Advice please! What would you do with £10,000 in my situation?

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I have just inherited some money. We have used some of it to buy a car, sort out the house and have a little holiday. All things the person would have been pleased about.
We have £10K left over and want to invest it somehow.
We have NO experience in this as have never had any savings before.
We both work full time now but I was p/t self employed for 12 years (health reasons) and didn't pay into any pension.
I have a small pension from various jobs over the years. We have mortgage that should be paid off in about 6 years and we have a lowish 5 year deal left on it (we are overpaying loads on it) and no other debts.
I'm 48. DH is 50 we earn about 60K a year between us and I currently pay into a pension. DH and has a good pension. Money is always a bit tight but we do OK, we have 3 kids all about to go to uni over the next 5 years.
We are happy to do quite a long term investment. Any financial wizards out there to give us any advice?

Also can you add to a pension in a lump sum or is that a stupid idea?

A simple answer is premium bonds, no risk, easy access to the money and chance of winning.

I think if it is your only savings, then Premium Bonds are perfect as they are safe, accessible and return as much as any no risk savings

Premium bonds are a good idea so you have access to the funds for when the kids go to Uni - £3k each.

Do you have an emergency fund? If not, I’d stick it in Premium Bonds to give you a bit of a buffer in case things go wrong.

Otherwise, lumping it into your pension isn’t a bad shout. If you have a DB pension then ask about AVCs, otherwise for a DC pension ask the pension provider how you can make an extra payment and make sure you understand how to get the 20% tax efficiency (most should do this automatically. If you’re a higher rate tax payer you’ll need to get the additional rate added via a self assessment to HMRC). This means your £10K could be actually worth £12K in your pension.

Note for a pension you’re limited to £40K in total contributions a year (between you & employer) or your total salary, whichever is lower.

A S&S ISA is another option if you don’t want to lock it away till pension age; you don’t get any tax efficiency on the way in so it’s less effective but you at least don’t get taxed as income on the way out.

Or a LISA could be another option if you’re eligible.

The only other thing I’d do is check your state pension forecasts and make sure you’re on track to get full state pension; otherwise you could use some of that money to buy additional NI credits.

Please put it towards a pension. So many on here think you have to be making massive payments into a pension scheme. You really don't. Even a small monthly contribution can make a difference.

You could ask your pension provider what is the earliest age that you could access your pension pot. If the age is 65+, you may not want to pay into it ?

Premium bonds are easy access

ISAs are tax free

Generally, the advice is to pay off debt first, can you pay extra into your mortgage ? Mortgage rates are due to increase in the future

Have some for "emergency" money

Do you have instantly accessible savings for unexpected loss of income? 3 to 6 months is the recommendation if this is possible - so £10k is a good amount for this.

If not, you should keep it for that, in the best interest paying account, or premium bonds if you're happy to gamble the interest - the payout should be similar unless you're unlucky.

You could then invest out of income by putting money into a stocks and shares ISA or pension each month. Investments aren't suitable as an emergency fund because if you need to access them when the market is down, you could lose money. Eg your £10k should grow better than cash but there could be ups and downs, and it could be worth £8k in a few months time so you don't want to have to touch it then.

Just seen that you have 3 DC who are likely to go to university. Have you saved for this? With a £60k household income, their student loan will be reduced and you will be expected to contribute towards their living costs.

Because you say money is a bit tight I would be tempted to keep at least some of it as an emergency fund if you don’t have one (PB or instant access savings account).
I would also review exactly where you’re at with your pension, and if possible increase your monthly contributions because the tax relief makes it worthwhile. I’m thinking small regular contributions, while the £10k is still available just in case, may be less worrying than investing the lump sum in one go in your case.

Thank you so much good advice.
I will be going through it all now.
@BarbaraofSeville slightly annoyingly are in compass only come up to £60k after years and years of it being around the £35k mark. Obviously this is a good thing but it has scuppered us for uni. We have very limited savings for this (about £5k in total and that was tough to do)

However that said we should be able to pay them some money as our income should be increased for the longer term and our outgoings have remained lowish.

Money Saving Expert has a good calculator I think for showing you what the expected “parental contribution” should be for your kids at Uni - essentially it takes the delta between the highest available loan and the amount your child would be eligible for based on your household income; and that’s what you “should” be giving them.

Have a look at what you can afford in your monthly budget to give, and what you need to save up for.

I’d stick £5000 in a rainy day Barclays saver each for 5% interest. You need to check how you qualify for what account.

Then premium bonds for rest.

You could go through the UK Personal Finance flowchart to help determine what to do with it.

flowchart.ukpersonal.finance/

Mathematically I would say put it in pension.
However you may not have an emergency fund, so I would do that first. You may have debts other than mortgage, such as BNPL, credit card, so I would pay those off first.

I would save it for your dc’s university funding. We are just into the bracket where our DC get the minimum loan, so to top it up so they get the equivalent of the full loan we need £5000 per year per child. Start saving now so it’s not such a huge shock 😀

Isa all the way for the whole amount.

Top up your pension by say £2k, fixed rate bonds for the rest, maturing in say 1,2 & 5 years respectively.

You need some easy access savings so put 2K in PB’s. The other 8K I’d stash in a fixed term ISA.

Not really sure why everyone is saying premium bonds? the odds of winning a prize of £25 is around 24k to 1. Odds of winning anything higher a lot less and the odds of winning 100k or above well you are more likely to be struck by lightning!

If you can afford to tie the money up with no access of 12 months then NS&I do a growth bond with a return of 6%