What to do with £5000 (again)

August 26, 2016 6:59 AM

Through surprisingly painless saving I find that I have £5000. For those not in the UK, the Bank of England has dropped its interest rate yet again so leaving it where it currently lives in a savings account seems like a lost opportunity (I just made £0.99 last month on interest. Woopidy doo.) I googled around for some ideas and found this, which is hilarious because that's me 7 years ago and things have changed since then. So what should I do with £5k now?

I am now married (just had our 6 year anniversary yay!) and my husband is awesome on the money front and because of him we've got the basics covered (ie: safety net, pensions, even paying down the mortgage faster) and I am able to pay off my credit card every month.

I could just chuck this as a bonus into our joint funds but I feel like this is my money that I have squirreled away in the past year and I want to do something with it for myself.

I'm wavering between "treat yo self" and "make it grow" and "do good" so I'd appreciate suggestions that go into any of those buckets although I think I would be most interested in "make it grow" ideas. (Assume that I will also keep doing what I'm doing and maybe save another £5k in another year)

posted by like_neon to Work & Money (10 answers total)

How much travel have you done? This screams "vacation" to me.
posted by sacchan at 7:04 AM on August 26, 2016

1) Have you maxed out all your ISAs? The current limit is £15,240 per person this year, which is a fair bit. My personal savings plan is as such -- saved diligently into Medium and Long porfolios of index funds.

2) Treat yourself: Vacation ideas
- Galapagos for 2 week holiday is about £3000 per person for a nice packaged tour
- South Africa and surrounds for 2 week holiday is about £2000 per person (incl economy flights, *very* nice accommodations, car, fine dining). The rand has dropped significantly.
- Namibia/ Botswana for 2 week holiday is about £3000 per person (incl economy flights, average to very nice accommodations, own car)
- Japan for 2 week holiday is about £3000 per person (incl economy flights, train pass, 3.5 - 4 star hotels, eating out, skiing, occasional amazing fine dining)

YMMV.
posted by moiraine at 7:22 AM on August 26, 2016

As was recommended to me in my own personal what do I use this money for thread, start a Fuck You Fund. I now have a savings account (the goal icon for the account on Mint is a middle finger) that holds money for the sole purpose of me saying "nope, done with this shit" and walking out of a job relatively worry free.

I have no dependents or debt and I don't like traveling, the thing I like most is freedom to just do me, so this really really appeals to me.
posted by phunniemee at 7:24 AM on August 26, 2016 [7 favorites]

Treats - with a big sum, it's always tempting to scale the size of the treat accordingly (and I'm not saying you shouldn't do so if you want to) but it's worth thinking about whether there's anything you'd like to do that will cost in the low hundreds - you could have a really nice meal, or a weekend break, or go to an event you would enjoy without eating up all the money.
Doing good - similarly, one thing I've started doing more is giving small amounts to things I value - a couple of Patreons, MeFi, Kiva and I enjoy the process.
Growth - biggest low risk return on investment you can probably get is to overpay on your mortgage if it allows that. Although rates are low, they're likely still higher than anything you can get in saving the money.
posted by crocomancer at 7:36 AM on August 26, 2016

I would spend $500-$1k on a trip, and invest $4k however it makes sense to do so, preferably in index funds in a tax-advantaged account (which sounds like its an ISA in the UK, but I don't know enough about UK finance to chime in on that front).
posted by craven_morhead at 11:03 AM on August 26, 2016 [4 favorites]

Put equal amounts into right-now fun and doing good, and add the leftovers to longer-term savings.
posted by clew at 3:00 PM on August 26, 2016

You could buy a house for £5,000.
posted by parmanparman at 3:29 PM on August 26, 2016

I'm with phunniemee on this one. The FU fund got me out of an unexpected bad situation that came almost overnight after ten years at what was up to then, a wonderful workplace.
posted by storybored at 8:17 PM on August 26, 2016

My bank just notified me that the interest rates on both my savings account and my ISA will be dropping to 0.01% at the end of October, so... yeah. I guess the banks just don't want our money any more.

Growing money seems hard at present, other than by overpaying the mortgage, which you're already doing. How about combining the other two options, with lifetime membership of a cause you support?

For instance, do you enjoy art and artefacts? Lifetime membership of the Art Fund is £1,500 for one adult, or £2,250 for two. (Most of the big museums and galleries offer their own memberships, but they seem to do annual membership only, typically in the £60-£70 range for one adult.)

Historic buildings and beautiful gardens? You could support the National Trust with lifetime membership for £1,555 for one adult, or £1,885 for two. Or English Heritage: £1,200 for one, £1,750 for two.

Conservation? You could become a Life Fellow of the RSPB for £1,300. "RSPB Life Fellow Membership covers two adults at one address."

Uh... beer? CAMRA offers life membership for £432 for one, £531 for two.

And I'm sure there are plenty of other good causes that would be very happy to offer you shiny membership cards and free entry passes in return for some of your £5k.
posted by ManyLeggedCreature at 9:29 AM on August 27, 2016 [2 favorites]

Dumping it into the mortgage would give it an effective growth rate (realized in lower interest payments) equal to your mortgage interest rate, which might be better than any investment you could make with it.

The downside of that is that it provides no liquidity at all --- pulling it back out of the mortgage once it's in would be very difficult, so if you wantto have this money available for emergencies, it's not optimal.
posted by jackbishop at 9:04 AM on August 28, 2016 [1 favorite]