What to do with £40,000?

boxst

Hello

I have been lucky enough to come into £40,000 and wonder if someone has some good advice as to what to do with it? My first instinct is to pay off some of the mortgage, but there must be a better way to use the money?

Any help and suggestions are appreciated.

Thanks.

Steve

dunstonh

Loads of options. Dependent on your tax position, overall asset position, future situation, aims & goals, attitude to risk and a few other things.

boxst

Thank you, anything slightly more specific?

I am not risk adverse, but not wild

Steve

dunstonh

Cant be more specific. We know nothing about you to narrow the options.

amcluesent

>but there must be a better way to use the money?<

Nothing that produces such a certain net gain!

sm9ai

40,000 lottery tickets, with that many numbers you can't loose!


Sorry couldn't help myself

mojo_jojo

Pay off some of the mortgage is one of the best ideas. Put some into an high interest ISA is the next best idea. Investing in shares can may you more money but can be risky.

The best idea is to give it all to me!

miaxmia

mojo_jojo wrote: »

Pay off some of the mortgage is the best idea. Put some into an hight interest ISA is the next best idea.

If they do not interest you, give it to me!

Came into some money a year ago - invested in a MAXI ISA - it has made over 20% interest in a year. And I am well aware that there is no guarantee when investing in this sort of product and your money can go down as well as up. Go and see an independent financial adviser.

Sorry this was meant as a reply to boxst, but it was because I read about your recommendation to pay off the mortgage that I thought I would add my penny worth.

dunstonh

mojo_jojo wrote: »

Pay off some of the mortgage is one of the best ideas. Put some into an high interest ISA is the next best idea. Investing in shares can may you more money but can be risky.

Paying off the mortgage may not be the best idea. Many investors average 10-15% a year even with corrections/crashes so paying off a 6% liability at the expense of 10-15% a year returns is not the best idea.

Putting money into a high interest ISA could be but it would be better to fully utilise the 7k ISA allowance and not just stop at 3k. You dont have to invest in shares to use the stocks and shares ISA allowance. Risk is also a sliding scale and not an on/off position. Having cash in a savings account carries some degree of risk.

plonkee

My first instinct is to pay off some of the mortgage, but there must be a better way to use the money?

There are other ways to use the money that may give you higher returns than paying off your mortgage. They are generally more risky, but as said above, more risk doesn't have to mean loads of risk. Nothing is risk free even if you pay off your mortgage you run the risk of needing the money and being unable to access it.

If I was in your position and I really didn't need the money, I'd definitely spend £400 on something that I really wanted and ensure I had 3-6 months emergency savings (in either a mini cash ISA or a high interest savings account). That might probably use up say £6000.

I'd then probably put some (up to £7000) in a stocks and shares ISA, I'd also put some (up to £7000) into my pension both in a boring diversified portfolio of index funds. If there were no overpayment penalty I'd then put the rest (about £20,000) into the mortgage.

I think my point is that you don't have to do the same thing with all the money, you can use some of it for your mortgage, and some of it for investments.

amcluesent

Do the maths. You're repaying your mortgage interest & capital using money already taxed at 22% (or 40%). Plus by repaying capital you avoid years of paying compounded interest payments that are now accumulating at 6% or more.

Repaying your mortgage capital has no equal in terms of the net gain you make for zero risk. If you do need cash, you can always remortgage against the equity in your home.