Ive been given a lot of cash! what to do?

15lsp

Hello

I've been given a large ish sum of money and im not sure what to do. First thoughts were to buy an Audi TT but i think my family would kill me. Im not ready to move out of the family home so property isnt really an option. Do i just put it all in one savings account, in seperate ISA's or shares? Or pay off my student loan?? :eek: Or is there something else im not aware of?

Thanks Laura

mjdh1957

Congratulations! (unless you robbed a bank or something;)

It's up to you really, but here are my thoughts.

Are you paying interest on your loan? In that case, it makes sense to pay it off first. Have you got any other debts?

Do you want it for a 'rainy day' or do you see it as long term investment? A cash ISA is good if you are a taxpayer. Have a look at the 'Savings & Investment' part of the main site (on the left of this frame, coloured dark red). You can only invest £3000 per tax year in an ISA. If you want it longer term, then consider a maxi ISA of up to £7000, though shares are much higher risk and this should be for a minimum of 5 years.

Robert_Sterling

It is often the case on MSE that people seeking advice do not give enough detail of their situation. Since we do not give out our real name and address etc we can afford to give more details.

In your case for example "How much is a lot of money?"

In general paying off your student loan company loan early is not a very good idea but paying of any loan where the rate of interest being charged is over five per cent per annum might make sense. The higher the loan rate the more sense it makes.

Meanwhile while you are making your mind up £3000 in a cash ISa would be a start.

15lsp

My grandparents have given me 25 thousand. Kind of an early inheritance.

Yes i have a loan from the student loan company and from what ive read it says its not worth paying off early. I would be looking to invest 20 thousand as i have a car loan outstanding so the £5k will pay that and my credit cards off.

The way i spend money its best to be locked away!

Its not in my account yet im waiting for the transfer to complete.

pbw

from the 25k....

5k to pay off your loan and credit cards,
3k into an ISA - NS&I @ 5.80% (or B&B @5.18% for monthly income)

17k into ICESAVE @5.70% gross

OR

14k in Birmingham Mid @6.05% gross
3k in ICESAVE - ready to move to an ISA in april

Ian_W

First thing is £3K in a cash ISA, NS&I is the best ATM paying 5.7% - you can pay another £3K in at the beginning of the new tax year on 6/4 saving tax on the interest earned.

After that look for the best savings accounts on the savings section of the site - they're in a bit of a state of flux ATM given the recent rise in IRs which they've not all responded to yet and the possibility of another fairly soon.

If you're not going to need the cash for 4-5yrs minimum you could also do a mini stocks and shares ISA of £4K and again another in the next tax year. Although they involve market risk historically they have always done much better than savings over the longer term. There are again some articles on the site which might help.

Altogether, not a bad problem to have - just don't waste the opportunity they're giving you. :beer:

15lsp

pbw wrote:

from the 25k....

5k to pay off your loan and credit cards,
3k into an ISA - NS&I @ 5.80% (or B&B @5.18% for monthly income)

17k into ICESAVE @5.70% gross

OR

14k in Birmingham Mid @6.05% gross
3k in ICESAVE - ready to move to an ISA in april

Thanks for the effort you've gone to! Whats the monthly income compared to a NS&I ISA? ive always just saved money in my building society.

Whats ICESAVE?

15lsp

If you're not going to need the cash for 4-5yrs minimum you could also do a mini stocks and shares ISA of £4K and again another in the next tax year. Although they involve market risk historically they have always done much better than savings over the longer term. There are again some articles on the site which might help.

No i will be buying property within 2 - 4 years so i cant have it locked away for that long.

pbw

15lsp wrote:

Thanks for the effort you've gone to! Whats the monthly income compared to a NS&I ISA? ive always just saved money in my building society.

Whats ICESAVE?

the NS&I ISA pays interest once a year. so with 3k, you would get £174 per year (which is equal to £14.50p/m)

however, i would go for the bradford and Bingley ISA which pays 5.18% and interest can be paid monthly into your current account. you would get £12.95 per month)

---

also, if you can tie up your money for 1 year, as you suggest you can, you can get 6.05% gross or 4.84%net (4.71% if you want monthly interest)

and i suggest you put 14k into this and you would get £54.95 per month in interest.

the other 3k i would put in ICESAVE (https://www.icesave.co.uk) at a rate of 5.70% gross, or 4.56% net and take this money out on 6th april and put it in an isa. whilst in icesave, you would get £11.40 per month

therefore, paying 5k into your debts and saving 20k and living off the interest means you will get a total income of £79.30 per month...

15lsp

oh...so i can't retire yet then?? hehe

Thanks very much, i'll definitely look into that and discuss it with my parents. My sister has also been given the same so it will be useful for her too. Although she has gone shopping today so whether there will be any money left is another matter! :rotfl:

Im liking the higher interest option

lewt

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