How would you invest £65,000 for an immediate return?

[HelloWorldLovelyDay]

Hello wise mumsnetters,
I've recently come in to a £65,000 windfall. I'm early 40s with no pension, no savings and will be welcoming a a child into my life next year (with no maternity leave as I work in shorter-term contract roles, and no partner or family support). Yes I realise none of these are ideal circumstances.

My question is, how would you invest this money in a way that is safe and enables a return on my investment that could fund maternity leave and childcare, while not running down this amount? I'm hoping this is possible.

In the past I've always loved the idea of investing in property. I love DIY and interior design and have made improvements to the flat I live in with little to no money. But I realise this that £65,000 won't go far and that buy to let is not looking like the great investment option as it was in years gone by (I think in theory I could use this money to get a buy to let mortgage for a property of around £260,000).

I also love the idea of setting up some sort of business or buying some land for a small farm or glamping business (again not super realistic for £65,000). Or some other type of business like learning carpentry and setting up a tiny house business (difficult as I'd need to rent a space for this).

I currently work in tech but have only just started earning decent money in recent years. And after multiple IVF rounds and work on my flat, I've only just broken even, which is why I don't have savings. Staying in my current career is a safe bet on the one hand but I also long for the chance of be my own boss or have a secondary income to fall back on. And I don't want to waste the chance to invest the £65,000 wisely in a way that might be able to change my life for the better.

I'd welcome any advice.

Take professional advice. Very few people here are qualified to give you well informed information.

It's not enough to give you any substantial income from interest, dividends, etc and certainly not immediately.

Using it for a BTL property gives you more expenses than income.

Tbh I'd use it to secure my future a bit. ISA, pension fund, that sort of thing.

My question is, how would you invest this money in a way that is safe and enables a return on my investment that could fund maternity leave and childcare, while not running down this amount? I'm hoping this is possible
Impossible! The amount isn't large enough.

ISA, 20k this year, 20K next financial year. Balance in the highest fixed rate you can get, depending on when you are going to need it. Your capital is reasonably secure and accessible. Obviously you need to top up your pension but of course you won't be able to access. Well this is what I would do, but I'm no expert.

Not big enough I’m afraid. Best return is usually putting into a pension but that’s no help to you if you may potentially need the money in mat leave.

I’d find a good easy access ISA or savings accounts. I’m getting 5.12% at the moment on one Not sure what the max amount you can put in is but that would get you over £250 a month in interest as an example.

Or take a gamble and put it in premium bonds, they’re easy to withdraw from.

Thanks for getting back to me. Aside from property I'm completely new to other types of investing, so I'll look into premium bonds and ISAs.

There are some parts of the UK where you can still buy a house with potential for a small student HMO for between £100,000 and £150,000.

But I suppose my question on this is, I assume like @IncompleteSenten mentioned that property investment brings a lot of expenses, like upcoming requirements for energy efficiency upgrades etc. Are there also upcoming tax changes or other punitive measures to make this difficult for the average person to afford? I know there are recent changes that caused a lot of buy to let landlords to sell, like no tax breaks on mortgage payments etc. And I assume house prices are sliding down rather than up too. (Although are they likely to still go up in the longer term?)

Would it be completely mad to think about using the £65,000 as a deposit to buy a run down house in the north of England to renovate into a homely student house? Or would that be a terrible investment decision with the variety of upcoming punitive measures against buy to let investors?

You need to be realistic.

As others have said, £65k invested isn't enough to give you a full time income. And welcoming your first new baby is NOT the time to be setting up a new business or trying to learn a trade!

Get £40k in the highest interest isa you can and leave it there, not touching the interest. £20k this year, £20k next year.

Use the rest towards giving you some funded mat leave to enjoy your new baby. Then go back to work at what you know, after mat leave, and with £40k + securely in the bank.

It's not a bad position to be in. And when you're out of the baby haze and sleepless nights after a couple of years you can start thinking longer term about how you can use the £40k.

@HelloWorldLovelyDay i have two rentals and am selling once my fixed mortgage term is up because it’s too much hassle and expense to be worth it. I absolutely would not be doing up a property pregnant and or with a newborn. You’ve either got to find tradesman which if they are good will be expensive and have waiting lists or you potentially get done over by a rubbish one. Or you do the work yourself which we did but way before children. You’ll have to pay high management fees or sort it yourself which is what we do but again, not ideal when you have a newborn and need to find someone to fix the boiler at short notice. You’ll also need to submit yearly tax returns, I do ours as im an accountant but this is another expense and admin.

Can you afford the mortgage repayments if you don’t find tenants straight away? It cost us about a months rent just to find tenants.

Basically ours are as easy as possible and yet we still can’t wait to get rid.

I agree with others. Setting up a business or getting into BTL when you are expecting a baby is likely to be a stressful experience that costs you more than you make, at least initially. Tax-wise, you pay extra stamp duty for BTL properties, and the general direction of travel is that tax treatment of landlords isn't going to improve. Governments don't really like private landlords, it seems.

As you have no work pension or savings, I would be prioritising a SIPP or an ISA as soon as you can, alongside an emergency fund to cover your income needs, should your work contracts dry up. Put the money in savings accounts for now, while you do your research and adjust to parenthood.

Drip-feeding into stocks and shares over the long term may be the best option. (Cash is looking good right now, but over the long term it is almost certain to underperform other asset classes.) You could open the SIPP / ISA now and fund via regular contributions from income, or the interest from the savings, rather than going all in at once.

If you want to know more about investing, I recommend the Monevator site:

https://monevator.com/

I'm afraid you may have to readjust your expectations. 65k is a smallish sum these days when it comes to investment. It wouldn't be worth seeking professional advice on a sum that small.

You would be mad to buy a BTL if you've never done it before, you don't have the skills, knowledge, or ready-made trade connections, you're not buying for cash outright, the outlook has changed for landlords in terms of what profit can be made, and......YOU'RE ABOUT TO TURN YOUR LIFE UPSIDE DOWN WITH A NEW BABY! (or child, it's not quite clear if you or pregnant or are adopting). Being a new mum is really not the time to be starting a new business, especially if you're a single parent. You really need to focus on giving that child a settled start and peaceful start in life.

You're not going to make enough money on 65k to fund maternity leave, pay for childcare for a few years AND still have 65k left at the end of it.

Definitely stay away from stocks and shares, the market is too volatile at the moment. Long-term, yes, it may beat inflation. But your priority, you say, is preserving as much of the capital as you can, and making a bit of interest. So, depending on your tax position, I'd just go for the highest rate of interest in a savings account or cash isa. Check very closely the terms and conditions eg when you need access to the interest, how many withdrawals you can make etc etc.

I wouldn't bother with premium bonds either. It's just like gambling really. Now and again NS&I do some good guaranteed income bond rates so keep an eye out for them.

I am getting 5.26% interest in a fixed rate account (1yr) at my bank. This pays out over £200 a month straight into an elected account account. Obviously it will be taxed.
They are also offering fixed time 1/2yrs ISA (cash) at over 6% for the term.
It’s worth looking around.
The last thing I would do is “invest it “ at the moment with the threat of a major recession.
When things settle down perhaps consider a draw down pension with the lump sum. You can then allow it to grow and start drawing it once you are over 57. You will be taxed on the monthly payment though but it will boost your state pension.

NSI (National Savings and Investments) currently have a three year green bond offering 5.7%. It’s not exciting but if you think you could tie up at least some of your money for a couple of years it is secure and at present seems a fair return.

if you put £40000 of the money there you would then have some to tide you over until you are back to work after your maternity leave. The only issue is not being able to dip into the fund until the end of the term.

It’s a personal thing but I would still invest in property, maybe get something for up to 200k, in the right area and at the right price and with permission to do holiday lets.

Would it be completely mad to think about using the £65,000 as a deposit to buy a run down house in the north of England to renovate into a homely student house?

Mad.
DH inherited a small property (shop with flat above). It wasn't terribly run down but the tenant who'd had a 'full maintaining lease' hadn't fully maintained it.

By the time DH had sorted out refurbishment, getting the fire precautions etc up to scratch and the woodworm and a bit of wet rot treated, I think it's cost him nearly as much as you've got to spend.

In a high interest savings account of 5.1% you would get £3,315 interest p.a. However £2,315 would be taxable at your usual rate, and you get a £1k allowance on interest earned.

However if you are taking maternity leave it may be that you do not earn up to your personal allowance this or next tax year, so may not be taxed on it. In as ISA the interest is not taxed at all, hence the suggestion to put it into an ISA.

Bear in mind that as savings it will take you above any threshold for any means tested benefits you might be entitled to, in which case putting it into a pension could be better.

Premium Bond winnings are not taxed… you could always be the lucky one, or trundle along winning £50 here and £100 there (average about 4%) … it’s a choice but you are basically gambling with the guaranteed interest of a fixed rate savings or ISA.

Life as a single parent with a baby is surely not the time to be setting up a new (risky) business etc.

You have just started earning good money. You will need a reliable income to see you through your baby’s childhood. In your shoes I would concentrate on building income from your current occupation and where possible build savings, and without fail pay into a pension.

Using £25k to support you through maternity leave and £40k into a pension could be a good shout.

Remembering that holiday lets will need thorough cleaning after each let, constant maintenance for minor and major repairs, someone to deal with emergencies at the drop of a hat, plus insurance, sorting out bookings, dealing with cancellations, advertising and coping with the off season and no income.

Don't try and set up as a landlord or in business when you are about to have a baby.

Get on Money Saving Expert and look for the best savings rates and split it between one with fairly quick access and another where it is locked in for longer, maybe a third that is slightly higher risk for higher return if you want to.

Accept that you will probably have to erode the capital for your maternity leave, but you're in a better position than you were and won't have to take on debt.

I'm getting 6.25% on my account with £52k in it. It's a pretty good return for no risk. The premium bonds are an option, no interest but you should win with that much invested

students want en suite bathrooms in high rise flats
the day of the student. house is quickly vanishing

This is what I would advise as well. The hidden costs of letting a property are really quite high especially if you don’t live in the area and can’t do any repair work yourself. With students, you’re likely to need to find new tenant every year which adds to the costs and the wear and tear on the house will be high. We used to rent out my fathers house and when the tenant left, it cost us over £3000 to get the damage fixed to get it up to the standard of where it was, the deposit scheme adjudicated in favour of the tenant ( apparently burning carpets, smashing doors etc was fair wear and tear) and we only got £500 of the deposit towards our costs.

If you can use the money to fund you through maternity leave and still end up with £40,000 in the bank when you go back to work, you will be able to add to your savings and then look at longer term investments.

Whatever you decide, I wish you luck in the future, you must be very excited to be welcoming a baby into your life.

I'm early 40s with no pension, no savings and will be welcoming a a child into my life next year (with no maternity leave as I work in shorter-term contract roles, and no partner or family support).

Presumably you already had financial plans in place to cover maternity and childcare so stick with those.

Invest the recent windfall in an ISA for your future.

Imagine if you did but a property, you’ve then put all your money into it, how are you going to live after the baby is born? And what if the boiler then breaks and you need to replace it? You’d be absolutely mad to do it now.

As others have said, put it into ISAs, use some to enjoy your baby, then in a couple of years time, see if you still want to do a BTL.

I haven't read the full thread but it sounds like you might still be entitled to maternity allowance and child benefit. Second anyone else that says premium bonds plus you could put the additional £15,000 over the £50k limit into the child's name.