What to do with £100k

Socajam

I would make sure that you have an emergency fund (20,000) and a life happens fund (10,000) and then do what the others suggested above.
Also if you have any debt, get rid of it, then use that money to invest more into your pension.

Ciprico

I would suggest if your company operate a "salary sacrifice" pension contribution option put in as much as permitted, and use the cash to fill any shortfalls the effective salary decrease creates. There are limits to how much you can add to a pension, so this won't make too much of a dent in the £100k - but your future self will thank you...

zagubov

Anopther vote for half-years income into emergency fund. About 10k into a chimney falls down fund and the rest into pension/S&S.
That's all after you've paid off any outstanding high-interest debts (store cards, debit cards, hire purchase etc.).

Bacman

Pensions not a great idea, your returns on a pension aren't always good especially after their management fees or the company going under due to bad decisions - remember Equitable Life? Sometimes you're better off investing the money yourself in fixed rate bonds for a better return on the money and also keeping control of it.

Just because mortgage rates have been low for a few years now does not mean they will continue to. They are regarded at the moment as "historically low" for a reason.

If you used all the money to go into your mortgage you'd halve your mortgage payments which would be quite a saving a month. Also that lump sum might mean you can negotiate a new mortgage with a lower interest rate too, helping you further. Getting to a stage of being mortgage free removes a heavy burden from your finances.

Apodemus

Bacman wrote: »

Pensions not a great idea, your returns on a pension aren't always good especially after their management fees or the company going under due to bad decisions - remember Equitable Life? Sometimes you're better off investing the money yourself in fixed rate bonds for a better return on the money and also keeping control of it.

Just because mortgage rates have been low for a few years now does not mean they will continue to. They are regarded at the moment as "historically low" for a reason.

If you used all the money to go into your mortgage you'd halve your mortgage payments which would be quite a saving a month. Also that lump sum might mean you can negotiate a new mortgage with a lower interest rate too, helping you further. Getting to a stage of being mortgage free removes a heavy burden from your finances.

While it’s always good to get a contrarian view, I would caution the OP about following the above advice. Someone in their 40s with a £50k+ salary and very little pension provision may be at risk of lifestyle creep and always find ways to spend available cash. A reduced mortgage leading to increased monthly income is at great risk of being frittered away on 101 little additional “essentials”. Assuming the OP is a normal mortal, the best way to make the most of any windfall is to lock it away for the future in ways that reduce the temptation to spend it, and pension provision now would do that.

eskbanker

Bacman wrote: »

Pensions not a great idea, your returns on a pension aren't always good especially after their management fees or the company going under due to bad decisions - remember Equitable Life? Sometimes you're better off investing the money yourself in fixed rate bonds for a better return on the money and also keeping control of it.

Citing Equitable Life as a reason not to use pensions is no more valid than recommending against savings because of Northern Rock or Icesave!

Pensions are just wrappers and it's unhelpful to generalise about their cost and performance, as these inevitably vary widely depending on what holdings are preferred. Of course there are no guarantees about performance but it's practically a racing certainty that putting money in savings accounts will lose real-terms value to inflation over the long term, so seeing them as preferable for this duration is unlikely to be tenable.

Having said that, it's not all or nothing and OP has had a number of recommendations to consider - I wouldn't necessarily see pensions as the right answer for the entire pot but equally it would be nonsense to dismiss them on spurious grounds....

Albermarle

Pensions not a great idea, your returns on a pension aren't always good especially after their management fees or the company going under due to bad decisions - remember Equitable Life? Sometimes you're better off investing the money yourself in fixed rate bonds for a better return on the money and also keeping control of it.

Returns on a standard DC pension depend on 1) what funds the money is actually invested in within the pension & 2) the trends in the financial markets.
Management fees are less of an issue ( lower ) than in the past and can be kept easily < 1% and in some cases < 0.5%
A standard pension default /average risk fund has produced approx. 6% pa over the last 10 years and a high risk/high growth fund would have produced nearly 10% a year .
Of course the next 10 years could be different but some growth over inflation can be expected.
Plus with a pension you gain a minimum of 6.25% tax advantage and can be more.

SonOf

Bacman wrote: »

Pensions not a great idea, your returns on a pension aren't always good especially after their management fees or the company going under due to bad decisions - remember Equitable Life? Sometimes you're better off investing the money yourself in fixed rate bonds for a better return on the money and also keeping control of it.

Just because mortgage rates have been low for a few years now does not mean they will continue to. They are regarded at the moment as "historically low" for a reason.

If you used all the money to go into your mortgage you'd halve your mortgage payments which would be quite a saving a month. Also that lump sum might mean you can negotiate a new mortgage with a lower interest rate too, helping you further. Getting to a stage of being mortgage free removes a heavy burden from your finances.

You are woefully out-of-date. By about a decade or more.

Modern pensions have 30,000 or so investment options. And can be priced exactly the same as ISAs and unwrapped holdings.

Making reference to Eq Life for issues that came about in the 1980s is not helpful or constructive as things havent worked that way since 90s.

eskbanker

Anyone else put in mind of a theme tune?

No no no no no no no no no..... BACMAN!

MaxiRobriguez

I wonder if DairyQueen is browsing this thread and can confirm whether I still hold the title for worst investment advice ever or not...