How best to spend £100k

[gigthenfishdelish]

We have come into 100k.

We have a mortgage of 150k, equity £350k. We have small pensions, 10k debt, no savings or investments aside from savings account for 14 year old DS. Total income is £80k in secure jobs and we are mid 40's.

What would be the best use of the money? We have not made the best decisions in the past with money so would like this to go as far as possible.

Thank you for all advice.

I’d put £15k into DS saving, and £20k each into ISAs. Pay off debt. Have a wonderful holiday/do some fun spending. Remaining 25 I’d invest into pensions. Wouldn’t bother doing anything with the mortgage.

There's some terrible advice on here! Firstly we don't know your mortgage interest rate and what the overpayment terms are which are key pieces of info.

Given that you have no savings I would do the following:

• Pay off £10k non-mortgage debt
• Max out your ISA allowances for this year (£20k each) with a low or balanced risk S&S ISA
• Put another £25k each in easy access savings accounts with the max interest rate you can find. This is your emergency fund. You can move most of this into ISAs next April

@speroku The op is early 40s I think. Why so risk averse at that age? They’ve got 25 years of work ahead of them and hopefully some living to do. £150,000 mortgage is small. Hardly worth worrying about. Isa allowances might change - watch the budget! RR might reduce annual allowance. The op has many many more years to save and why a small pension? Are they self employed? Tax position for pension matters too.

@TizerorFizz well their total income is £80k and they have a mortgage, no savings and a 14 year old. I'm not convinced any job is a "secure job" in the current climate so you need an emergency fund.

A S&S ISA doesn't have to be risk averse but if you've never invested before then sticking it all in a high risk one would be a fairly ballsy move. My S&S ISAs are higher risk but I have some cash to spare if it goes tits up and I know what I'm doing.

I don't know why you'd opt to put the money in a pension when you can put it in a S&S ISA and then access it tax free whenever you want. Gives you way more options.

ETA: yes I know Reeves is threatening to change ISA allowances but they haven't suggested taking away existing ISAs which is why it's worth maxing it out now

Pay off the £10k. What’s the story with your ‘small’ pension provision? That would be the obvious place for the rest but need more detail to be certain.

First: Clear That £10,000 Debt
Let’s start with the obvious one — if you’ve got debt (especially credit cards or personal loans), get rid of it immediately. Paying it off is a guaranteed return — you’ll stop paying interest, reduce your stress, and instantly free up your monthly cash flow.
Start a Lean Emergency Fund (~£3,000–£8,000)
This is your “sleep-at-night” money — in case of job loss, car trouble, or boiler breakdown. You don’t need to go overboard here — a couple of months’ worth of essential expenses is enough because you now have other assets building in your ISA and pension.
You can put this in a high-interest savings account for safe, accessible growth Or in ISA too (ISA needs to be flexible.
Think Long Term: What’s the Plan for Retirement?
You’re in your 40s — it’s not too late, but now is the time to get serious. Ask yourselves:
When do we want to stop working?
What does early retirement look like?
How much would we need each year?
Use a calculator like this one: Lightyear FIRE Calculator to work out the numbers. Work out how much you need to invest each month — and when you’ll be financially independent.
Pension vs ISA – or Both?
This is one of the big decisions. Here’s how to think about it:
Pension
Tax relief (extra money from HMRC!)
Locked until age 55 (57 from 2028)
Great for long-term, post-57 income

ISA No tax relief, but grows tax-free
Accessible any time
Perfect “bridge” fund for early retirement

If early retirement is your goal, you’ll probably want both:
Pension for retirement from age 57+
Stocks & Shares ISA to access money in your early 50s (or even late 40s!)
might looks into if you can do salary sacrifice so that extra amount in paid into your pension that way you save on tax plus NI.
And if that option is not suitable then, now’s a great time to open a SIPP (Self-Invested Personal Pension) — where you have full control of how your money’s invested. I
Help Your Child’s Future: Junior ISA
Your child is 14 — university, first flat, or driving lessons are all around the corner. Open a Junior Stocks & Shares ISA and invest a small amount (even £2,000 now) to give them a little head start when they turn 18.
Check Your Protection: Insurance
You’re building wealth now — make sure it’s protected.
Life insurance: If your family relies on your income, this is non-negotiable.
Make sure you’ve written wills and have death-in-service benefits checked with your employer.
Invest in Yourself, Too
Don’t forget: you and your partner are still young enough to grow professionally. Use a small portion of the money (e.g. £1,000–2,000) for:
A short course, certification, or even a conference
Small personal investments today can open bigger doors tomorrow.
Final Thought: Make It Count
This is your reset moment. With the debt cleared, a buffer in place, and smart investing started, this £100,000 can change your financial trajectory permanently.

Hope it helps and give some clarity?
Good luck with whatever you decide!

@mumthatinvests great post 👏

Am I being stupid here, how would OP get tax relief on putting the money into a pension? I'm assuming the £100k is money received tax free. And surely OP would be taxed on that money at the point she withdrew it from the pension?

I came into this amount of money about 8 years ago. I paid off all debts, new patio and driveway, new car, big 6 week holiday for 5 of us in NZ & Oz.
It’s surprising how quick it’s eaten up!

@speroku I don’t think they will as it’s not earned income. Usually you are taxed after pension contribution so HMRC helps out.

Its that not just copy and paste from chat GPT?

Thanks for all your ideas and advice.
We have small pensions as we didn't start them until we were older. Very bad mistake but what can we do. Income split is £60k and £20k.
Mortgage rate is very good, 1.6% fixed for 2 more years. We can overpay by 10% a year. The 10k debt is a personal loan for car at 6%. Our kid has 15k in S&S account that we have been paying in to since he was born.
I think that answers most queries but I will read through and add anything more if needs be.

Our house is old and needs work sadly, so that does have to factor in.

Pay off the debt.

Put 6 months’ expenses into a savings account / cash ISA.

I’d probably use a bit of money for a “treat” - big holiday, car upgrade, home improvements.

Rest of the money I’d look to put in a fixed rate savings account and pay down the mortgage once your fixed rate is up. Then use the money you save from the debt / reduced mortgage to start investing or add to your pension, depending on what your aims are.

try asking the same question - I dont think it will give this answer !

It will never recommend " invest in your personal development"!!!

I went deep into personal finance for a year or so! spend time to learn about all this !
I wrote all this to help out!
however yes once I write anything, I paste in chatgpt so that it makes it more readable!

If you are married:

Is the £60k income before or after pension contributions? If that person pays into pension so as to reduce income down to £50,270 they will save 40% tax on the pension contributions. How you go about it depends if this is a self invested pension or company scheme though.

I would pay down the 6% car loan. Then keep putting what you currently spent on it monthly into a savings account for a new car (or whatever other large capital purchase you might need in time).

Your mortgage is at a decent rate so I’d not pay that down at all at the moment.

£20k into ISAs each.
The remainder into high interest savings account for the lower earner who will have a higher tax-free interest allowance and will pay tax on the interest at a lower rate. Could also pay a bit more into higher earner pension to bring them into 20% tax bracket for interest income and split it though.

How much will home improvements be? If the ISAs aren’t needed in next 5-7 years I’d put in S&S and use other savings for home improvements. They can top up pension. If you need the money sooner cash ISA may be more prudent.

If this is true, better to just leave it in your own words. At the moment it screams ChatGPT and it’s off-putting.

“Invest in yourself” is exactly the sort of thing ChatGPT would say.

Pay off debt.
Pump money into pensions. To get the tax relief if one of you pays 40%, then pay more of your salary into pensions to get under the 40% threshold, then use the 100k to top up your missing salary.

Keep a bit for guilt free fun.

oh ok ! thanks for feedback! will keep this in mind !

Its just that I read so much about personal finance and learnt so much that I want to help others now !! I did all the classic mistakes in past ( not putting much in pension, or not understanding tax or full benefits of ISA etc !) but now on path to FIRE hopefully in few years!

Still figuring out how I should share my learning whether I should just make a blog series or a youtube playlist for my family and friends !

Debt
Pension

You have plenty of time to pay off the mortgage. Putting this money to work against debt and securing your financial future for retirement is an amazing position to be in. Take advantage of it. Don’t fritter away.

Ok. I still feel I’m probably talking to a bot but if you’re going to do a blog or YouTube series you need something special. If you’re just giving out the absolute basics as here you need to do it with personality (not ai slop) and to be thinking more in the round (jisa without decent pension provision?) If you’re offering more than that you need proper content. There are lots of really good finance podcasts and YouTube channels so maybe have a look at those and think about what you can offer that’s valuable.

Still feel it’s a countdown before “mumthatinvests” is back here with a day trading link 😭

People telling you to pay off mortgage are daft.

OP you're on a 1.6% mortgage don't overpay any of that, not even your overpayment allowance, you'll make far more interest than 1.6 in a basic savings account even if its taxable, you can pay off once your term comes to an end and you come to renew (probably closer to 4%) if you wish, but at the mo take advantage of that low interest.

Pay off the 6% car loan. Max out ISAs, the person on 60k start shoving more of their salary in pension to make the most of the 40% tax saving. For the person on 20k set up a world tracker fund investment ISA on vanguard for a few thousand to help build up long term pension savings. Stick the rest in an easy access savings account.

Obviously I'm not a pro, this is just what I would do and we have very similar salaries and equity to you. Xx

I see your debt is a car loan rather than credit cards, so not sure if you can overpay it sooner? And that home improvements are one of your spending priorities.

If you can't pay the loan off right away without penalties, I'd put £30,000 towards savings in a combination of easy access and sock-it-away-for-a-set-time ISA accounts. Go for the highest interest you can. This will allow you to pay off your car loan from savings over time and also have a rainy day/house improvements fund. Interest on those savings accounts should be left to compound so that the savings build up. Home improvements should be very carefully costed and considered before committing to them.

I'd put a big chunk (£20k each?) into your pensions right away - the earlier you put it into the pension, the more time it has to grow. If I were you, I would then put the money you are currently spending on servicing the car loan either all into pensions, or split between pension and mortgage overpayment. Do that immediately so that you never get used to having the extra money left in your account every month.

Of the remaining £30,000 I would put £20000 towards a lump sum overpayment on mortgage and £10,000 towards holidays, fun days out and/or smaller, less essential home improvements. Good luck!