2 options for £20k - advice needed!

Luis

Hello,

I am selling my house, and renting a room for a bit til I get my head straight, and need some advice on how best to invest about £20k according to the following two scenarios:

1) Invest cash, carry on working - maximum growth, no need for access.

2) Invest cash, give up job - high interest but regular access to function as 'wages' - either 2 lump sums per year, or monthly allowance.

I do not know yet whether I am going to give up work and take a year out, but would appreciate advice on how to make the most of my cash acording to either scenario.

Thank you x

ManAtHome

Think you'll need more than £20k to replace wages - a reasonable savings rate will only get you around £18 a week (4.75% interest rate). For anything other than standard savings stuff, you need to see an IFA so they can assess your attitude to risk, how long you intend investing etc.

cheerfulcat

Hi, Luis,

In scenario 1, your best will probably be some sort of stock market investment as, long term, these have historically outperformed cash by a good margin. You can invest in shares directly - this is best for *maximum* growth ( no fees to middlemen ) but requires a fair bit of research. Alternatively you can put your money in collective funds; this still requires research but gives you access to a greater spread of investments than would be possible if you held the shares directly. It is also considerably more expensive, both in direct fees and opportunity cost. You could of course, with a sum as large as £20k, go for a combination of shares and collective investments. Don't forget to keep an emergency fund in cash!

Scenario 2 doesn't leave any options. A high interest deposit account of some sort is the only choice, as you will be taking capital.

To be honest, if you are in the middle of some sort of life change, it might not be the best time to be worrying about investments! It's very easy to make bad decisions when in an emotionally fragile state...cash might be the best option for the time being.

Best of luck

Cheerfulcat

Luis

Thanks both,

I am not looking for any sort of income to live off for this cash - I am going to use it to live on if you see what I mean.

Thanks for the advice.