Best Way to Invest a Sum of Money

tyroneshoelaces

Ok, I am a self-employed freelance writer and have been full time for around 3-4 years. In that time, my earnings have been excellent and that has enabled me to save a considerable amount of money. This is around £80,000. Now, I understand that the money is just sitting there doing nothing in my bank account and I want to make it work harder for me.

Of course, I should and will eventually seek professional advice from an expert but before I go down that route, I was wondering if anyone had any advice or tips about how best I should invest or where I should put a portion of my savings. I am quite open to the amount although I wouldn't want it to be the majority of my savings as I have a family and we like to do certain things!

So, has anyone got any experience of investing large sums of money or any ideas as to what I could do with it?

I appreciate that this has probably been covered time and time again but I would love to see what options fit in with my situation.

Thanks in advance!

Daliah

Knowing nothing about your age, your family and other financial commitments, your pension arrangements, your spending needs and plans, or your risk appetite it's impossible to guess what could potentially be right for you. The only suggestion I would make is that you read a lot more about saving and investing. Whilst you do that, you could put £50k into Premium Bonds, and the rest perhaps into an instant access savings account.

AlanP_2

Daliah has hit the nail on the head there.

Tailored suggestions for a 60 year old retiring next year would be different than for a 30 year old with 4 kids and saving for a mortgage.

Generically S&S investments are likely to do better that cash savings over an extended period (say 10 years+).

Making use of available tax wrappers (Pension, S&S ISA, LISA) will help, but each has their own pros and cons.

ndf9876

tyroneshoelaces said:

 I would love to see what options fit in with my situation.

You haven't described your situation, only stated an amount of money you have. Since we know nothing about your personal circumstances, attitude to risk, goals or plans for that money etc etc, it's impossible to offer any guidance.

Ebe_Scrooge

As above, it's difficult to give good advice without knowing more about your circumstances.  The "general" options that are worth considering are, in no particular order:

1. Overpaying your mortgage.  Even with a low APR on your mortgage, you'll still save more than the interest you'd earn in a bank account.  The downside is that you can't then easily access the money should you need to.

2.  Pay into a pension.  You've got a reasonable chance of the capital increasing in value over the long term, and it's tax-efficient.  Same downside as above.

3.  Premium Bonds.  No guarantee of making any returns, but your capital is safe - although if you don't get any wins, you're losing money in real terms due to inflation.  But easy to access if you need to withdraw it, and you might make some reasonable income from wins.

4.  Invest in the stock market.  No good for short-term investing, and there's a chance you could lose money.  But over the long-term, and with a well-managed fund, odds on you'll make a decent return.

5.  Some form of ISA.  Not brilliant returns, but better than nothing, your capital is safe, and easy to access (depending on the particular type of ISA)

Depends on your attitude to risk, how long you plan to invest for, and whether you need instant access to the savings.  But some ideas to think about.

tyroneshoelaces

Hi, 

Apologies, I should have provided more information!

I am 37. I am married with two young children. We like to holiday 3-4 times a year. In terms of my pension, I don't currently have one. When I started out full time at the end of 2019, I wasn't quite sure if things were going to work out, so I left it 6 months until getting pension advice. I then got super busy and that took me up to the pandemic where the company and advisor I was going to use was not willing to meet in person. It is now on my list to arrange over the next month. I appreciate that I might have to put some of my savings into that to make up the shortfall. 

In terms of risk, some risk is ok but obviously I want to manage that balance. I want to try and put my savings into something that will generate long term income or will increase in value. I understand that that sounds like the perfect investment but I am honestly new to this thing, so I don't have any kind of idea really, so I am just trying to scope things out.

xylophone

 In terms of my pension, I don't currently have one. 

Did you ever have one? If so, what kind (DB/DC) and where is it?

jimjames

Age 37 with no pension then that is something to address as a very high priority. 

You may also want to look at putting money into an ISA to get the £20k tax free allowance for this year, you'll then have another £20k available next tax year. If opened as cash ISA then you can move to S&S version later but you've at least got the allowance used.

Ebe_Scrooge

OK, from the sounds of it, putting a big chunk into a pension could be a very wise idea.  It's worth getting some professional advice on that - there are dozens of pension providers out there, and all will charge different fees.  Remember that, on the whole, pensions are invested in the stock market, so you will see big fluctuations in the value of your pension year-on-year.  But given that you're looking at a 30-year investment period, you should see a healthy return overall.  That's where a decent fund-manager comes in - they'll invest in a sensible mix of higher-risk, higher-return funds, with some lower-risk, lower-return funds added in.

Aside from that, it's always a toss-up between risk and return.  Sticking in a high-street-bank savings account is near as dammit as safe as houses, but you'll earn very little.  Invest in some tech start-up companies on the stock market, or buy crypto-currencies - you could make a fortune, or you could lose the lot.  You need to pick a half-way house that gives a decent balance of risk/return that you're comfortable with.

GeoffTF

You need to have a cash reserve. Six months income is a common suggestion. You need to a pension. If you know nothing about finance, an easy option is Vanguard:

https://www.vanguardinvestor.co.uk/what-we-offer/personal-pension/personal-pension-account

You can use the Target Retirement Fund appropriate for your planned retirement date. There are cheaper options, and much more expensive ones, such as using a Financial Adviser.

tyroneshoelaces

I did have a pension up until I started out as self employed and had been paying into it for 9 years l. It was a civil service pension. The pension advisor is someone who has helped my father in-law and comes highly recommended so that is who I will be turning too.

Geoff thank you for that link I'll take a look. I have a small investment of just under £1000 in cryptocurrencies but that was more of a 'fun and willing to lose it' kind of investment.

I have an urge to invest in property. My father has done that but it's a big step and risky too to some extent.

I just don't want my money sitting there, which is increasing month on month, doing nothing.