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!

Second the recommendation for the financial flow chart and Meaningful Money. There's a podcast, and last year they discussed this in detail that's linked on the website.

Broadly I would look to use some of it for a holiday eg £1-2k, keep some as an emergency fund eg for next washing machine, just put it in the highest interest paying instant access account.

Do you run a car? If so, some of it would be usefully set aside for when you need to replace your car and allow you to do this without taking out a loan/finance.

But it's almost always worth saving or investing something even if the amount is relatively small as it can build up to significant amounts over time. So perhaps look to earmark most of it for this, especially if you don't need a car.

However it's worth considering how having savings would affect any financial help you'll be entitled to when you reach state pension age as you might be entitled to help with the cost of rent but this might be reduced if you have significant savings.

Look on gov.uk for info on the rules and links to benefit calculators to compare scenarios, although obviously rules can change over time.

Have you looked at help to save? https://www.gov.uk/get-help-savings-low-income

How old are you?
Do you work?
Are you on means tested benefits?

(not bring gratuitously nosey, the answers affect what my advice would be)

I'm 47, married. I'm disabled and my husband is my carer. I paid into a workplace pension in my early 20s but it wasn't really something I continued to save into. It always felt like a mountain to climb in terms of understanding. While I was in work, I was always in debt. Now I don't work, I live within my means. (Stability of home life I think!)

It's frightening that because I'm unable to work, I'm doomed to be below the poverty line when I'm in retirement age.

Not allowed to save more than £6k due to being on benefits is securing my Doom in later life.

Thanks for your advice all, I'd love to be able to invest and save for my retirement, but it seems, I'm not allowed to :/

I thought pensions were exempt from the UC savings threshold?

In which case that seems like the best approach by far, given what you've just said about wanting to invest and save for retirement.

It is a Catch 22 for people on disability benefits.

However, as far as I know, money paid into your pension does not count as savings - and you get 20% added on top by the Gvt.

So it might be worth tracking down your old workplace pension (you should do that anyway - it's your money) , seeing how much it is worth, and whether it is worth adding to.

However, at the moment, people on pension credit are better off than people on a basic state pension, so if your workplace pension would only give you a couple ££ a week, you would probably be best keeping your pension income at Pension Credit level.

Not sure there is a way around your windfall pushing your savings above benefits level.

Maybe we know more about your circumstances others will have an idea.

Please visit your bank’s ’avoiding investment scams’ page on their website. There’s a lot of scams out there and no-one thinks it will happen to them, until they lose all of their money. And please don’t flush it down the toilet on cryptocurrency. If an offer sounds too good to be true, with high returns in a short period of time, that’s because it is.

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It's not that you're "not allowed" to have over 6k in savings, it's that if you do, then you obviously forfeit some benefits. You can't have people with massive savings accounts also claiming benefits - that would not be fair.

Please don't waste this money. You will need it in the future. I would stick it straight into the bank and choose one with the best interest rate. I then wouldn't touch it.

You know you are bad with money and you are thinking of wasting this huge lump sum on a holiday when you have no provision for your future

No idea why my post above has been removed. All I did was echo the pp in ‘no Crypto’ and to avoid anything promoted as any form of get rich quick scheme.

index trackers are cheap, they are not the least risky, what makes you think that?

I'm not allowed to live above the poverty line in the future then I guess.

I would put it in a pension as you only state one

So start one up if need be

Pensions don't count under uc savings

It’s boring, but as you’re on benefits, the best thing to do is start a SIPP and stick it all in there.

You are totally misunderstanding - you are allowed to have as much money as you like. You just can't claim benefits if you've got lots in savings. I don't know how else to explain it to you.

Look into self invested pension, with a low fee paying platform. Vanguard for example. Choose ETF Funds.

Open a cash and s&s isa with a low fee platform.

Keep some for savings..

Spend some on a holiday.

There is a lot of really good information/books about investing out there.

Compounding interest, dividends from funds in an isa wrapper means it's all tax free. Over time you'd be surprised how much even a small amounts can build up over time!

I can't save for my old age so im not in poverty, as someone kindly explained earlier, while keeping the benefits I'm entitled to now. I don't know how else to explain this to you.

Unless I'm misunderstanding of course. I don't want money for now, I want it for when I'm not on UC anymore and only getting a state pension to live on.

As a few people on this thread have explained, pension savings are exempt from the UC savings threshold. The government want you to save for retirement!

This sounds like your only safety net, so I would save it. Money Saving Expert lists the best saving accounts at any one time. I usually put my money in fixed term bonds. if I can afford to put it away for 6months to two years. In your situation, I would keep 1k or 2k in an instant access and put the rest in a fixed term bond. Look at Raisin bank too, they offer a whole range of high interest accounts from a variety of banks.

The answer seems to be to put it in a pension. Nest is incredibly easy to set up.

Compounding interest, dividends from funds in an ISA wrapper means it's all tax free
You get up to £1000 interest tax free anyway. ISAs tend to pay lower interest rates now than standard savings accounts.

These are the rules for savings. I personally feel its disgraceful that people are allowed so little in savings before it affects their benefits. It just keeps people in really financially precarious situations.

If your savings are:

• under £6,000, your benefit claim is not affected by your savings
• between £6,000 and £16,000, you lose some of your benefit payment
• more than £16,000, you’re not eligible

Every £250 over £6,000 counts as if you had:

• £4.35 of monthly income for Universal Credit

If you put it in a pension you might want to look into the rules on being able to take it out as a lump sum or what monthly income you will get from it. If the monthly income is so small you might be better keeping it as savings you can access and spend.