What to do with a few thousand £

[investmentidea]

Hi everyone,

I was hoping I could get some ideas on where to invest my money.

I've been trying to save for a house but something always comes up where I have to spend money! So right now this seems so untrainable and my money is just sitting in the bank losing value.

I was thinking to invest between 1-3k somewhere - anyone have any ideas on what?

I've also saved all the money my son was gifted and his child benefit. He's got about £3k and I'm wondering where would be best to invest this? I was thinking a junior ISA but it's all just so confusing. How do I know what's the best option??

Any help is appreciated!

Lifetime ISA is designed to save for a house purchase. The government gives you extra when you put money in.

How old is your son

For your son, junior ISA and put it in a low-fee index tracker of some kind. He has a lot of time before he will need the money. Depending on your ISA provider there may be some kind of default growth option, or just look for "FTSE500 ETF" or something like that. £3k is low enough that it might get eaten away by fees if you put it in something very fancy and managed.

For you... It depends on your timeline for a house. Could you consider putting it in a bank account with slightly higher interest, like 4+%, if you still think you may buy in the next couple years? Where it is now?

Yes, as others have said, it all depends on your time horizon. For a long term investment (at least 5 years) a cheap global tracker fund or ETF is probably the best bet - Vanguard offer these and you can either buy directly from them or via an investment platform such as Hargreaves Lansdown or Interactive Investor. (I don't know if Vanguard do a Junior ISA, but they would probably be the cheapest platform if so.) NB I would avoid choosing a UK-only fund as the growth prospects are likely to be lower over the long term due to the make-up of the FTSE 100 (not much tech, lots of banks and cyclicals). UK smaller companies offer better prospects arguably, but you don't want to overcomplicate things with a relatively small amount to invest.

For a house purchase in a year's time (say), then there are lots of decent fixed rate accounts offering around 5-6%.

My son is 18months so he won't need access to the money anytime soon. As he grows up we'll keep a small amount of money in a current account for him so he has some access/ autonomy.

The consensus for my son seems to be a JISA but not just UK based companies.

I was initially planning on buying a property next year but not 100% sure i'll be able to afford to. House prices in my area are still increasing :(

The money is just sitting in my current account (no interest paid). Which is why i feel like the value is just depreciating.

I haven't heard of ETFs before, i'll definitely look into that and Vanguard.

ETF stands for Exchange Traded Fund. It is essentially the same as a standard tracker fund in terms of holdings, but you buy and sell it like a share - i.e. you see what price you are getting in real time, rather than placing an order for a fund purchase. The downside is that it usually costs money to trade an ETF, whereas some platforms offer free dealing for standard funds. Over the long term it won't make much difference (if any), so which you go for may depend on your chosen platform's charging structure. For example, Hargreaves Lansdown will charge 0.45% per annum to hold a standard fund, but fees on ETFs are capped. Given your further clarification of your situation I'd suggest that standard funds are the simplest approach for your son's JISA - just find the cheapest platform to hold funds with a user-friendly website, which may well be Vanguard.

Have you considered switching your current account? Many pay a decent amount of interest on balances up to a certain amount.

I think if you are struggling to save money for your house purchase (which will also benefit your son), then you don't need to save his child benefit for him in a JISA unless you really want to. You could put it towards some of the cost of feeding and clothing him, and that would allow you to save more for your house. Also, the main benefit of a JISA is that the interest is tax-free. But if you don't currently have an ISA of your own, you can get the same benefit by holding your son's money in your own account for him - that way you would be able to access it if you needed it for him at some point in the next 16 and a half years, rather than locking it away.