Lump sum - what to do?

[FieldAtlanta]

The initial message was deleted from this topic on 21 October 2023 at 08:49

[greengreenwood7]

To me its about timeline and also the wider view on debasement of the principle amount: And what an individual considers 'risky'.

If official inflation figures are say 8%, then fair to say that 'truflation' is north of 12%. So earning less than that effectively sees the power of the initial principle eroded.

Getting the Gov to mitigate that by going the usual route of LISA or pension where Gov adds a portion/% seems reasonable.

For me stocks with a 2-3yr min timeframe is where i'm looking; probs just 3-4 companies such as tesla/goog/amaz/apple etc. Risk wise, upside far outweighs the potential down, and spread across a few decent assets should give positive increase and peace of mind that if 1 'blows up' the others will mitigate.

Maybe its not just about what your fiancees current thoughts are/not, it might also be about taking the chance to work throughwhat those current conceptions might mean to her 'pot' in 2-3-10yrs?
( assuming 'truflation' is 10% per yr, £25K in 10 yrs = approx £10k)

[PositronicRay]

Nothing wrong with clearing down debt, you'll only pay tax on savings interest.

I always used to go 1/3rds. Treat, mortgage, pension\savings.

I'm not sure there's a 'right' answer.

[xeny]

FieldAtlanta said:

- She feels like it could be really useful to us in our next house move in years to come .

This is the tough bit. With inflation where it is, that lump sum is shrinking at ~10%/year. Pension overpayments now so you can afford to cut back contributions somewhat when you've moved/sprogged and money is tighter?

[Armitage.Shanks]

If you'd asked me the question when I was 30 I'd say invest it. Asking me now in my 50s I'd say spend and enjoy it. Perhaps a compromise spending it on your existing property to add resale value?

[Mr Whippy]

PositronicRay said:

Nothing wrong with clearing down debt, you'll only pay tax on savings interest.

I always used to go 1/3rds. Treat, mortgage, pension\savings.

I'm not sure there's a 'right' answer.

Indeed. No right or wrong.

Thirds is as sensible approach as any in my view.

Worrying about money too much is a waste of emotional energy.
Invest the energy spending some of it too, and have fun!

[Boringvolvodriver]

Mr Whippy said:

PositronicRay said:

Nothing wrong with clearing down debt, you'll only pay tax on savings interest.

I always used to go 1/3rds. Treat, mortgage, pension\savings.

I'm not sure there's a 'right' answer.

Indeed. No right or wrong.

Thirds is as sensible approach as any in my view.

Worrying about money too much is a waste of emotional energy.
Invest the energy spending some of it too, and have fun!

I would concur with both of the above ideas.

Given what the OP has said, then I am not sure there is too much merit in paying down the mortgage - based on spending £5000 on a treat, then perhaps split the rest into pension, share scheme and a one year fixed ISA.

With the pension and share scheme I wouldn’t put it all in at once, use the money to drip feed them so as to benefit from possible fluctuations.