Investing a Lump Sum

If you are lucky enough to have a decent lump sum, the main dilemma is what to do with it. Should it be invested? Should it sit in a high interest account? Or should it simply be spent on that highly desired object? Whilst this may not necessarily relate to you, a surprisingly large number of people will come into a lump sum during their lives, maybe from an inheritance or a house sale, so it can be worth getting some ideas just in case it happens to you.

Pay Your Debts

The first recommendation, before anything else, is to pay off any outstanding debts. Once all debts have been paid in full the remaining lump sum should be simply placed into an easily accessible bank account while you undertake some research.

Tax Free Banking

There are many avenues to pursue, but tax is an important issue at this point. Base ratepayers will pay on any amount over £1000, but higher rate taxpayers pay on £500. Locating a good ISA is a good start as it offers tax-free banking. However, only a certain amount of money can be placed in an ISA during a single year, so it is unlikely that the full amount can be placed in one.

Premium Bonds

Premium bonds can also be a safe option and offer you the chance to earn even more money. Run by HM Treasury and all dividends are tax-free. However, in the current economy it is still sensible to invest some in the stock market, particularly if the money isn’t needed for a period of over five years.

These are just a few suggestions, but it’s very important that you do your own research as well.

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