What should I do with 50k?

[hyperbole001]

I know this is a nice problem to have but I have 50k sat in a savings account and have no idea what to do with it. I considered bunging the whole lot into Premium Bonds but keep reading on here that they're no longer as lucrative as they used to be...

I own a London flat with 67% equity so I'm not in a rush to pay off the remaining mortgage. I pay into a pension currently but still 30yrs off from retirement. No other debt aside from Student finance.

I know S&S ISAs seem to be all the rage but I'm not even sure how to go about this, or whether they make a great deal of sense to me - can I simply open this ISA or am I required to play around and move money around. I'd be happy to lock away around 40k for 5-10yrs as I have no immediate need for it. I've even contemplated Bitcoin but am probably too risk averse to go that route.

What would you do?

Decide what it is for...

£10k might be an emergency fund which you want to keep as liquid as possible. Savings account/Premium bonds combo is popular for storing an emergency fund as some is instant access and some has at least an opportunity of getting a little bit of a return, even if it all does lose to inflation.

Some might be for something you know you need in a few years time.

Some might be for sometime in the future, so you can take more risk with the money.

S&S ISA is a good thing to use to keep the money accessible but still growing.
Many providers are happy for you to put in a lump sum and not add to it. However you might like to add to it over a period of years.
Vanguard Investor has a low cost S&S ISA and has simple to use LifeStrategy funds which are like a readymade portfolio. Keep it simple and spend some time learning about investing.

meaningfulmoney.tv/UG4
That could be a good starting point to learn about investing.

Carry out detailed research of different companies, build up research about different types of stocks and shares, rather than just follow the suddern hot shares of the moment ect, is take the time to learn the ins and outs of the stock market, research how much a broker and analyst costs ect, see what investment options your bank offers, then when. You have all the information as best as possible, then reach a conclusion on where and how much your investing to begin your investment portfolio.

If you want to get into bitcoin with minimal risk, there are a number of ways to do it.

The easiest is to set up a recurring buy on coinbase at say £100 per month. Bitcoin is enormously volatile, this way you are buying consistantly regardless of price.

If you are a little more tech savvy, rather than incurring fees for bank transfers, transfer over £1.2k to coinbase, then every month go to coinbase pro and swap £100 for £100worth of bitcoin.

Its generally a bad idea to put all your cash into btc in one go, dripping it in in small amounts, the more frequently the better will hedge your risk enormously.

Oops apologies, wrong thread 😳.

Don’t bother with premium bonds, BTL comes with too many responsibilities and Bitcoin is on its arse at the moment (though that means it might be the time to get in you just don’t know with it)

Have you taken any professional advice with an IFA?

I have a S&S ISA and it’s doing really well. I don’t actively manage it, just chose two medium risk funds and keep an eye on its growth every 6 months or so. If the fund starts to underperform it shows a red arrow and then I’ll switch to one with a green arrow for a £5 fee.
I’d recommend, the yield on mine is maybe 10% per annum.

I know you're not in a rush to pay off your mortgage but, depending on the rate you're on and whether you'd have penalties for paying off 50k at once, would you get a better rate by paying it into your mortgage (so saving that interest) than you'd get from any savings/ISA?

@Figgygal

Don’t bother with premium bonds, BTL comes with too many responsibilities and Bitcoin is on its arse at the moment (though that means it might be the time to get in you just don’t know with it)

Have you taken any professional advice with an IFA?

Interesting that you don't think I should bother with premium bonds - I thought the earlier advice from PP suggesting I keep 10k liquid in PB wasn't bad. BTL isn't an option for me as I don't want to the responsibility, don't want to be hit with second property stamp duty and I'm not sure BTLs are lucrative anymore.

I saw Bitcoin had tanked and did think now would be a good time to buy. A colleague purchased a coin for £4k - if they suddenly tanked to those levels, I may be tempted.

Haven't taken advice from an IFA.

@Cassandraprobs

I know you're not in a rush to pay off your mortgage but, depending on the rate you're on and whether you'd have penalties for paying off 50k at once, would you get a better rate by paying it into your mortgage (so saving that interest) than you'd get from any savings/ISA?

My rate is low, around 1.5% and I don't think the savings from paying less interest would be worthwhile. My mortgage is currently £650 a month and around £150 of that is interest. Also, I don't want to pool all of my money into property. I have a significant amount of equity already tied up into my home.

@BirthdayCakeBelly

I have a S&S ISA and it’s doing really well. I don’t actively manage it, just chose two medium risk funds and keep an eye on its growth every 6 months or so. If the fund starts to underperform it shows a red arrow and then I’ll switch to one with a green arrow for a £5 fee. I’d recommend, the yield on mine is maybe 10% per annum.

Thanks, can I ask which S&S ISA that is? Vanguard?

I’m very happy with my stocks and shares ISA. I have a socially responsible, medium to high risk, fully managed one with Nutmeg. I like that it’s accessible (withdrawals take about a week) but it gets a great rate - consistently above 10% per year for the last four years. I would highly recommend as a way of keeping savings in a low hassle, steady return way.

6 months cash fund, for emergencies

Then, depending on personal circumstances; pension, ISAs, other investments,

Pension
I assume you are in your mid 30s, so pensions aren't the top priority, but its very tax efficient.

ISAs
Being in your mid 30s you can put £4k in to a LISA, get a £1k top up from the government, and then the balance of your annual ISA allowance in to a stocks and shares ISA - something low cost, passive, tracker. Lots of options out there, Vanguard/HSBC/Blackrock/Fidelity. Each has its own quirks, but pick one and invest in a global low cost tracker and then let it grow. Long term, i.e. more than 10 years, its the best place for your money.

Investments
If you are happy to lose a big chunk of your money, then BItcoin or another crypto currency is something to consider. Personally, i avoid them, as I don't understand them, and I prefer to invest in things I understand.

Other things to consider are personal circumstances; married, kids, partner, wills, attitude to risk, etc..

Premium Bonds are good for large amounts like yours as the probability of winning increases substantially. I have won £25/mth consistantlynfor the past three years on my similarly large deposit with N&SI - which is much higher than other cash accounts.

Thank you for your messages, all of which have been super helpful.

To answer some questions, yes I'm mid-thirties. Have paid into a pension since 2009 and am aware that this is a tax efficient way of saving for the future. It's an area I need to consider and read up more on.

Hadn't considered a LISA - whilst the 1k top up is attractive, I'd rather not tie up my money so far into the future.

My plan was to open up a Vanguard S&S Life Strategy and place 10k into the 60% fund, and then 5k into the 80% and 100% funds - I know this is risky but I don't plan on touching this morning for the foreseeable. I hope that 10+ years would be a long enough time to ride out any bumps so I'm not worse off.

I would then place 20k into Premium Bonds and keep 10k back for emergency funds. I have plans to move home in maybe 2 years, so I'd like to have some funds available to me should I need access. Meanwhile, I can continue to save circa 1k a month of my earnings.

Re the LISA, in the scheme of things its a small amount of money to tie up, only £4k, and for the same length of time as any money in a pension.

Re Vanguard LS funds, why not just put £20k in to the 80% fund, as that is effectively what you end up with with your suggested allocation, why make it more complicated than you need to? If you intend to keep the proportions the same in the long term, then you are looking at having to re-balance periodically, which is avoided by putting in to just the 80% fund.

As an aside, in your position, I would put it all in to 100% VLS, as it offers the better long term (more than 10 years) option, IMO

Re the LISA, in the scheme of things its a small amount of money to tie up, only £4k, and for the same length of time as any money in a pension.

In fairness, I need to read up some more on this.

Re Vanguard LS funds, why not just put £20k in to the 80% fund, as that is effectively what you end up with with your suggested allocation, why make it more complicated than you need to? If you intend to keep the proportions the same in the long term, then you are looking at having to re-balance periodically, which is avoided by putting in to just the 80% fund.

Another fair point. Can you tell I'm fairly new to all this (!!). I've been so good with saving all my life, but I have no real understanding of how to invest. I wish I'd been much more savvy in my earlier years rather than just having my savings sit in a current account for the best part of a decade... (I really did do this).
My initial thinking was around spreading the money and 'diversification' (whatever that means) but if you're saying it's the same difference, then I guess I should just whack it all in an 80%.

I was also considering putting some money into an SP500 (is that what they're called) but I know they're risky. Any thoughts?

OP you get diversification within the vanguard funds because the funds contain hundreds of different shares (and bonds if you pick a fund containing bonds). You pick an institution that offers s&s isas as a product, and then choose a fund. I’ve gone for Vanguards 100% equity fund as I plan to leave the money in for 10-15 years. I may start to switch some into less volatile funds closer to when I want access to them. There are some easy videos on you tube explaining how this works, and also info on the websites of vanguard, nutmeg and others. If you are keeping 30k in cash you might be able to withstand a bit more risk with your investment.

To invest in the S and P 500 you can buy an index fund, it will be buying a share of the largest 500 companies listed in the US. You can look at the returns for each fund and the level of risk, you should find that the higher risk the greater the rises and falls in value. S&P 500 index fund will be a similar risk to other funds with 100% shares in large established businesses, but you might prefer a global fund or one with more uk shares.

@Brown76 Thank you so much, and to everyone else in this thread. So helpful

If you're interested in Vanguard Lifestrategy, a YouTuber called MaMaFurFur goes into detail about how to set one up, what it involves, the risks, costs etc. I followed her and set my own up (brilliant adulting if I do say so myself).

She is very relatable as she is just a normal mum about the same age as you. Link below.

Vegas

@JellyBabiesFan

Vegas

Haha or that.

@JellyBabiesFan Thank you, am giving that channel a watch now!