

Stocks & shares ISA with a robo-investor like Nutmeg or Wealthify.

You’re probably too late on this one but a year ago I betted on Tesla and that worked out pretty well.

Do you have other cash savings, say up to about £10k, that could be used if you needed to do work on your house, cover periods of sickness or unemployment or similar?

If not, put into the best instant access account you can find, or gamble the small amount of interest, which will be about £50-70 per year by buying premium bonds.

If you are already covered with cash savings, and want to invest, you could put it in a stocks and shares ISA. vanguard is often mentioned on here as being good for low cost trackers.

But yes, if you have a mortgage, the interest rate is above about 1.5% and you already have some cash savings, you could do worse than overpaying your mortgage, but check for any limits on penalty free overpayments.

Low-charging passive Tracker fund.

Put it in an ISA and you won't need to think about tax.

I prefer Income rather than Accumulation, you can set it to reinvest income, but if you ever get hard up you can open the Income tap and it will be a useful extra.

We own our property and have no debt and other savings. ISAs not an option because of where we live. I wondered about something we could enjoy which would hold its value or increase in value?

If you have no savings, I'd just keep it in cash, in the best instant access account available, or PBs as you can get the money back within a few days if you need it. Plus you may also win a prize that outstrips the interest you would get on savings, although that's far from a given.

Anything else is a risk, and you could lose money if you had to liquidate the 'something you could enjoy that would hold it's value or increase' at a time when it hadn't gone up in value.

if you hold it in cash, its value will be eroded by inflation. And you might dip into it and spend it.

I would spend £1k on actual gold, as I believe the markets are becoming wise to the flooding of the markets with either paper gold or ETFs.

I would also chuck a grand into bitcoin but instead of keeping it in an online exchange or online enabled device would keep the private key in either a home safe or storage facility.

Depends on circumstances. ISA, LISA, pension etc Premium bonds do lose money as the winnings don’t keep up with inflation.

If you bought a single worn Krugerrrand or Britannia today for £1239, the price you could get if you sold it would be £1145, so you're immediately out of pocket. The dealers have to make a living.

Bitcoin is an exciting idea as long as you keep clapping your hands and saying you believe, as it doesn't actually exist. In December 2017 they were worth more than twice what they are today, so perhaps they'll double again. Or halve again. Not for widows and orphans, but exciting for gamblers.

So gold and bitcoins both sound interesting What's the best way to go about buying bitcoins?

If you're looking at Bitcoin, you might as well go to the casino and put it all on red.

Whatever you do with it, how would you feel if this time next year, your £5k is worth £4k, £3k or even less?

Yes, you lose a bit to inflation with cash or premium bonds, but the absolute value is as close to 100% guaranteed as you can get, and inflation is relatively low at the moment.

Bitcoin is an exciting idea as long as you keep clapping your hands and saying you believe, as it doesn't actually exist.

You're right. As long as you believe mathematics doesn't exist and doesn't rule our entire existence. bitcoin is like digital gold, there will only ever be 21Mn of them created. The first purchase made with bitcoin was a Papa John in Florida (I believe) from London which was approx 10k bitcoin for two cheese pizzas. Nowadays that's about $50Mn. So yeah, it's pie in the sky.

bitcoin can't be rehypothecated, it's decentralised, nobody owns the rights to it, even its creator Sakoshi Nakomoto remains anonymous. But don't lose your private key or you lose your money. The technology it runs on, Blockchain, is I believe the future of communication and the internet which is well worth a look at. I started a thread on Blockchain about 5 years ago and got zero replies, something that doesn't surprise me, so many people are unaware of its potential.

As for gold? I'd happily hold half a dozen sovvies because the economists I trust believe gold is vastly underpriced, as do I as there is too much paper (futures) issued and the true value of the metal will be realised.

These are both long term investment options. You're not going to make a quick buck, but you will, over time, make a good return.

Disclosure: in 2011 I had a hard drive that had 2400 bitcoin then worth approx £5k. My antivirus wasn't up to the job and I lost the lot, including my private key. My fault entirely, I should've takrn my coins offline.

Still, those naysayers will knock it, and that's fine. Just make sure you keep a note of you private key.

Are you looking to add to the amount you are saving? I read up about 'passive investment' then put a lump sum into Vanguard Life Strategy funds (these are funds that are made of lots of investments across the world - you can choose the mix of bonds and shares dependent on your attitude to risk and what you want out of the money)
It's for long term investment and not risk free; but I've been getting a nearly 10% return over the past 5 years which knocks the socks off most other vehicles.

I am out of the UK so cannot use the ISA wrapper; but have a SIPP, and an investment account with a broker (as I am limited to the amount I can contribute to the SIPP).

The first purchase made with bitcoin was a Papa John in Florida (I believe) from London which was approx 10k bitcoin for two cheese pizzas. Nowadays that's about $50Mn

But does the average private citizen like the OP understand how to buy Bitcoin, store it safely away from the myriad of internet criminals minded to steal it and sell it so they can get their money back should they need it? Plus be happy with the risk that the price is volatile and if they needed to get it back at the wrong time, be happy that they might have lost 5, 10, 50 or even 90% of the money? I'd say no, as would 99% of people.

I've now realised that I've misunderstood the OPs update, and that she does have other savings. Therefore, gold or something like a Vanguard Life Strategy Fund would be the way to go, although it sounds like the OP is outside the UK, so I don't know if they are available to her, but there is probably a local equivalent.

Thank you for your responses. Don't want to put all eggs into one basket by any means. I understand bitcoin is a gamble. I think I will look at a local fund and then add to it monthly.

Bit late to the party here. Bitcoin all the way - it's a good time to buy but keep it in mind as a medium term/ long term investment and hold tight!

I've got my savings in a Wealthify ISA. I went for the middle of the 5 risk profiles and its consistently been at 11-12% interest. Its dropped a bit at the moment though because of coronavirus shifting the world markets down but it's a long term thing so I'm not too worried.

There are other robo investors too like Nutmeg and Moneyfarm. Really easy and effort free.

I’d buy first edition signed books.

I am also buying physical gold

I know Piglet John was looking back in Jan but if that same Krugerrand had been bought for £1239 then and sold today it would have turned a profit of at least £25 as my dealer is buying them back at £1264

I like having money tied in 'portable possessions' and soon we will be coming in to a large inheritance and I plan to put the max in premium bonds and keep buying gold when I can.

Premium bond prizes have been cut again. You’re extremely unlikely to win anything with £5000. We have £20000 and have had no wins at all in the last year.