What to do with £35k

Emmia

Asking for a family member 

A family member has £35k for investment that they would like to maximise the value of, and they've asked me to ask the hive mind.

Age 46
ISA allowance is fully used for this year.

Money not expected to be needed for a decade or more.
They have a very healthy emergency fund.

Do they invest in a GIA? Bonds? Pension? What would you do?

Brie

overpay their mortgage?  I know interest rates are not that high currently but it will continue to save money well into the future.

pension is another good spot, in my opinion.  maybe with £5k in premium bonds just for fun.

El_Torro

10 years from now they will be 1 year (possibly more) away from being allowed to access their pension. So if they're willing to wait then putting all the £35k in a pension is going to be the most tax efficient thing they can do. How to add it to the pension exactly and whether they can do it all immediately will depend on their financial situation. 

If they don't want to put it all in the pension then waiting until April to put some of it in a Stocks & Shares ISA is probably not a bad move either. Less tax efficient than a pension but more flexible. 

HedgehogRulez

Pension is the correct answer

friolento

Another £20k into an ISA in April; park it until then in the best easy access or short term notice account.

The remaining £15k into a pension if they can still contribute this tax year.

Some or all could also go into Premium Bonds.

You could point your relly at CHATGPT or Gemini for a "conversation" with a virtual IFA.

Newbie_John

Do they have partner? And if, do they have ISA allowance?
Mortgage, what rate, how long left?
What income tax do they pay? 20%, 40%, 50%?

Overpaying mortgage? - gains average rate for next 10 years let's say 3%, but money locked for mortgage duration
Premium Bonds? - 2-3% gain per average, tax free, easy access

Other options to consider not mentioned would be student loan if likely to pay off, gilts if looking for save 4-5%.

Vitor

Pension makes sense for the tax benefits if the money can be left untouched until 57/58

Section62

Emmia said:

...
ISA allowance is fully used for this year.

...

Do they invest in a GIA? Bonds? Pension? What would you do?

What was the ISA allowance for this year used on?  If a cash ISA they might want to consider transferring (some of) this money to a S&S ISA to make the investment, and keep the equivalent amount of the £35k as replacement cash (non-ISA) savings. 

Athough they may have to pay extra income tax on the cash savings, the advantage of getting the investment(s) into a S&S ISA means not having to worry about CGT record keeping, which they would if they invest in a GIA instead.

Emmia

Section62 said:

Emmia said:

...
ISA allowance is fully used for this year.

...

Do they invest in a GIA? Bonds? Pension? What would you do?

What was the ISA allowance for this year used on?  If a cash ISA they might want to consider transferring (some of) this money to a S&S ISA to make the investment, and keep the equivalent amount of the £35k as replacement cash (non-ISA) savings. 

Athough they may have to pay extra income tax on the cash savings, the advantage of getting the investment(s) into a S&S ISA means not having to worry about CGT record keeping, which they would if they invest in a GIA instead.

They're only using S&S ISAs - no cash ISA (they see them as inferior) and the allowances are fully used for this year.

Emmia

Newbie_John said:

Do they have partner? And if, do they have ISA allowance?
Mortgage, what rate, how long left?
What income tax do they pay? 20%, 40%, 50%?

Overpaying mortgage? - gains average rate for next 10 years let's say 3%, but money locked for mortgage duration
Premium Bonds? - 2-3% gain per average, tax free, easy access

Other options to consider not mentioned would be student loan if likely to pay off, gilts if looking for save 4-5%.

Married, but don't want to put money into an ISA in the name of the spouse.

Mortgage on a 3 year fix, 2 years to run on the fix, another decade on the mortgage itself. Amount remaining ~£180k

40% tax payer

No student loan to pay off.

Emmia

friolento said:

Another £20k into an ISA in April; park it until then in the best easy access or short term notice account.

The remaining £15k into a pension if they can still contribute this tax year.

Some or all could also go into Premium Bonds.

You could point your relly at CHATGPT or Gemini for a "conversation" with a virtual IFA.

It's very unlikely they'd use ChatGPT or another chatbot for financial advice.