To wonder what to do with the money

[Quandary2018]

Parents have very generously gifted me 25k which, while a substantial sum of money, is not enough for me to use as a deposit on a house as I’m a single parent who works part time and I simply don’t earn enough to get a mortgage so- what do I do with the money?
Am thinking maybe some savings for the kids and a holiday but that seems wasteful so what would you do with 25k that isn’t mortgage related

Savings are making so little at the moment, better to throw into property if you can or write off why debts.

I killed off my student loan with my last windfall, much better interest rate than a savings account!

We bought a house on shared ownership idling the next.

Savings just stay about the same value over time at the current rates. It only goes up if you put money in... its depressing.

Premium bonds

Be aware that shared ownership is lacking in legal protection. If you get into rent arrears the HA can repossess and not return any of your money. see this article

OP, please post your question on the MSE forum:

forums.moneysavingexpert.com/forumdisplay.php?f=17

They're so knowledgeable about money over there, you'll get terrific advice. Over the years, those boards have got me out of tens of £ of debt, fixed my credit rating, got a great mortgage rate, started saving, and learnt about and set up a SIPP and S&S ISA.

*tens of thousands £

If it does not affect your benefit entitlement, I would put it into a decent pension scheme.

Other than that, what education can you do to boost your earning potential? 6 years is enough to study up to PhD level or retrain and gain experience in anything you fancy. Alternatively, could your parents use it to pay for childcare on your behalf, allowing you to escape the benefits trap?

OP honestly you’re getting so much wanky advice here (premium bonds, really?) and with the nuance of benefits you need to talk to someone who knows what they’re talking about.

I would ask on the moneysavingexpert forums or personal finance reddit.

Remember kids can have ISAs too so you make be able to get some gifted into a S&S ISA. If you are in danger of the savings limit your parents could always withhold some for next year for the kids ISA - eventually they’ll need driving lessons/help with lessons.

I suggest ask the same question on money saving expert and TELL them that you are a novice investor who doesn't want to take high risks or buy complicated products you can't understand and are hard to cash out in future. They can be foul condescending blinkered gits on MSE, but you may get some good advice about specific investment options. They will also, bizarrely enough,, understand better than MNers that house buying is expensive.

If anyone thinks you can bank 25k and live off the interest, or let the interest accrue to raise your deposit, we had £540k in a term deposit for a few months between house sale and purchase and earned just £330 per month interest. £25k is not going to accrue much at all.

@tistheseason are you actually serious. What would the point of getting a 2 bed and sleeping in the lounge just to get on the housing market. I bet you wouldnt do it so dont force it upon someone just cause it's the done thing to buy property.

SO isn’t the nirvana people make it out to be

Nor is home ownership tbh

Can you get a LA rented property? That is a much safer and usually cheaper option than private and affords a bit more security.

Moving area doesn’t sound a good idea I agree

Have a lovely holiday somewhere with the kids for say 1.5k and then ask your parents to hang on to the rest for now so it doesn’t affect your benefits.

Look at upskilling if you can to increase your earning power over time.

And make sure your ex is paying proper maintenance.

I haven't read the whole thread but some mortgage companies take in to account tax credits, child maintenance, child benefit etc as income, not just wages. It's worth looking into as it's a great way to invest and not money down the drain like renting.

I would buy a buy to let property for approx £100k. A 1 or 2 bed flat, doesn’t need to be a really desirable area. Something straightforward that won’t need too much work if your tenants don’t care for it perfectly.

Buy to let mortgages are given based on the rental income covering the mortgage, not just on what you earn. So if the yield is at least 5% you should be ok. Depending on the cost of small flats in your area you could even consider 2? (Think ex-council type flats, the cheapest you can find).

Heavens - don’t use the money “studying to PhD level”. You’ll just end up in debt with little earning potential.

I second the advice to post in a money saving forum.

What are 'Freddies'? I have 10k currently in premium bonds as I'm not yet sure what to do with it, so am just leaving it there for a month or two ( Until the big win ;) ) but am thinking where else it could go - it's not a lot I know..

OP honestly you’re getting so much wanky advice here (premium bonds, really?)

Premium bonds have a quite a high yield, plus you get your initial investment back.

Top ISA at the moment is 1.5% interest is a paltry return, premium bonds give 1.4% on average.

I think by “Freddies” the pp means Freddos chocolate bars...

Put it in stocks and shares ISA and add to it when you can - dribs and drabs add up.

Compound interest is a marvellous thing

I would do one of several things depending on your other circumstances.

A) are you interested in and capable of retraining/further training to increase your earning power? If so, use some of it for that and get your parents to mind the rest for you in a trust fund for you or your kids

B) are you and your children adventurous and not at a critical stage (GCSEs, a-levels, fixed job it would be difficult to find another like it)? If so, would you consider blowing it all on a round the world trip for the whole family? I know it's extravagant but given your lifestyle as you describe it it might be the only chance you and your kids get to really travel and broaden your horizons ... It would draw huge criticism and it wouldn't be "easy" but it would be a real experience you and they would never forget.

C) how old are your children - what's the gap? Is your eldest approaching uni age/apprenticeship? If so consider using it to pay some large fixed cost for them e g. rent or tuition or an agreed living allowance so they don't have to work too hard while studying. Your younger child may feel that's unfair though if they are of an age to be cognisant of it, so it depends. If the gap is big then you can realistically say hat when they are in the same position provision will be made for them to do likewise (and start figuring out how you can do that).

Definitely don't bank it if it will lose you your benefits - get your parents to look after it for you and have an arrangement for withdrawal.

weaningwoes excellent advice.

I really am a bit slow this morning.....

Martin Lewis Feb 2019 Info on Premium. Premium bonds aren’t a good idea. Listen to Martin!

Premium bonds*

As the daughter of a single mum who rented all her life with two children, I would second the pp who said use it to bulk out your retirement plan. My mum has just reached stage pension age and has no private pension. She also rents privately and receives housing benefit (though not enough to cover any property that is big enough for us to visit her in so she has to pay more). It’s a pretty scary position to be in. As her child, I would have much rather she sorted her retirement out if she got a windfall than left it for me. As a non home owner, your retirement should be your priority.

Premium bonds have been shown to have a pretty rubbish ROI, actually most savings do at the moment. Only lotteries and gambling is worse.