What to do with £3k...

[m4rky1985]

Hello,

I've been looking through some threads on here but most people seem to have a much larger sum of money to invest than what I have to play with...

I've received an unexpected payment through my works pension scheme as I overpaid on a different scheme for a period of time. I've opted to do something with the money now but what to do with it I'm not entirely sure...

I'm already sorted with a half decent pension through work.
I make overpayments on my mortgage
I've got 2 x small easy access savings accounts with good interest rates
I've got just over £9k in my premium bonds account.

I've got a couple of things on 0% interest credit so not really sure its worth paying them off being 0% but would free up around £350 a month if I cleared them off.

Ideally I'd like to stick the money somewhere (happy with a bit of risk) but not sure if its really enough to bother putting in a fixed bond?? I don't really want to take money out of my existing savings/PB to top it up as I see this purely as a bonus and want to see what I can do with it - I did contemplate just topping up my PB to increase my chances of winning but I've only had one win since May of £100 so it could just be sat there doing nothing...

Any thoughts / tips / ideas greatly appreciated.

Many thanks

Find a low cost index tracker fund and stick it in there

Check where you are according to this, then decide -

ukpersonal.finance/flowchart/

It's really good.

Although I'm a bit unsure what happened - can't you just leave it in your pension? It's a shame to lose the tex benefit.

Are you a member of a DB or a DC scheme?

I would pay off your debt even if it's 0% interest at the moment.

/Why has the money not stayed within the pension? Money taken out of pension before retirement age can incur a large penalty, so I am a bit confused as to why they paid out the money even if it went in by mistake.

As you have debt, I would be putting it towards that, even with it being 0% interest debt.

I paid off a car on finance, at 0% interest. 9 months later I got made redundant. If I had not paid the debt off, I would have needed to find the money every month to pay the debt. Whilst you have an income the 0% debt may sound like a good idea, but what if you lose your job?

You have some emergency fund - the easy access accounts and the premium bonds. So you do have a buffer, but if your income went, would that buffer be enough to cover many months of job hunting plus all your costs of living including the debt repayment?

If you decide not to repay the debt, then put the money in the easy access accounts so you get interest on it and have it accessible so you can use it to repay the debt if someone unexpected happens.

Do look at the flowchart that LizzyV has posted... good guide for what to do with money.

Thanks for all the replies and advice.

The pension in question is a Police pension. I'm not 100% sure on it all myself to be honest...

When I joined I was put on the 2006 pension scheme...they then changed us to the 2015 scheme which meant paying slightly more per month. A challenge was then put in place as the 2006 scheme was a better pension and was won.

People who were originally on the 2006 scheme were allowed to go back on that scheme and so the extra that was paid over a couple of years in the 2015 pension scheme has been offered as a refund. We've been told we can have the money now (end of this month) or leave it in our pension pot and it'll just be a slight extra in the lump sum come retirement. The pension people said it wouldn't accumulate any interest but guessing by the time I retire it would be worth more than £3k?? However I've opted to take the money now so hopefully I can somehow make it work for me a little over the next few years although I appreciate its only a relatively small amount.

I'm hoping my jobs fairly safe...the only way I'd lose my job (Police officer) is if I did something stupid myself to be sacked which fingers crossed won't happen!!

If paying off the debt will give you an extra £350 a month, you can then invest that £350 (maybe in an ISA, as I don't see one in your list). You won't miss it, because up to now you've not had it to spend. In 9 months you'll have more than the original £3,000 and it will keep rising.

Pay off the debt and then send £300 a month to a regular saver (I get 7% interest with first direct!) for 12 months.

Spend the £50 a month on something thing fun.

stocks and shares isa