So a few of you might remember me mentioning this in the chat, but about a year ago my "grandfather" died. I put that in inverted commas because whilst technically he was my grandfather because of biology, I never actually met the guy nor even saw a photo of him. All I know is he was divorced from my Granny sometime in the early 70s leaving her with 3 kids and he was pretty much never mentioned again.

Anyway last summer this guy kicked the bucket leaving my mum and her two brothers as his only next-of-kin. His estate apparently defaulted to the three of them and today I received a cheque from my mum; Part of what was left to them. I'm not going to tell you how much money it is, but I will say it's a 4 figure sum and about the equivalent of 6 months wages for me.

Anyway I have no real plans for it so it seems like it'd be a good idea to open a savings account or an ISA or whatever, however I'm entirely clueless when it comes to this stuff. Can the more economically minded 'ians explain just what I should be looking for in a savings account?

Alternatively you could always suggest things to throw it away on! Inb4hookers&blow.

Does this even have to be asked?

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Four figures is 6 months pay?

I guess that's in British pounds so it's worth more, but at first blush it sounds like you're poor.

buy me

http://www.ksl.com/index.php?sid=733005&nid=443&tab=images/view&ad=4398752

this car + a fabricated hardtop to fit it during utah winters.

Do it

At the moment, interest rates are rock bottom, so shoving it in a savings account or ISA (ISA is tax-free savings, but you can only put in... er... 3K a year?) is safe in that won't be exposed to any risk, but it's little better than shoving it under the mattress at the moment.

If you truly have no plans for it, then you might do better looking into a fixed rate bond, which will get you a higher interest rate, but lock the money away until the bond matures.

If you have any debts accruing interest, paying those off wouldn't be a bad move either.

It all depends on your circumstances though.

I do have some student loans but I'm not required to pay those back until I have a degree and I'm earning something low like £14k a year.

Be aware that the Student Loan (despite Government promises when they were introduced) is accruing interest. If you have nothing to do with the money, and the interest rate on the loan is higher than the best rate you can get on a savings account, then paying down the debt could be a sensible investment.

What is the average cost of living in your neck of the woods?

Maybe easier to answer...

What do you have to make to be able to afford groceries and a few drinks one night a week?

Oh I know but my loan is very small at the moment and I won't be needing to take out any more loans for the course of my degree either. Paying some of it off to reduce the interest could be smart but honestly there's not that much that's going to be added over the next 2-3 years.


About £40, but for the time being I live with my parents [again.]

Put it in the bank towards buying a house. Thats what I'd do. Stick it in a high interest CD and forget about it til it matures, then repeat.

The difficulty with investing small sums of money in something safe (e.g. a Certificate of Deposit or CD) is that your return will likely only keep up with inflation or just a little better. Even a 5 year CD only offers about 2%+. You could amost do or do just as well using a high interest checking account & paying in to it as much as possible.

Does your employer offer any sort of stock purchase plan? I used to work for a growing company that matched my investment up to 5% & I would collect my reward every 6 months, often doing rather well for myself (enough to fund a vacation each time). There was no risk of me losing more money than I put in to this option & it was a pretty safe bet that I'd make a decent profit each time. This is obviously dependent upon how well your company is doing.

I'm a big fan of paying off debts as quickly as possible (I paid off my student loan for Community College in a year) but it doesn't sound like you want to go this route. If you have the interest & enough free time to learn about investing, direct investing may be an option. You didn't know you were getting this money, you don't sound like you're going to die if you lose it & you're not investing a substantial enough amount to prompt suicide if you **** up. This could potentially yield a reward or a headache but it'll certainly educate you. There's always mutual funds as well. Some of them give you a decent amount of control over your stocks.

If you want to try your hand at philanthropy you could always become an angel investor. There's a very high risk but there's often great perks & rewards if things turn out well. Starting your own part-time business could also be an option. My brother started a window washing company for a few thousand dollars & did quite well for himself.

Eat it.

I would go the payoff debt route, but that's just me. I can't stand to keep loans around for long at all, because I know I'm losing money the longer they go unpaid. I paid off my first car in a year and a half, and I'm planning on paying off my Mustang in the next few months (and honestly the interest on that loan is incredibly low, so it's not much at all, but it still bugs me).

i would say start a small business, pay off your current debt, or if you feel like taking on a little risk and trading vigilantly,... buy silver! because its fun and you feel like a pirate!

If the interest rate on an auto loan is low enough, it's not a big deal. If I go full term on the car I just bought for 25k, I'll end up paying about 26k. I won't go full term, but I won't save that much paying it off early, either.

If you are making the minimum payments into the loan to prevent additional fees, and you have some kind of savings account with a higher interest than the interest on the loan then you're better off putting extra money into the savings a/c because you earn more money that way than you save by paying down the loan early. (Compound Interest cuts both ways!)

This is likely the case with Bacon as the interest rate on a student loan is (I believe) lower than available on the market.

It also sounds like you're still a student Bacon? Not really sure if this will change much, but it probably reduces some of the options available to you as you don't have an income stream - therefore using the money in combination with a loan to make mega-bucks, with a tidy profit after paying back the loan probably isn't an option because you won't be able to get a loan.

Really, I think the biggest question you need to ask yourself is what is your risk tolerance? Are you prepared to potentially lose some or all of this money in exchange for a potentially higher return? The best route for you is dependent on your answer to that question. (I'm assuming that easy access to the money isn't necessary because it's an unexpected windfall, but if you do want liquidity then that will change things as well).

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I've got a cash ISA, but interest rates are pretty sad at the moment. I would say that not running up additional (student) debt is a good plan, considering how low savings rates are. Sounds to me like putting a big chunk of it in a fixed-term account seems sensible, as long as you're confident you won't need it for a few years. I can't see savings rates shooting up anytime soon