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I have £100k in my savings account :)

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Hello,
So far the past 5 years, I have been working extremely hard and saving most my income and now I have finally reached the £100k mark!!
I was just what would be best to do with the money.

To be completely honest, I am not sure why I decided to save, I just kind of got addicted and also have a very strange relationship with money. My family were fairly poor when we were growing up which thought me how to get by on very little. Also, when I spend money I kind of feel guilty (I am not really sure why) so tend not to spend too much however I do go on the occasional binge sometimes.

A bit about my situation: my savings have given me security and I think I have really valued that more than anything. After working in the mining industry for a few years, I decided it wasn't for me and quit a decent paying job. I having been doing freelance work for the past year and also decided to study again. I bring home around £600-800 a week now however the work I do is seasonal and there are quite periods (For the past 12 months I have earnt around £25k). All of this I would not have had the guts to do without my savings.



A few ideas I had regarding my savings – please do tell me what you think:
- save a bit more and buy a property outright for investment and enjoy the rental income
- get a mortgage (probably not possible as I don't have a stable income)
- buy a decent car. I have been driving a 1999 Hyundai since forever and perhaps wouldn't mind spending up to £5k on a decent car. However in saying that, my car serves me well and I have no immediate need to upgrade.
- live as I currently do and continue saving (but for what?)

I have very little interest in finance and tried to read a few things on investment, funds and shares but got board very fast and didn't really understand anything so kind of gave up on that front, also I don't really like to take risk specially when I don't understand the situation fully.
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Comments

  • bigadaj
    bigadaj Posts: 11,531 Forumite
    Ninth Anniversary 10,000 Posts Name Dropper
    First and simplest approach is what do you want to do?

    If you want to but a property then cash is a good place to be, and there are still places you could buy outright currently. That might be an idea, though you don't say what you do and whether you have to travel for work. In which case assuming you're single then buying and getting a. Lodger could cover some costs.

    How old are you and what are your ambitions. You will need to retire at some stage, though if you are a basic rate taxpayer and not benefit from employer contributions then a pension isn't a default option.

    Investing in equity funds through an isa woudk be an alternative.

    In most instances it's good to spread money and risk, so a combination of cash fund, house money, isas, pensions and spending pot for car would be a sensible approach.
  • ruinen
    ruinen Posts: 52 Forumite
    I'll tackle the easiest one first. Buying a new/newer car can make economic sense. Just do your sums and see. For me, I recently bought a pre-registered VW Up! direct from a VW dealer for £7k. The car requires no MOT for three years, it comes with warranty, it is very low emissions so road tax is a big saving, I was able to cancel breakdown cover on my old unrealiable car. Insurance was lower. The fuel economy was a big improvement over my old car. In he end spending £7k saved quite a bit of annual expense, plus I had a nice new and realiable car.

    As bigadaj asks, I think knowing your age, pension situation, ambitions is important to know before answering the other questions. If you don't yet have some clear ambitions, then keeping your money in easily accessible cash for a few years is not bad. Better to earn a poor interest rate, but keep the flexibility to pick the right options later, than prematurely commit yourself to big decisions.
  • ruinen
    ruinen Posts: 52 Forumite
    breakwater wrote: »
    Hello,
    - live as I currently do and continue saving (but for what?)

    This is a good default option while you decide on the 'for what'. I was in a similar situation. I found those savings extremely empowering.

    The only thing I would have done earlier in hindsight is start experimenting more with how you can spend some of that money to buy you benefits that improve your quality of life. Often these things ended up not being that expensive.

    It goes back to starting to think more about your ambitions. Are there things that you've dreamed of doing? Learn to dive, ski, sail, fly a plane. Travel. Study. Transform you freelancing into a real business. You could start spending small amounts of that money to test if those are things you really like.
  • bigadaj
    bigadaj Posts: 11,531 Forumite
    Ninth Anniversary 10,000 Posts Name Dropper
    On a practical point I hope you have that money in at least two separate institutions as the Fscs limit is only £85k.
  • mollycat
    mollycat Posts: 1,475 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    I'll tackle the easiest one first. Buying a new/newer car can make economic sense. Just do your sums and see. For me, I recently bought a pre-registered VW Up! direct from a VW dealer for £7k. The car requires no MOT for three years, it comes with warranty, it is very low emissions so road tax is a big saving, I was able to cancel breakdown cover on my old unrealiable car. Insurance was lower. The fuel economy was a big improvement over my old car. In he end spending £7k saved quite a bit of annual expense, plus I had a nice new and realiable car.

    Sorry, but to me this makes no sense at all ;)

    OP has a car that would appear to be running fine, you're proposing he spend several thousand; how many years of reduced costs until he break even?

    I've ran bangers all my life and consider it the most cost effective way to motor.

    Of course if the OP wants a new car the OP should get a new car; it's just not MSE, (IMHO).

    ps, you might want to renew your breakdown cover, nearly new cars fail as well you know!
  • ChesterDog
    ChesterDog Posts: 1,145 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Photogenic
    Mollycat, sshhhh!

    I will be selling my Up very soon. Fantastic little car.

    Breakwater, you know where to come. :-)

    High Up, Bluemotion, Night Blue... ;-)
    I am one of the Dogs of the Index.
  • jimjames
    jimjames Posts: 18,661 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    Totally agree mollycat. It may be nice to have a new car but I can't see many, if any, situations where it is money saving.

    Op, have you pensions etc sorted? You probably should also look at S&S ISAs rather than cash unless the money is to buy your own property to live in.
    Remember the saying: if it looks too good to be true it almost certainly is.
  • ruinen
    ruinen Posts: 52 Forumite
    Some calculations (with plenty of assumptions, but will give you some idea):

    Road Tax: £230/year (1999 car over 1599cc)
    MOT £50/year
    Insurance: £200/year
    Fuel: £1000/year (assuming 20p/mile * 5000 miles)
    Breakdown: £100/year
    Total: £1580


    Road Tax: £35/year
    MOT £0/year (for 3 years)
    Insurance: £150/year
    Fuel: £500/year (10p/mile * 5000 miles)
    Breakdown: £0/year (was actually included in my insurance for free, but I would be much happier on no breakdown cover on a new VW then a 15 year old Hyundai)
    Lost interest on £7k: £70/year
    Total: £755

    Lets call that £800/year saving.

    That obviously excludes the more likely extra costs of keeping a 15 year old car running. But also excludes depreciation of the new car. But also excludes the goverment policy seems set on raising future road taxes on inefficient cars, and I doubt fuel prices are dropping.

    In the context of someone that has savings and has already expressed the possiblity of liking a newer car, then I think the sums are worth considering. My example is just one of many options. Go for a year or two old Toyota Aygo and you probably mitigate more of the cost of deprecation.
  • ruinen
    ruinen Posts: 52 Forumite
    ChesterDog wrote: »
    Mollycat, sshhhh!

    I will be selling my Up very soon. Fantastic little car.

    Breakwater, you know where to come. :-)

    High Up, Bluemotion, Night Blue... ;-)

    Bluemotion! Nice even better on road tax = £0/year
  • ChesterDog
    ChesterDog Posts: 1,145 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Photogenic
    Sunroof, cruise control, Maps & More, heated seats, 5000 miles...
    I am one of the Dogs of the Index.
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