Short term investment

[LMW1990]

I have recently come into some money. It's not by any stretch a lot but it's more than I've ever had with no purpose for it! I've paid off a few bits and pieces and have nice chunk left over.

I'd like to do something with it where I can get it back as and when I need it (so no long term investments) and there's no fees to get it back.

I'm not adverse to learning something new, such as stocks, so long as it was low risk.

I have about 4K.

What sort of things have people successfully done to earn a little more with this sort of amount?

Thank you

The problem with stocks is that they can go down as well as up.

Imagine you'd put your £4k in the stock market at the beginning of this year and then needed your £4k back in late March after the stock market crashed due to the pandemic being declared. At that point your £4k would have been worth about £2.5-3k.

There's also bonds, but that's lending money for companies and companies can go bust, which might be an issue over the next year or two.

For that amount, you probably need to keep it all in cash, especially if its your only savings as you'll probably end up using it to repair or replace a car, replace white goods, home improvements or cover loss of income so any of those things could happen at any time.

So unfortunately you're unlikely to earn any interest in the next few years, but you'll still have a bit of spare money if you need it.

The best paying accounts are under 1% so you're looking at around £30 a year in interest. You might decide to put some of in a fixed rate account for slightly more, but then you won't be able to get at it in the short term.

You might decide to gamble that £30 by buying premium bonds. Statistically you're quite likely to win nothing, but you have a good chance of winning a prize of £25 each year, so you're about in the same place as you would with a standard savings account. Or if you win more, you're better off.

As Barbara said shares can go down as well as up but if you want to use some of your money to try and learn about shares try the Freetrade app. I've started using it this year and it's great for small investors and very easy to use. I've never bought shares before. Here's a referral link freetrade.io/freeshare/?code=KHFFJNKN39&sender=noTHc1yJ

£4k is more like emergency fund money rather than investing money.
If you already have an emergency fund of 6 months of expenses, then you could look at investing it but if not I would keep it liquid... given interest rates are so low maybe put in Premium Bonds and gamble the interest... least you always get your stake back.

You mentioned paying off debt, so has that all gone completely? If not, then putting towards that would be a good idea. Do you have a mortgage. Long term if you do not need the money liquid, then paying it off your mortgage might be an investment, if house prices go up. It is not liquid, property takes time to sell, so consider your different pots of money... some you need instant access, some you need quick access, some can be tied up much longer.
For any investment you need to be looking 5, 10 years maybe longer. So can you tie it up that long? If so then you could look at a low cost stocks & shares ISA with a low cost multi asset fund inside that tax wrapper.