What to do with 4K?

[HowWeAre]

Unexpectedly going to receive 4K next month. I know in the grand scheme of things it’s not a huge sum of money but to us it is a significant amount and also an amount I imagine can easily be frittered away if not careful.

Some details: I’m 24, live with my boyfriend (same age) of 3 years in privately rented accommodation and have recently graduated university. Neither of us have any debts, no cars on finance and are on salaried wages (him 21k and me 25k). Both of our jobs are stable and have continued throughout lockdown as we are classed as key workers. We currently save every month into savings accounts and ISAs as we are saving for a house deposit however that will probably be far away in the future as we live in a very expensive city so we will need to increase our wages significantly between us even if we save up a very large deposit.

So I’m thinking what should I do with the money? Split it between savings and ISA? Keep some for a rainy day fund? A treat after a hard year? Suggestions welcome- I don’t think I’ve ever really received a large sum of cash I haven’t accounted for and want to make sure I’m sensible about it. AIBU to have no idea lol

Do you need a treat right now? How much of a difference would spending £100, £1000, all of it, make to your lives? If the honest answer is "we were getting on OK without it", which it probably was if you'd been keeping up your regular savings, then put as much as you can - preferably all - away towards the house deposit. Opportunities like this can significantly accelerate the dream of home ownership if not squandered.

I'd put it in premium bonds or shares as a long term investment. Premium bonds are easy and safe as it's government guaranteed. You also, might win a bonus which is a plus but not guaranteed unless you invest loads. premium bonds

Throw it in a fund and forget about it for five year. Get some independent advice if you want to invest in shares. Technology and pharmaceutical industries always a good investment.

A treat and then majority in premium bonds

As it's not a gift where you'd be expected to treat yourself I'd invest most if not all of it towards your house deposit.

You weren't expecting it, you're in a stable financial situation to presumably treat yourself in other ways, get it in the bank towards your house deposit

^^ This.

Having unexpected money doesn't necessarily translate into having to spend it. Unless there's something that you want that you've not been allowing yourself to buy due to the cost, it's probably best to save it towards your rather than deliberately trying to buy something just because this money has appeared.

On the matter of house buying, do you have any particular ties to where you live? If not, and you could work anywhere due to being key workers, especially if you're something like nurses or teachers where your income is likely to increase over the next few years and you can find work and get paid the same wherever you live, you could look at buying in a cheaper area.

On your wages, you could get a 2 bed house in a nice area (OK, maybe not Mumsnet nice, but perfectly decent places to live) on the outskirts of a northern city for under £150k, which would be easily achievable in the next year or two on your income.

I wouldn't put the money in shares unless you're set on not buying for 5-10 years due to the potential volatility in the stock market making your money worth less when you might need it.

@DooleySpooley

Stocks and shares Lifetime ISA and investors it in the S&P500.

Don’t buy Bitcoin!

And don’t put it in joint savings unless you are married.

"In August, bitcoin suffered a 20% drawdown, a 17% drawdown in November, 31% in January, 26% in February, 18% March, and now more recently down 16% about peak to trough. Through that period from the August peak into the recent low, BITCOIN IS UP 315%."

I put in 1.5k, oooh, some time ago.

That 1.5k has grown to be worth the same as a decent 'starter' house in the south east. Wouldn't buy one because I think the house is overpriced. I fully expect the BTC to be worth much more in time because it's incalculably value compared to our £ funny money.

It's the apex asset if you have the stomach for it.

But yeah, indefinitely wouldn't chuck in the whole 4k.

I'd put 3k in a LISA and buy a decent vanguard global equity tracker like VWRL, and £500 in BTC and £500 in Ethereum.

Not financial advice.

Stocks and shares ISA. Minus a little bit for treats. Any ordinary savings accounts are rubbish at the moment.

@katy1213

It'll be such a drop in the ocean of a house deposit, I'd splash out on a wonderful holiday as soon as worry-free travel is possible.

It's that kind of thinking that leaves you unable to afford a house.

Plus what sort of holiday do you think it's normal to buy? You can get ten days all inclusive off season for £600 - or a lot less, that's just the amount I spent last year.

I find it easier to save if I occasionally relax spending, so I might spend 100 and give the same to my partner (as he would for me). The rest I'd save, possibly in premium bonds.

If it's a company you were paying have you checked if you're owed interest? Because that's money that should have been in your savings account.

If it's a company you were paying have you checked if you're owed interest? Because that's money that should have been in your savings account.

This is true. You're owed 8% a year I believe!

I would put the whole lot towards a house deposit - especially if there’s nothing else you’re desperately wanting at the moment.

Agree that you should spend £1k and put 3k away for savings
I also agree that you should put £3k in your own personal account