£25k in savings to invest

Alex.T

Hello all, I’m interested to hear peoples ideas and opinions on what to do with £25k I currently have in a chase savings account earning 1.5%.

We have no immediate need for the money, and we currently have £4-5k in our ‘just incase’ account. 

I would really like to make this money work for me, and to earn more money from it in preparation for my children going to university. Short term, I’d like to be able to pay for atleast the first year fees for our eldest daughter, which will be in 5 years time, and longer term for our two younger children which will be in 10 years time. 

Open to all ideas.

thanks for your time.

Alex.T

Would also like to add, this money is really only intended for our childrens future. 

They all have a Santander 123 mini account with the max £2k+ in, currently earning them 3%. I do pay a small amount into this per month too. This will also be theirs to do what they like with when they are 18. 

Pension is currently 10% of my monthly wage, which I will up over time. Mortgage is approx £155k left (on a £500k property) but happy with that for the moment. 

Albermarle

Firstly I suggest you research about paying Uni fees, as paying them upfront is normally NOT recommended.
It is better for the student to take out a student loan for fees and living costs. In any case the cost of paying fully for three to go would be prohibitive.
Student loans: the truth about uni fees, loans & grants - MSE (moneysavingexpert.com)

Probably you will still have to contribute towards living/accommodation costs though.
Also there is no guarantee they will want to go to Uni. Once they get to about 15 they can develop strong opinions in my experience !

Back to your main question. Firstly similar questions get asked on the forum all the time, so probably worth a skim through.
Unless you do something off beat, then your choice is really between saving (like now) or investing in stocks and shares.
The downside of saving is that inflation is eating away at the value, and the downside of investing is that the next few years may not be so good and you lose money. On the other hand investing long term reduces the risk a lot. Based on historical data, the shortest time for investments is 5 years but ideally more than 10 years.

It could be better to save or invest via children's accounts as they pay more interest/charge lower investment fees in some cases. However once 18 it would be their money to do what they want with.

Alex.T

Thank you. Yes, you’re right I do expect them all to have quite strong opinions when they come of age. Our eldest has expressed an interest in architecture and is already researching universities, so I expect that to hopefully come to fruition. But the two youngest are only in primary school, so things may change significantly in that time! What I’d like to do is let them have whatever they want at age 18, to be able to help them set up for adult life. I’ve a feeling that investing in the stock market will be the best option for us, and I need to make some time for doing adequate research into this before jumping onto that boat!

I’ve also been looking into investing the money in property too, but I think we are at a very volatile point in regard to house values at the moment, and possibly £25k won’t be enough to get a decent return out of it. 

Is there anything else that I can do in the meantime, even something in their names. Or would I be best leaving it in the Chase account or similar if any better rates come up. 

Thanks for your advice. 

Brie

I've just been looking at the range of savings accounts that are available some offering up to 2.7% which is much better than the .01% some of us are getting elsewhere.

Just click on the banking and savings tab at the top of the page.

Albermarle

For savings accounts you can look here.
Compare The Best UK Savings Accounts | moneyfacts.co.uk

If you want to start investing yourself, the best way is in a Stocks and shares ISA.
Having the investment funds within the ISA, means you pay no tax on any gains and you have no need to report anything to HMRC, so much simpler. You still have to pick the investments though, although some make this relatively simple for you.
Often mentioned companies offering S&S ISA's are Nutmeg, Hargreaves Lansdown, Fidelity, A J Bell, Wealthify etc 
Stocks & shares ISAs: find the best platform - MSE (moneysavingexpert.com)
Investing in stocks for beginners: how to get started - MSE (moneysavingexpert.com)
Top children's savings accounts: 3% interest - MoneySavingExpert

xylophone

Do your children have JISAs?

Alex.T

xylophone said:

Do your children have JISAs?

Nope. Eldest still has a child trust fund from when the government were doing them. That will also be hers to do as she wishes when she’s 18. 

Beddie

There is no "correct" answer. You could leave it in savings, invest in a Vanguard LifeStrategy fund, try Nutmeg for Robo advice, choose a ready made portfolio on a fund platform, do your own fund research via Trustnet etc.

Nutmeg etc. are interesting as you fill a risk assessment questionnaire, might be worth looking at it just to help gauge your appetite for risk/loss.

Alex.T

Beddie said:

Nutmeg etc. are interesting as you fill a risk assessment questionnaire, might be worth looking at it just to help gauge your appetite for risk/loss.

Thank you. I’ll try this tonight. I’ve got a feeling my willingness to risk this would be fairly low, due to the fact I have an aim for providing a better future for my children with the money, so therefore I expect either a very low risk investment, or keeping an eye on the savings accounts with the best interest would be the route best for us right now. 

Albermarle

Alex.T said:

Beddie said:

Nutmeg etc. are interesting as you fill a risk assessment questionnaire, might be worth looking at it just to help gauge your appetite for risk/loss.

Thank you. I’ll try this tonight. I’ve got a feeling my willingness to risk this would be fairly low, due to the fact I have an aim for providing a better future for my children with the money, so therefore I expect either a very low risk investment, or keeping an eye on the savings accounts with the best interest would be the route best for us right now. 

Just be careful to not be too risk averse.
So far this year so called low risk investments have suffered as much as so called high risk investments. In the long run the riskier investments have grown a lot more. In this respect risky does not mean risk of total loss, or betting the house on Bitcoin, it just means more short/medium term volatility.
Safe savings accounts are being badly affected by the gap between interest rates and inflation.

There are a couple of sayings that could be relevant . ' Taking no risks is the biggest risk of all ' ' Reckless Caution' 

So I would change your post as follows.

due to the fact I have an aim for providing a better future for my children with the money, I would look at a sensible long term investment strategy that should provide some growth above inflation.