What can I do with 50k

[Thatsinteresting]

I'm about to inherit approximately £50k. Both DH and I are mid 40s with 3 dc. Our mortgage is around £150k and we overpay around £1000 a month. My pension pot is 40k, DH 250k. We only have around 10k in savings. I know I should see a financial advisor but I don't even know where to start, do they even deal with such small sums? Inheriting feels like an opportunity that we shouldn't waste. DH says we should pay it towards the mortgage but we have a 10 year low rate fix so I think the money could do more elsewhere. Should I look at BTL or is that just ridiculous?

I'd be very grateful if someone could help me understand what I should be thinking about and if it's worth me seeing an advisor?

50k is really a very small amount for investing tbh. Your current £10k in savings seems very risky if that's all the "rainy day" money you have. I personally would want more, for if one of you looses their job or gets long-term sick. Or if you have to pay for some private medical stuff (not unlikely sadly now NHS is so bad). Or just everyday things like unexpectedly needing a new car.

So personally, I would keep it in cash. Just find a good interest rate on a nice, safe, ordinary building society account. You don’t need a financial advisor for that.

Edit to add. I agree putting it toward your mortgage is not the best idea, because I think you need more accessible "rainy day" cash. But its a good second choice. Or make a voluntary contribution to your pension.

Just to add, there are tax implications if you pay a lot into your pension in one year. So take advice if you are considering that option.

I’m not a financial advisor but having such low savings would reallly stress me out. What if you need a new roof / boiler / car.

you need to stop overpaying your mortgage and build up some ISA savings (stocks and shares or cash). Stocks and shares isa will always out perform your mortgage interest rate over a 5 year period so whilst you might think you’ve taken a long term view overpaying you really haven’t.

plus you need to massively build up more pension.

to answer your question on the 50k I would do 20k in a S&S isa now and 20k next tax year. Plus 10k pension. You’ll either get a nice 20 or even 40% bonus on that if you’re a higher level tax payer. Then immediately stop the overpayments and put £1000 a month straight in savings to build up more of a buffer. And transfer another 20K from savings into your ISA as soon as the 2026 tax year opens. And maybe some more into your pension and get the tax break.

look at where you want your pension to be in 29 years time and what impact putting a few £k into it over the next few years.

If it was me, I'd shove it all into Premium Bonds (unless you already have them of course) as £50,000 is the amount you're allowed in there, and you're likely to win a couple of prizes each month, with the chance of winning big, and zero risk of losing the money. Put it there at least until you know what you really want to do with it. It's easy to access too.

Pay off £50k against mortgage and use the monthly amount you save to put into an ISA. Paying off 20-30% will shave a few £k off the long term cost you pay back.

I'd also pop it into Premium Bonds. You then have access to the money should you need it, and very high chances of winning some extra money too. You could use the winnings to build a larger rainy day fund.

How much do you earn?

If you’re paying higher rate tax I would put £10k in high interest account, the rest in an ISA (to prevent paying tax on interest) and move enough each year into my pension to reduce my higher rate tax payments).

What are your long term plans re pension?

£10K is such a small amount of rainy day funds for a family of five when there’s clearly a lot of disposable income every month, hence the £1K overpaying.

I would use both your ISA allowances (£40K), add £5K to your easy access savings, and use the last £5K for a family holiday.

Max out at stocks and shares ISA each year until it is all safely there as savings. Definitely don't do BTL.

Why not put it on the mortgage and instead of paying extra into your mortgage monthly then pay into your pension as it needs to be increased in my opinion

Premium Bonds aren’t always the best option, it depends on how lucky you are. If you have the max in there of £50K then with average luck the prizes per year total £1.8K. You don’t pay tax on that, but then you don’t with the ISA interest, and that interest is guaranteed.

General advice is to have 6 months living expenses in accessible funds to cover redundancy, large bills etc. So premium bonds, cash ISAs etc.

If you go with premium bonds I think it's a good idea to invest below the max (say £45k) so any winnings are re-invested unless you get a big one.
Stocks and shares ISAs have risk - so are considered long term investments and not part of the 6 months accessible investment I mentioned above.

Depending on your salaries and company pension schemes: Are you making the most of those? if you can pay in extra to your pension and avoid tax, you could seriously boost your pension pots now by increasing your salary sacrifice. That could make more money long term than paying off the mortgage.

Came here to say this.

Sidenote. Why on earth are you overpaying your mortgage by £1k a month if you’re on a long-term low rate fix and only have £10k in savings?

£20k into an ISA now , rest into PB’s then withdraw £20k into new ISA year in April. I use the PB’s for my savings each month and then scoop out £20k each ISA year

I'd look at why your pension is so much lower than your husbands and use your inheritance to rectify that.

I would put 10k in an ISA and pay the rest off the mortgage to shorten the term not reduce your payments.

This is excellent advice.

This 100 per cent. I love the excitement of checking after the monthly draw

I would also have a look at chip in addition to premium bonds. They are another quick to access and reasonable interest one. Premium bonds is great if you get a win but for us, I've seen far less than I would have got in interest so far.

I'd do

£30k pension
£10k s&s isa
£10k premium bonds or cash isa (i.e. somewhere you can get the money quickly if you need it urgently).

I wouldn't bother paying anything more on your mortgage (it's small compared to mine and I'm similar age).

The amount you can pay into your pension may depend on your salary so look into the rules for this.

Pay off any non mortgage debts
Have 6-12 months of costs saved as an emergency fund
Put some in your pension...you can put up to the amount of your earnings (net of tax) and get tax relief at source.

I'd also suggest learning more about personal finance. Meaningful money on Facebook and YouTube are really great. You have gone to build a good pot for your retirement. I'm not sure the £1000 into your mortgage is better than an extra £1000 into your pension or 1/2 in pension and 1/2 in ISA invested for the long term in funds (Vanguard of a good low cost platform for easy to use funds - think min 10 yr invested, that's why you need the emergency fund first.

CHIP has good instant access savings.

Your mortgage isn't huge and neither are your mortgage payments, being on a low long-term rate. I would not prioritise that.

I think 10k emergency fund maybe needs bolstering to 15-20k (6-9 months living costs), so would add 10k there.

I have terrible luck, so am not touching PBs.

How are your savings for the kids? As these are not mentioned yet. Are you saving for their uni fees, etc? If not, would put some in a S&S isa or junior s&s isa for their benefit. We are assuming they will need quite a contribution, if living away from home and paying uni fees. Their graduation comes before our retirement and the end to the mortgage term, so with the shortest 'maturing' that needs comparatively more putting in.

Your pension needs strengthening, but I would see if you can strengthen that directly through salary sacrifice by making additional voluntary payments.

I'd put £20k in a stocks and shares ISA, £20k cash savings and £10k into your pension.

I would do £20k S&S ISA, £20k pension, £10k to add to your rainy day fund (which should be in a high interest easy access account).

Unless you already use your savings allowance, I wouldn't consider premium bonds.