How to invest £30k lump sum
Discussion
All,
Not me unfortunately but family member has found themselves in the fortunate position of having £30k sitting in their current account and no idea how best to invest it.
Whilst it could be locked away for years it would be good for them to know they could access it if their situation changes ie loss of main income. Giving up the £30k would leave them with enough of a fund for say 6 months no income.
Their mortgage is relatively small (<£100k) and rate on it is <2% so they're looking for other ways to make the money work for them.
Any financial experts able to give some advice?
Not me unfortunately but family member has found themselves in the fortunate position of having £30k sitting in their current account and no idea how best to invest it.
Whilst it could be locked away for years it would be good for them to know they could access it if their situation changes ie loss of main income. Giving up the £30k would leave them with enough of a fund for say 6 months no income.
Their mortgage is relatively small (<£100k) and rate on it is <2% so they're looking for other ways to make the money work for them.
Any financial experts able to give some advice?
If they need the safety net of the money being there in its entirety at little to no notice that limits what you could do with it IMO.
So for example if you put £30K into equities you could go back in six months needing £30K and find you only have £20K or you might have £35K because the risks and rewards are higher.
If you put money into a cautious investment fund you have less risk which means less reward so your £30K might be £31K or £28K to use some examples.
I'd focus on understanding where your/their risk/reward appetite is around what you need and what you can stomach.
So for example if you put £30K into equities you could go back in six months needing £30K and find you only have £20K or you might have £35K because the risks and rewards are higher.
If you put money into a cautious investment fund you have less risk which means less reward so your £30K might be £31K or £28K to use some examples.
I'd focus on understanding where your/their risk/reward appetite is around what you need and what you can stomach.
lynden11 said:
£30k sitting in their current account
Their mortgage is relatively small (<£100k) and rate on it is <2%
Yes, but how old are they, how long does the mortgage have to run and what is their top rate of income tax? All of these things need to be considered together. For instance,Their mortgage is relatively small (<£100k) and rate on it is <2%
2% of £30k is £600
2% of £30k for 10 years is £6,000
Dixy said:
Ask them if they would consider increasing their mortgage by £30k to buy any investment, when they say don't be silly then the answer is reduce your mortgage.
I'm no financial expert but I agree with this.If they're not wanting to put the money at risk with an investment that has higher potential, then they're not going to be putting the money anywhere that will do as well as the interest they'd save by paying some off the mortgage.
PorkInsider said:
I'm no financial expert but I agree with this.
If they're not wanting to put the money at risk with an investment that has higher potential, then they're not going to be putting the money anywhere that will do as well as the interest they'd save by paying some off the mortgage.
If they're not wanting to put the money at risk with an investment that has higher potential, then they're not going to be putting the money anywhere that will do as well as the interest they'd save by paying some off the mortgage.
Exactly!
The OP says they are obviously concerned about losing their main income so need the money readily available.
That discounts paying off the mortgage.
I’ve got roughly that amount sitting in premium bonds and in the past 12 months it’s made 2%
Not a fantastic return but it’s safe and I can get to it anytime I want.
That discounts paying off the mortgage.
I’ve got roughly that amount sitting in premium bonds and in the past 12 months it’s made 2%
Not a fantastic return but it’s safe and I can get to it anytime I want.
Drawweight said:
The OP says they are obviously concerned about losing their main income so need the money readily available.
That discounts paying off the mortgage.
I’ve got roughly that amount sitting in premium bonds and in the past 12 months it’s made 2%
Not a fantastic return but it’s safe and I can get to it anytime I want.
That was why I went the direction I did.That discounts paying off the mortgage.
I’ve got roughly that amount sitting in premium bonds and in the past 12 months it’s made 2%
Not a fantastic return but it’s safe and I can get to it anytime I want.
Unfortunately on £30K you will make f
k all with traditional savings products as you know 
OP - Perhaps they may want to look at a defensive bond based fund that can offer higher returns than cash without the risks of the stock markets.
Alternatively, they could speak to Sarnie about moving to an offset mortgage whereby they could deposit the money there to save on mortgage payments, but always have access to it should they need it.
As they have a six month emergency buffer already in place this may not ever be required.
Alternatively, they could speak to Sarnie about moving to an offset mortgage whereby they could deposit the money there to save on mortgage payments, but always have access to it should they need it.
As they have a six month emergency buffer already in place this may not ever be required.
Bearing in mind this was a windfall and not planned money, it would make no difference to them if they paid down the mortgage with it all.
Maybe keep a couple of thousand for a rainy day but money in/money out and they wouldn't even notice it. Except for the reduced mortgage payments and the warm feeling of being closer to being mortgage free.
I'd pay the lot into the mortgage and not have to worry about making a stupid decision 'investing' it or indeed listening to people tell me how best to spend my money.
Maybe keep a couple of thousand for a rainy day but money in/money out and they wouldn't even notice it. Except for the reduced mortgage payments and the warm feeling of being closer to being mortgage free.
I'd pay the lot into the mortgage and not have to worry about making a stupid decision 'investing' it or indeed listening to people tell me how best to spend my money.
I’d not be rushing to do anything with it with the exception of Premium Bonds.
Safest and getting cash out then Premium bonds worry free. You could drop the lot on there for now.
Let’s see how the next 3/6 months play out. I’d certainly not be doing/investing the cash until furlough is removed entirely (currently end of Oct).
The other thing is and it’s clearly not good if everyone does this but only buy the basics build up those reserves we don’t know if this is going to be bad really bad horrific cataclysmic. That said if you’ve a say worn out mattress currently keep your eyes peeled as you may find some incredible bargains in which case that “investment”/required purchase is sensible.
Do you have any non mortgage debt that is high Apr%?
I wouldn’t use the £30k to clear it instead I’d be taking out new debt at the lowest possible Apr they can achieve to then clear the high APR%
Safest and getting cash out then Premium bonds worry free. You could drop the lot on there for now.
Let’s see how the next 3/6 months play out. I’d certainly not be doing/investing the cash until furlough is removed entirely (currently end of Oct).
The other thing is and it’s clearly not good if everyone does this but only buy the basics build up those reserves we don’t know if this is going to be bad really bad horrific cataclysmic. That said if you’ve a say worn out mattress currently keep your eyes peeled as you may find some incredible bargains in which case that “investment”/required purchase is sensible.
Do you have any non mortgage debt that is high Apr%?
I wouldn’t use the £30k to clear it instead I’d be taking out new debt at the lowest possible Apr they can achieve to then clear the high APR%
Been thinking about this one again.
It's 'free money' so this person is no worse off if they lost the lot, are they?
Stick it all on black.
If they win, they can pay some of the mortgage off AND put £30k in savings, premium bonds, or whatever.
There is no flaw in this plan whatsoever; there is no losing outcome.
Thank me later, guys.
It's 'free money' so this person is no worse off if they lost the lot, are they?
Stick it all on black.
If they win, they can pay some of the mortgage off AND put £30k in savings, premium bonds, or whatever.
There is no flaw in this plan whatsoever; there is no losing outcome.
Thank me later, guys.
Gassing Station | Finance | Top of Page | What's New | My Stuff