What to do with 16k?

Doylum

Hi all,

My wife has just been paid a lump sum of £16k and we are not sure what's the best way to use this money.

We don't want to waste it and are thinking of paying off some of our mortgage with it. We don't have large debts (around £1k on credit card) and don't have large savings. (around £1k).

We want to use the money on a low risk way to make it work the most for us.

Do you guys have any ideas on what we should do?

Many thanks,
Mark

amcluesent

Are you tax-payers, basic or higher rate? Any known expenses coming up, like children going to uni?

DiggerUK

Doylum,
Clear debts. (including mortgage)
Buy gold for long term savings.
Short term, have an holiday and a few nights out.

Doylum

amcluesent wrote: »

Are you tax-payers, basic or higher rate? Any known expenses coming up, like children going to uni?

Yes, we are both tax payers on basic rate. No big expenses coming up that we know of.

We pay for private education (payments have us on our knees!!!) for our daughter and think she will go to Uni in around 11 years time.

DiggerUK

Doylum wrote: »

daughter......she will go to Uni in around 11 years time.

Then definitely put a few gold sovereigns by.
VAT free buying, CGT free selling.

amcluesent

OK, so plenty of time for gains.

Max out Shares ISA this year split between a BRIC and Resources fund.
£2K in Zopa, A* market
£2K in Sovereigns
Any cash left over, put into Premium Bonds ready for 2011 ISA or pay off mortgage, depending on rate.

DiggerUK

amcluesent wrote: »

Max out Shares ISA this year split between a BRIC and Resources fund.
£2K in Sovereigns
Any cash left over, put into Premium Bonds ready for 2011 ISA or pay off mortgage, depending on rate.

Forgot about NSI long term, if you are in PB's then you will have passed the ID requirements to transfer to NSI ILSC as soon as they become available.
Top post amcluescent.

jimjames

Pay off credit card as first thing. Paying 17% + interest makes no sense when you've got cash in the bank earning 3% max.

Given the timeframe it could be worth putting some money in shares for the university fees, cash savings are unlikely to match inflation. It depends on your view of whats the higher risk, cash earning -2% (3% - 5% inflation) or shares that historically have outpaced inflation. Even over the last 10 years which have been poor for shares you'd still not have lost money.

Cautious_Investor_3

amcluesent wrote: »

OK, so plenty of time for gains.

Max out Shares ISA this year split between a BRIC and Resources fund.
£2K in Zopa, A* market
£2K in Sovereigns
Any cash left over, put into Premium Bonds ready for 2011 ISA or pay off mortgage, depending on rate.

They are first time investors, have indicated a low attitude to risk, is a BRIC and Resources fund really the right place for such a person? I rather think not. Surely we must start to match our thoughts to posters situations rather than our prefered current investments?

Surely a better plan of action might be:

1. Check the interest rate being paid on the credit card, if it is above the net rate payable by a savings account then repay it

2. Invest the maximum possible in cash ISAs i.e. £10,200 between them

3. Then maybe dip their toe into something a little riskier via an equity ISA, this would be for about £5k. This would clearly be a longer term investment but could be used for the uni fees which will come along in the future.

I hope this helps.

The Cautious Investor

blinko

my resources fund is down 5% this weekk eeekkk

hoping for good news on todays US figures and at least a stabilising of comdditiies

BRIC will obviously be good long term but may be above OP risk