Where would you put £10k of savings?

[Bigredriding]

We have about £10k which is doing nothing in a high street bank account. I’ve had a little look at investing in shares and would like to do this, but it looks confusing and as though it would take a lot of time and energy. I’ve heard Premium Bonds are only marginally better than a savings account. We have a mortgage and could pay some of that off, but would prefer to have the money accessible for home improvements/emergency etc and grow it a bit if possible. We’re quite young and have a long time on the mortgage left, so it would be a bit of a drop in the ocean.

Does anyone know anything about buying shares? Or what would any good with money mumsnetters do?

Bit coin. But wait for it to drop. We invested 2k a few years ago. It went up and we withdraw what we’d made but left the original investment. It’s now back up to about 9k again. We will be withdrawing some of it soon and leaving the rest.

Someone we know put 25k in and made 120k. You need tk be prepared to lose it though so maybe start off small. And not yet. It needs to come back down.

Pbs here too for decades, not won a single penny.

In fact we check it regularly to make sure it’s still active!

Do you need the whole 10k to be accessible or only part of it? If only part, keep that in cash and put the rest in an equities (stocks and shares) ISA- FTSE tracker or something to keep fees low. When you're young is the ideal time to invest in shares because you have longer to outride the volatility - once you start approaching retirement, most would advise starting to move into a greater proportion of fixed income to protect your downside.

Can easily set up an account with one of the larger fund managers- Fidelity, Hargreaves Lansdowne etc.

OP, have a look at Vanguard. You can put your money in one of their funds under ISA wrapper so it will be tax free. The easiest thing to do would be to choose one of the Ftse passive funds, it won't require any market knowledge from you. Dead easy to open

Those saying they have never won on PBs how many do you have? I win most months and have nowhere near the 50k limit.

In your situation OP i'd go with the premium bonds for now.

Premium bonds make you fuck all unless you win the prize! I recently got an inheritance of 12k - I put 1k in premium bonds just for fun and the hope I win something

The rest is in a stocks and shares ISA - it’s already made some good l money on it after 2 months

We have about that amount in a Vanguard ISA. We put it in the S&P 500 fund (dead easy, you just deposit money as normal and pick a fund). S&P 500 is pretty consistently well performing and we read lots of advisors suggesting it so went for it because figured better than nothing for now. Have had about 7% return so far.

Cash or lifetime ISA

I would find a normal savings account OP and be prepared to move the money yearly to get the best interest. Rates are extremely low but you might find something that keeps up with inflation.

If you need it accessible then there's not many options.

If you have regular spare money at the end of the month I would open a stocks and shares ISA - there's a few platforms with low fees, check MSE. And then pick a tracker fund. But this money you will need to leave where it is for a good few years. Even £25 a month you can do something with.

@Bopahula can I ask what stocks & shares ISA you are using? We have the resources to put a small monthly amount into something a bit riskier and I like the sound of that. Obviously I accept the risk with it and will leave most of our savings where they are, doing nothing!

As a PP suggested I invest in Vanguard Lifestrategy funds and HSBC Global Balanced funds for my stocks and shares ISA rather than individual shares. Lots of different platforms offer them so compare the costs as it depends on how you wish to invest (lots of small trades or lump sums). Moneysaving expert is your friend here.

What is your mortgage rate? Overpaying seemingly small amounts can make a big difference - have a look at moneysavingexpert (I love that site!).

Do you have a pension? Boring and a long way off but I regret not shovelling more into my pension earlier in my 30's. LISA also good depending on what rate of tax you pay.

I also use premium bonds - you do not pay tax on the prizes which is useful for me and you never know if you will win the big one! I find it more exciting checking for prizes each month than a bank statement.

We use Vanguard for shares, but it's not accessible money, more of a pension pot.

If you may need for emergencies (so relatively easy access) don’t put in shares or pensions or pay off your mortgage.

Put it in an ISA (but an easy access one) savings or premium bonds. You won’t get good rates of interest, but you can get at it.

What is your overall financial situation?
It sounds like this £10k is all you have, but you are somewhat settled (married, mortgage - kids?) so can't afford to lose it on short term share or cyrpto investments.
Plus you don't have the knowledge atm - if you are interested in doing this start educating yourself now.

What are your pension situations like?
Is this a one of £10k for some reason or money you have accumulated and you'll continue to save and add to each month (how much?).

I'm very risk adverse and carry higher cash levels than is sensible, despite knowing this.

I'd personally put it in premium bonds as my back up fund, in case of emergency need - redundancy etc. If you needed it for something like a boiler or roof repairs it would be quickly accessible, but it isn't just in the bank to be spent.
Premium bond wins are tax free.
The average return (prize rate) isn't great, but then neither are bank accounts.

I'd then look at how much you can save each month and split this between your pension requirements (very long term) and other more more short or medium term goals.

If your employers offer a pension scheme where they will match your contributions then that is free money, and definitely worth looking into.
Otherwise you can probably contribute to your employer scheme anyway, and if you salary sacrifice can benefit from a national insurance saving.
Or standalone personal pensions.

If you want to build up another cash fund then regular savers are a good idea. They carry a higher rate of interest and usually just run for a year at which point they pay out and you start again of you want. Depending on your requirements at the time you could then use those funds (holiday, boiler etc) or add them to one of your other saving vehicles.

Given you've got the £10k backup you could look at putting the medium term money into shares but until you've educated yourself about this I'd stick to funds. You can get trackers very cheaply, covering UK or global funds. You should do this via an ISA as any income and gains would be tax free.
As ISA's are individual you should split this so you each have the same going in.

With interest rates as low as they are and unless you are additional rate taxpayers then you will have a 0% rate interest allowance £1,000 for basic rate taxpayers and £500 for higher rate tax payers). Given this you probably don't have to worry about tax on the interest at this stage.

Premium bonds aren’t that safe. They’re essentially lottery tickets to a prize draw. No interest is paid, and they will lose real value due to annual inflation

You'd get around £50 a year on that amount in the best instant access savings account. With average luck you'd match or probably exceed that with premium bonds, there's no risk and you can get the money back in under a week, so likely to be the best choice in your circumstances.

As PP have said, your best bet if you need the cash accessible are probably premium bonds. The best easy access savings accounts are only paying out 1.5% at the moment so all low risk options are crap. MSE reckon at the moment if you have more than £5K saved then with average luck you’ll win enough to beat the savings accounts.

Investments are for money you won’t need in the short term - yes, an Index tracker will probably give you fairly steady 7.5% gains at the moment, but you need to be able to hold your nerve over the short term - imagine you needed money last March when the market dipped? Disaster. People who rode it out are doing even better than they were before but you need to be able to leave your money in there.

I’ve got money saved in PB that I accept the risk of depreciation as a payoff for the security of having it easily accessible for emergencies.

Ooh and I meant to say - I’m assuming you have no other high interest debt here. No point fiddling how to get 1-7% in interest if you’re paying 10% somewhere else!

Thanks for all this advice. Haven’t had a proper look into some of the things suggested due to time pressures with two needy children! But at the minute it looks as though premium bonds may be the best bet and I like the idea of the stocks and shares ISA to maybe put a little bit of money into each month, so I’ll explore that option. We overpay £200 a month to mortgage already and don’t really want to up that because it’s not something we’ll reap the rewards of while our children while our children are young.

@Bigredriding

Thanks for all this advice. Haven’t had a proper look into some of the things suggested due to time pressures with two needy children! But at the minute it looks as though premium bonds may be the best bet and I like the idea of the stocks and shares ISA to maybe put a little bit of money into each month, so I’ll explore that option. We overpay £200 a month to mortgage already and don’t really want to up that because it’s not something we’ll reap the rewards of while our children while our children are young.

Stocks and shares ISAs are a long term investment. I put around £9K in a few years ago. They went up to £12K pretty fast but over the last year have dropped down to the original investment. I'm not looking at them as a short term gain, they are a small % of my overall savings, but unless you monitor the growth each year and are happy to withdraw the funds and spend, it's a lot of hassle.

@BarbaraofSeville

Premium bonds aren’t that safe. They’re essentially lottery tickets to a prize draw. No interest is paid, and they will lose real value due to annual inflation

You'd get around £50 a year on that amount in the best instant access savings account. With average luck you'd match or probably exceed that with premium bonds, there's no risk and you can get the money back in under a week, so likely to be the best choice in your circumstances.

The only reason that PB can pay out is because the vast majority of people who hold them earn nothing (like the lottery.). If you never win, your investment in them is zero and eroded by inflation. Far better to put it into a building society and bank ISA even if the interest is just 0.5% - 1% because at least then you get something.

It's very unlikely that anyone with £10k of premium bonds will win nothing in a year and it's also very unlikely that anyone putting the same sum in a UK instant access savings account will get more than 0.5% interest at the moment.

And why do people keep banging on about cash ISAs when the ISA aspect is irrelevant to at least 98% of savers in the current climate and the interest rate is usually poorer than standard savings accounts?

The potential benefit of a cash ISA is accumulative.
They only have £10k now, but who knows what will happen in the future and an ISA protects a years worth of allowances in a tax free wrapper (under current rules).
I've had IDA'S every year since they started, and whatever was before (god getting old, can't remember! TESSA?).
Over the years thats a lot in tax free vehicles.

Op, I'd do pb for now, whilst doing research on stocks and shares isa.

Look up vanguard as a start, Jack bogle. He said why look for the needle in the haystack, when you can buy the whole haystack.

Eg not individual shares just buy the whole thing index.

Eg a fste 100 index would buy you 100 companies in the ftse. Sometimes there is a different weighting, Some replicate it exactly.

Once you have chosen a few funds... Maybe some from the states, some Japan... Spread out.. Wait for a dip then start to buy 100 each month... Don't put large chunks in, drip feed in.

I have about 4 index funds as above held in Hargreaves and landsowne (pricey platform I will move soon to cheaper one), I took a gamble on a fund manager, and have two funds, one brought at the top of the market, rookie mistake that I'm struggling to make money on.

Including the recent troubles it's increased about 25 %.

In a safe.