Practical advice on what to do with money coming my way.

[haylady]

I just got the good news that I will finally get my compensation claim from a serious accident i had years ago. I'm really pleased and relieved and thought it might never happen however i don't know how to invest it wisely as i am not practical with money. It has come at a great time as my marriage broke up and i left my job and moved to be closer to family with my 3 young children. I have not got another job yet but hope to get part time supply teaching work in September.
I should get about 200k so should i just buy a house outright? I'd rather not as i'd like to help my family out a bit and not spend it all at once. A decent house here costs about 200k and prices are still falling. I'd rather put down a good deposit and get a small mortgage but might not get one without a job. Should i just wait a bit? If so where will i put the money. I wish i was savvy with the stock market but am v clueless.
I'd appreciate any good advice.

It's a nice problem to have :) Buying property is a very good idea. Whether you buy one outright or with a small mortgage really depends on your income. Savings and investments are making very little money at the moment but, over the long term (10 years+), property usually increases in value. As the property market is quite wobbly you could easily get a bargain if you're not in too much of a rush.

If you're thinking of buying property in the near future then you'll need your money accessible rather than invested too heavily and too difficult to get at. Do bear in mind that the FSA compensation scheme covers deposits up to £85k per financial institution - in other words, don't put all your money in one place. So short-term options to look at would be

• Cash ISA. You can only invest £5400/year but the interest is Tax-free and you can get the money back at any time
• Savings accounts with notice periods. The longer you are prepared to put your money away... 3 months, 6 months etc. the better the interest rate you will be offered
• Bonds. These require you to put your money away, usually for a minimum 1 year to qualify for the interest but the rates are better than regular savings accounts. National Savings are offering index-linked bonds, for example
• Premium Bonds. The returns can be low but your initial investment is safe and there's always the chance of winning the jackpot

To find out who is offering the best rates you can use comparison sites or, if you're not sure about finance, consider using an independent financial advisor (IFA)

A final thought. What pension provision do you have? It could be an idea to set aside some of your award for the long-term and use the rest to buy the property. Would definitely recommend using an IFA if you go that route

Is your divorce sorted? If not you need to make sure that your ex doesn't have a claim on this money.

Also make sure when using different banks that they are different & not all under the same umberella