How to grow £10,000

[SwordToFlamethrower]

Hi there,

Had a bit of a wind fall recently and I am not very good with money, always lived hand to mouth my whole life.

What I'd love to do is go on the holiday of a lifetime, such as Italy or South America or India or something (nature lover!) but the sensible side of me is saying WOAH, you need to save it or invest it.

So what do you suggest for me? I have no big purchases to consider. I have no mortgage as I'm in a council house. I'll only ever have a state pension so nothing to pay into anyway.

Thank you!

Could you invest most and treat yourself to an experience of a lifetime with the other bit?
Speak to a financial advisor on how to get the best returns.
You'll need a lot to "grow £10K" like, a LOT.

I've looked at trying to grow a similar amount in the past myself but the rates are that low its not really worth it.

I decided to stick my money in premium bonds instead for now. I've won around £1200 in the last 12 months which equates to £100 a month so a nice amount but not really life changing or gauranteed.

Maybe stick a couple of grand in a decent savings account or premium bonds as a bit of a cushion should you need a bit extra one month and enjoy the rest doing what you enjoy :-)

You don't need 10k to go on holiday to lovely places. Just get the cheapest flight and back pack around. Your money will go further, you'll see more and have a great adventure. I bet you could do all of South America for 2k.

Definitely go on an amazing holiday. Definitely make sure you have a few grand to put away for future emergencies. You don't really have enough of a sum to grow it much so i wouldn't worry too much about that tbh. I would make the most of it and do some amazing things.

You don't need a financial adviser - it would cost a lot of money, and this isn't enough money to need one.

It is a decent chunk of money though, so it would stand you in good stead to save it. Check the Money Saving Expert website for recommended savings accounts. Chase offers 4.5% interest at the moment.

Do you work at the moment? I wondered whether tou might be able to contribute to a workplace pension for the future.

Erm, I bet you couldn't!

£10,000 in a savings account with 4.5% interest, will yield £450 interest in a year.

It's not insignificant.

Just a friendly reminder you'll need to declare it and it'll effect your UC (if you claim, ignore me if not!) as my sister got stung with this.

I'd definitely treat yourself to at least 1 holiday. It probably won't be enough to keep you in luxury for your whole life, but what I'd do is stick it in Premium Bonds or whatever is the highest interest rate you can get, bank the interest or winnings and you'd gain around 2k every 2/3 years which you could ALWAYS use for a holiday, and therefore have a consistent way of funding fun trips without effecting your capital.

Well done for deciding to make the most of this money. £10k invested over time can make a huge difference to you. I would suggest that you first look at compound interest calculator. That will motivate you to save this money rather than spending it. Then look at putting the money into a stocks and shares ISA. Look at Martin Lewis's Money Saving expert for advice. Also look at Dave Ramsey YouTube videos. They are American but very encouraging.

If you want growth and do not need to access it in the next 5-10 years, you could drip feed it to stock and shares ISA. If you are not planning this, then please ignore the rest of my post.

Vanguard is cheap. You could choose this one: https://www.vanguardinvestor.co.uk/investments/vanguard-ftse-global-all-cap-index-fund-gbp-acc/overview

Cheap and decent growth. What I mean with drip feed is to allocate for instance 500/month instead of putting £10k all at once. I did this mistake once so I know for a fact that drip feed is safer (unless your timing is perfect). In the meantime, while drip feeding, you could put the money in an easy access saving account.

High interest savings account.

4% over 10 years = £14,908 in 20 years £22,225

S&S ISA, agree with the Vanguard suggestion.

Watch Meaningful Money guy on You Tube if you want to learn how to invest.

Forget 4% interest rate cash accounts if you want decent growth.

@yoshiblue, I don't think riskier investments would be appropriate for the OP at all.

Stocks and shares isa with vanguard or Hargreaves lansdown.

pick an index tracker (probably not uk and Europe right now but could do. My USA one is doing best).

biggest amount I made was 52% where I had bought uk stock during Covid. current U.K. account making 8% and my us 26%

Index trackers are among the least risky.

I appreciate that @Nc546888, but at the same time, a lot of people aren't ready to jump into platforms and funds etc., and mighty prefer guaranteed interest from a savings account instead.

@BloodyVarifocals where did I tell her to invest in a risky fund? Vanguard offer levels of risk, she can easily pick low or medium if she wants! 🤷‍♀️

@yoshiblue, I said riskier investments which stocks and shares are relative to a savings account with guaranteed interest.

OP, the personal finance flowchart is really helpful, and will help you to assess exactly where you are, and what you could choose to focus on:

ukpersonal.finance/flowchart/

Instant access cash ISA in the short term, interest will be tax free and you will be able to withdraw for your holidays or other treats should you wish.

As @Marmut stated stocks and shares products are not suitable unless you have an emergency fund and plan to leave the money for at least 5 years.

I don’t know. From what I am gathering OP has never had this lump before, she’s survived well enough.

This might be the only chance she gets to start a nest egg. I would take the gamble of decent returns rather than it wittling away in a 4% saver that’s losing value to inflation.

At the moment it’s not a life changing sum. You could blow that on a great year if you’re not careful. Or 2-3 years of still being careful but enjoying a few luxuries here and there. But 10k lump has the potential to be start of actual wealth if OP does her research properly.

Let’s let OP decide whether she wants to invest. How unempowering to decide for her that it’s not in her best interest to.

I'm definitely seeing this differently to others

The OP is planning to retire on the state pension alone, but according to the retirement living standards, this won't actually be enough for a minimum living standard:

www.retirementlivingstandards.org.uk

If I was the OP, I think I'd be saving this as an emergency fund, rather than investing it.

But the OP asked 😄

A financial advisor is not worth it for 10k, it would cost a disproportionate amount

Yes and we’re all offering advice :)