How to make the most of 20k

[jeez2020]

Hi,
Unbelievably for me I have managed to save 20k, It is more money than I have ever had before and I want to look after it wisely.
I don't think I can get on the property ladder as in my 40's and live in london so I doubt very much I will be able to get a mortgage. I am a single mum to a 15 year old, no debt at all and already try to have a nice summer holiday every year.
It is in an ordinary bank account so it would be great to hear whether I should move it somewhere I would get the most benefit from it... and what would be the benefit?
I have thought about keeping it for my sons education in uni but not sure if he even wants to go to uni.. he says no atm!

I feel extremely fortunate to be in this position but am a bit clueless, what would you do?

The best rate of interest at the moment is nsandi, which is essentially the government. They're offering higher than you'll get in a high street bank though obviously it's not wonderful.
Presumably you need something fairly quick access in case you need it? You can have up to £1million in there, so you can keep saving for a while

I would buy premium bonds with that I think

Interest rates are stupidly low so
You might as well have the possibility of increasing it by 'winning'

Could you use it to buy a holiday let in the UK?

Deposit for mortgage on small rental apartment elsewhere (that’s cheaper)

It depends on how long you are willing to see a return and if you're willing to take a small risk.

A stocks and shares ISA would probably bring a far better return over the next 3-5 years than an interest account (or premium bonds)

Remember too, that the value of cash is eroded over time if inflation is higher than the interest rate - so interest only accounts can also be "risky" in that respect.

Thank you all, as I've always lived month to month this is a completely new dilemma for me. I don't want to talk money with friends and I don't have any relatives who can advise me.

Premium bonds... Ive heard the term but didn't know they were still a thing... I don't know what they are or how to buy them!

Because I always use air bnb I have wondered if I could buy a basic holiday home abroad to rent out. I imagine I'd need more than I have but I think I could build on my savings now I have got this far, my business is doing well and the more substantial my savings become, the less inclined I am to spend any of it... although it is VERY tempting to buy a gucci handbag!

I also appreciate that whilst it's a massive amount to me, in reality it's not that much at all. I guess I'm also wondering if I put in an isa etc is it even worth it? Do I need to save more before I even start thinking about this?

I also don't have a pension...

ISA allowance is I think £20k per year! I would think some sort of pension provision is a must in your situation too. Try the money advice service (government site) and money saving expert. Maybe invest first in a financial education book on amazon

How much are you continuing to save per month? It would certainly be a down payment on a house in another part of the country, which you could let out. I used a calculator on Barclays (have an interest in this for a relative) and you could buy a house/flat worth £140,000 with a rental value of around £600 per month. Would it be worth doing something like that and having somewhere that would bring in an income during retirement? I know there's more to it than that in terms of costs but it sounds like it could be affordable. (Btw I chose a repayment mortgage, not an interest only.)

If that's everything you have saved, then I would put it in NS&I.

I’d spilt it, put maybe 10k in an isa (various funds but mainly global to spread risk), rest between premium bonds and high interest account (with access if you need it).

Once the current property bubble settles I would buy a buy-to-let property somewhere in the UK. That way you are on the property ladder.

Well done jeez2020 for saving that much, and also thinking ahead how to make the most of it for your future.

If you are thinking of premium bonds, check out moneysavingexpert's calculator here. It's worth also reading his artice about them here.

As you don't have a pension, I would say this is your priority. Decide how much you can afford to lock away for at least 5 years (preferably until your 55 years), and how much you would like to put aside for a rainy day - ie something you could withdraw quickly.

I would recommed reading the moneysavingexpert's intro guide to saving and investing first. A book I found very helpful when I first started investing was the Motley Foool Investment Guide.

Good luck!

Hi @jeez2020 - just to say that I have found some of the podcasts in this series very useful in my attempts to educate myself on personal finance including pensions and savings. meaningfulmoney.tv/mmpodcast/

Ps well done, that's an impressive amount to save.

Well, my recommendation has come back to bite me- nsandi have just axed all their interest rates
Hopefully you went with something else?

You really need a pension. If you don’t have anything at all and will be relying on the state pension, you’ll be in for a miserable retirement.

Start a pension with the 20k and add to it monthly.