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Original poster

What to do with £50k?

2 replies

CatteryCats · 28/11/2024 10:04

I’m due to receive a lump sum of around £50k.

I’m in my late 20s with:

A DP, but no children.
£167,600 left on our mortgage.
Bare minimum DC pension scheme.
S&S ISA to top up pension, which I invest £100 into each month.
Small Emergency Fund.

I’d like to set myself up for the future e.g lump sum overpayment on our mortgage, with a lump sum to be deposited into my S&S ISA.

But I also want to enjoy some of the money with a once in a lifetime holiday and some other treats e.g. a nice handbag.

What should I do with the £50k? How would you allocate the money?

OP posts:
maxelly · 28/11/2024 11:46

How small is the small emergency fund? Is it already 6 months of wages? Also how much ISA allowance do you have this year and what's the interest rate on your mortgage? Also do you own the property jointly with your DP and as tenants in common with defined shares or joint tenants (relevant as assuming this is an inheritance or similar you presumably want to ring fence this money as yours rather than joint, in which case I wouldn't invest it into a jointly owned property). Any debt other than the mortgage - car finance, credit cards, overdrafts?

Purely on what you have said I would:

-Spend £5k on treating yourself
-Up to £19,200 into your ISA now (this is on the assumption you have already contributed £800 this financial year, so to take yourself up to the £20k annual allowance)
-£10k into the best available interest rate easy-access savings account to be your emergency fund (adjust this depending on how much you already have and what your current monthly expenses are, I'd recommend at least 6 months of wages, ideally 12 particularly if you don't have good sick or redundancy pay at work)
-Remainder into premium bonds or another savings account for now, to be transferred into an ISA next financial year when your allowance resets. Depending on the risk level you have set on your existing S&S ISA you might want either to make this amount a lower risk/index linked funds situation or just go for a cash ISA.

Personally I wouldn't bother paying it against your mortgage, both for the reasons of joint ownership above and also because it's highly likely (unless you fixed when interest rates were very high) that your money will do more for you invested than you will save in interest charges on the mortgage. You could consider using some of it to make additional voluntary contributions on your pension which would be tax efficient but considering your young age you may want the money more accessible than that.

Original poster
CatteryCats · 28/11/2024 14:07

maxelly · 28/11/2024 11:46

How small is the small emergency fund? Is it already 6 months of wages? Also how much ISA allowance do you have this year and what's the interest rate on your mortgage? Also do you own the property jointly with your DP and as tenants in common with defined shares or joint tenants (relevant as assuming this is an inheritance or similar you presumably want to ring fence this money as yours rather than joint, in which case I wouldn't invest it into a jointly owned property). Any debt other than the mortgage - car finance, credit cards, overdrafts?

Purely on what you have said I would:

-Spend £5k on treating yourself
-Up to £19,200 into your ISA now (this is on the assumption you have already contributed £800 this financial year, so to take yourself up to the £20k annual allowance)
-£10k into the best available interest rate easy-access savings account to be your emergency fund (adjust this depending on how much you already have and what your current monthly expenses are, I'd recommend at least 6 months of wages, ideally 12 particularly if you don't have good sick or redundancy pay at work)
-Remainder into premium bonds or another savings account for now, to be transferred into an ISA next financial year when your allowance resets. Depending on the risk level you have set on your existing S&S ISA you might want either to make this amount a lower risk/index linked funds situation or just go for a cash ISA.

Personally I wouldn't bother paying it against your mortgage, both for the reasons of joint ownership above and also because it's highly likely (unless you fixed when interest rates were very high) that your money will do more for you invested than you will save in interest charges on the mortgage. You could consider using some of it to make additional voluntary contributions on your pension which would be tax efficient but considering your young age you may want the money more accessible than that.

My EF is £1k. My DP and I own our house jointly.

If I decide to overpay the mortgage we’ve agreed to get a Declaration of Trust drawn up specifying how much I’ll overpay, how much we each paid for the deposit etc. That would mean my money will be ring fenced.

No debts except the mortgage. I have student loans, but I’ll never pay them off due to being low income.

Thank you, so much!

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