£10k - what to do with it?

[Decisionsarehard]

How would you invest £10k if ...

• you had 6 months worth of 'emergency fund' and added a marginal amount to each month
• your young kids had healthy junior isa investment funds, pensions/sipps and shorter term savings accounts, which are paid into monthly
• both had workplace pension and a good percentage into
• you were putting 'mortgage overpayments' into an account offering double the return than the interest on the mortgage would be
• you already gave some to charity, and have monthly charitable direct debits set up
• you had another £10k to go on a nice holiday
• no home improvements or shopping is required

Sipps? Isa? Stocks and shares? Premium bonds? I'm trying to educate myself and getting a bit discombobulated by the options.

The £10k is unexpected and really nice to have, want to make sure it's used wisely.

Would have thought ISA will get you the best ROI if you're a normal rate taxpayer

Also congrats on the surprise money 😁

I would invest it in my house, namely a garden office.

I'd speak to a financial adviser.

Thanks all! Will look into isas. And thanks for the congratulations @FrodoBiggins !

Someone on another thread suggested a financial advisor wasn't worth it for such a fee, though that was also a consideration I'd had.

Still have a bit of time to think it over.

ISA for sure.

I would say premium bonds. It is nice thinking you could be a millionaire... It does depend on how lucky you are

I know genuinely nothing about premium bonds! It's a phrase I'd never even registered until finding the Investments forum to ask this question. Research required!!

Millionaire feels like someone else's reality for sure 😂

Nationwide have just bought out a 5% fixed interest rate account for 18 months, max of £10k

Might be worth putting it in there for 18 months to make £750 on it?

If you might need it in the next few years then cash ISA as the PP said. If you will definitely not need it for 5 years plus, then stocks and shares ISA, invested in something like a global ETF. This latter is not a risk free option, but should, over a long enough period, do much better than a cash ISA.

If you're trying to educate yourself I thoroughly recommend a book called "the psychology of money". A bit American, but the logic and sentiment is spot on and it's very easy to read.

And no, I'm sorry to say that a decent IFA can't help you invest £10k. The cost of doing the compliance work to take on a client is more than that (thanks to the misguided direction of financial regulation we have in this country). There are financial advisers who will help you, but they'll be tied to one company's products and under considerable pressure to get you to buy something which gives them high commission or fees. That's the only way the percentages will stack up on £10k.

Stocks and shares isa for a decent return long term (5+ years) or premium bonds for the fun of occasional monthly wins and maybe a big one!

And I just have! But it's only available to people who were NW members last month. You also have to be happy that you cannot access it for 18 months.

Buy the book The Permanent Portfolio by Harry Browne. And after reading that start investigating portfoliocharts.com. The strategies can be used for both pensions and investments.

I was going to add SIPPs for the children, but you already have those.That's incredibly good of you. (Parents can save £2880 per year per child and HMRC will top that up with another £720 free). That book (^) will help you understand how to invest for them. Avoid ESG funds (unless you're happy to forgo the best returns) as they exclude many of the best performing companies. Minimise costs - fees and charges on the funds you select and the platforms you use. That will supercharge your returns.

I'd go for a cash ISA, easy access if you think you may wish to withdraw in the next 12 months. Premium bonds have a better return if you have the full 50k so an ISA is more likely to pay a better return.

A tracker ETF in an ISA. Wide variety of tracker ETF. Warren Buffet would recommend an S&P500 tracker but he is American. It's still a valid investment for someone in UK but you could choose UK, Europe, USA or World.

Just for balance 😀

ESG funds don’t ‘miss out on the best companies’, but they are designed to include other metrics of company performance like environmental harm, impact of their goods and services on society, etc.

This sometimes mean that the biggest companies don’t make the cut - maybe because of intensive mining for parts, or production of chemicals, etc. Some people consider this to be a desirable trade off, others don’t. Most, I’d expect, have a large broad exposure plus a small ESG component.

For £10k would looking at broad trackers (within Stocks Shares ISA or low cost investor account, such as Moneybox). Maybe some global/uk/eu/us, and maybe a little gold etf too.

Just to note: in a stocks shares ISA you can make and periodically amend some selections, so you can pick a combo of ETFs vs all in one. I find Moneybox the most straightforward platform to set up, pick and see how your asset is doing. You can start with their given suggestions (Cautious, Balanced, Adventurous) or pick your own. You can have both stocks/cash within your annual ISA allowance too.

I will say in the UK we seem v scared of market down movements and monitor too frequently. These should, as PP have said, be left for a number of years as the trend is the stock market* rises, far outstripping cash rates which usually don’t match up to inflation. This includes downturns and subsequent recoveries.

’Stock market’ meaning an index/portfolio of index/stocks, most commonly through ETFs. Not a single stock (like all your money in Tesco).

If you're going to quote then please quote accurately (cut and paste can help you).

"as they exclude many of the best performing companies" (not all)

The following article describes the risks of ESG funds. As we've discussed, select ESG funds for the right reasons - not because they'll deliver the best returns.

https://www.yodelar.com/insights/ethical-fund-performance-under-the-spotlight

£750 after 18 months feels hardly worth it 🫤

My ESG funds have outperformed the rest over the last 3 years. About 30 yes ago I took out an ethical investment product which has also done well.

Which funds?

Sorry just seen this. Years ago it was Aberdeen standard, can’t remember the name of the fund . My Vanguard ESG fund is also doing well and certainly outperforming the Lifestyle 40 fund.