What to do with £5k?

[mishfish]

Hey

My husband and I recently married and were lucky enough to receive £5k in gifts from friends and family.

We would like to buy somewhere one day and would like to put the money away somewhere sensible where it would gain interest but the initial investment remain safe. We aren’t planning on spending the money on a holiday or anything. We have manageable credit card debt that we should have paid off within the next year. Money is tight but that will begin to improve due to changes in circumstances

Would anyone please point me in an appropriate direction whether it’s a financial advisor, or a bank etc?

Thank you

Surely you pay off the credit card first? How much will you have left?

How old are you both? Have a look at Lifetime Isa’s

@stealthpolarbear we would have £2.5k left. The credit card is currently 0% interest and we could move it if we start to be charged interest and it hasn’t been paid off. Is paying the credit card off still the most sensible option? I don’t really know much about savings and this is the first time we have really been in a position where we have some money in the bank that we don’t intend on spending.

@Magik we are late 20s and mid 30s

No fair enough if it's 0%

Ignore 0% interest, it's still debt.

Pay the debt off.
Put the remaining £2.5k in an interest paying but easily accessed bank account or savings account. Some bank current accounts pay better interest than savings accounts.
This is now your emergency fund and is there to stop you ever using debt again.

Then look at your expenses and build up the emergency fund so that it represents around 3 to 6 months of typical expenses (you pick how much based on your perceived risk of being made unemployed).

Now you have a firm base on which you can build your financial future.

As you are a first time home buyer and you are young you could look at using a LISA to save for your house deposit.

Some resources you may find useful:
www.petesbook.com - The Meaningful Money Handbook, written by a UK financial planner. It explains why and how to stop using debt, use a budget, protect your things and invest for your future.
Podcasts:
Meaningful Money
Dave Ramsey Show
Bigger Pockets Money

Stop using a credit card... use debit instead. Mobile apps now give instant tracking of expenditure, such as Monzo, Starling and others.

Use this gift to get your money under control. Decide today to change - stop using credit - buy things with money you have. You will soon be able to start saving towards a home deposit.

Buy £5k of tinned food, so you'll have something eat next year after March 29th?

Don't pay off the credit card unless it ceases to be 0% interest. Save the £5k and pay off the card in due course!

There is nowhere ‘safe’ to put it that will beat inflation as far as I know.

If you buy premium bonds, you may not beat inflation but you have the potential to win prizes and the money is quite accessible.

What about on of the first time buyer isa were govt also contribute.

I've used 0% interest cards as short term loans. Have you caped spending on that? They exist to lure you to stay and then introduce interest. It makes sense, otherwise there's literally nothing in it for then except a minor loss. If having it tempts you to use it then it's wiser to pay it off and cancel it. If you have capped it and wont use it again then it doesn't matter what you do because until it's paid off the reality is that the money you owe will come out of your current "worth", which includes that 5g.

Investments for this kind of money are poor at the moment. Pp who mentioned building up accessible savings until you can survive 3 to 6 months is the best next step. First time buyers and paying into a retirement fund are the two options I'd consider after that.

I'll look after it for you!

I would pay off the credit card too. Especially if you are not sure that you will pay it off before the 0% period ends. If you are fine paying the card each month, once it is paid why don't you put that same amount into a savings account each month?

Give it to me. I will live on it for the next year.

I would pay off credit card debt so you aren't tempted to spend it.

If one of you can change current accounts and pay in £1k a month via salary Nationwide is paying 5%. Otherwise some good regular saver accounts, I have one at my bank paying 1.5 percent on first 5k if I put £50 in each month but you do need to remember to add it or set up DD. You could also do a bond but that ties up for a longer period of time giving you no access and they can auto renew with very little notice given.

If you would both be first time buyers then first time buyer ISA looks a great option as government adds to it but only if used for house purchase:

www.helptobuy.gov.uk/help-to-buy-isa/how-does-it-work/

Thank you everyone! There’s so many options. The credit card was a short term thing (lost clients, very young children etc) but circumstances have changed now due to work picking back up and funding for one of them kicking in. I think we will see a financial advisor and lay all our cards on the table to come up with a decent plan

I know the last reply was a while ago but I just wanted to say a financial advisor may not be the right thing for the level of money. Your probably looking at £200 an hour for advice at least. With the level you’d probably do better posting on money saving expert and asking for advice or looking at the guidance on the site.

I would agree. Also they wouldn't really be able to advise a lot of you are not able to accept any risk, so unless you have other things to see them about I would just search online for the highest rate savings account and put it there.

If you aren't able to secure a new 0% you may need that to repay your debt but I'd use it for an emergency fund in your situation