What to do with 10,000

j_smiley

I have just received £10,000 and I have no idea what to do with it. I don't have any debts or mortgage I would just like to save/invest so I can maybe increase it.

atush

there are a plethora of the smae posts with 10K, 20K, 30K etc. And they are pretty much all the same.

So, first you need to give more info. Are you a taxpayer? What rate? Do you have other savings, investments and pensions? do you own a home w/o a mtg? Will you want to own a hime in the near future? Approx age?

With not debts, first thing is do you have 3-6 months spending for emergencies? This would be best saved in an ISA if you pay tax, and elsewhere at a higher rate if you don't.

Above that you could invest, either into a pension or a S&S isa. Or start saving for a house deposit.

j_smiley

Sorry I am a tax payer I'm in the 40% tax. I have no other savings and i have a work pension. I would like to get a house but would rather save this money if possible. Iv heard about stocks and shares isa but I know nothing about the stock market.

xylophone

Cash ISA? This will take care of £5760. http://www.thisismoney.co.uk/money/saving/article-1583864/Best-savings-rates-Isas-Cash-Isa-accounts-fixed-rate-Isas.html

You could consider a stocks and shares ISA but would need to do your own research. http://www.guardian.co.uk/money/2013/mar/29/stocks-shares-isas-financial-long-game

Otherwise you might consider opening an account with Nationwide- 5% gross for a year on £2500 provided that you pay in £1000 a month. http://www.nationwide.co.uk/current_account/flexdirect/default.htm?intcmp=Intcmp_1841

atush

what % do you put into your pension (and what rate does the employer put in?). Does it take you out of HRT?

jamesd

What sort of timescale do you have for getting a house? How close to getting together say a 25% or 10% deposit would this put you? Does it have to be a house instead of a flat? How do rents compare to mortgage costs where you live?

j_smiley

It's a railway pension and about £30 per week goes into it. Bit this doesn't move me away from the high tax rate.

And timescale for a house not in away hurry a few years maybe I'm 24 so I'm in no rush at the moment I could use this money but would rather use it for a deposit at a later date.

Mickygg

You are 24, higher rate tax bracket, no debts or mortgage yet have no savings???You must have wicked weekends!
I'd do cash Isa with £5760 and savings account the rest. Rates are very low but build up a shield from tax man as you are in 40% tax.

jamesd

For time periods up to five or so it's not normally wise to use investments. The problem is that they go up and down in value. If you have any sort of inflexible timescale that can't wait two or three years you may end up forced to sell during one of the down periods and suffer a significant loss.

This is a bit like a roller coaster with upwards trend. But along the way there are lots of dips. The main UK stock market has dips of perhaps 20% every two or three years and dips of about 40-50% every ten years or so. Along the way it has gains that more than make up for these. After long enough in the market the dips no longer end up taking you below the starting value but it takes a while to get there.

It would be good investing practice to start making some use of investments within a stocks and shares ISA. Not for all of it, but perhaps start putting in £300-£500 a month as regular payments. This will give you some money at stake but also time to do lots of learning about investing before the amounts become threateningly large. it's a lot easier to deal with a 40% drop when it's 40% of £2,000 then when it's 40% of most of your pot! But having seen it over the years it becomes easier to deal with because you know it's just the usual ups and downs. Still tough, just less tough.

What you do to reduce the ups and downs is use a mixture of investments in different types of things in different parts of the world. This makes it less likely that all will be down at the same time.

jimjames

Mickygg wrote: »

You are 24, higher rate tax bracket, no debts or mortgage yet have no savings???You must have wicked weekends!

Maybe not on the railways, I imagine alcohol tests on Mondays will wipe out a lot of your weekend fun!

atush

if they are in the 40% tax band, how are they paying only 30 quid a week? I thought the railway was a DB/FS scheme?

Am I dreaming here?

the OP should def be paying more pension contribs (even if into a Sipp or PP) at 40% tax until they drop out of the higher tax band. Unless of course, buying a house is now or in the near future on the cards.
Quite frankly, I am confused by the numbers here.