Moneywise readers are divided on what to do with a small windfall as reflected in our latest poll.
Nearly one in five (19%) readers would put the money into the stock market using a Stocks and Shares Isa.
A similar number = (17%) would opt for a cash savings account instead though, perhaps opting for the safety of full FSCS protection over the riskier stock market. The split reflects a perennial battle between savers as to whether cash savings or stock market investments are better.
While cash savings are much safer owing to protections from the FSCS on deposits, investing is seen as a much better option for higher returns. Many of the top savings accounts pay rates of interest that don’t beat inflation, therefore devaluing the deposit over time. Check the Moneywise savings best buy guides for the top cash accounts.
Just 5% of readers said they would use the money to top up their pension pot.
Treat or debt?
Some 14% would use the money to treat themselves to purchases such as a holiday, gadgets or home improvements. But more than one in 10 (12%) would use the money to pay off debts. In either case, it is best to consider how you go about it. If you don’t have access to a £5,000 lump sum to pay down debt on a credit card, it may be in your best interest to find a 0% balance transfer card to prevent accruing more interest charges. Check our guide for the top picks.
Finally, nearly one in five (19%) said they would use the money for some or all of the options, reflecting that many have a mixed bag of personal finances. Many readers commented that they would use the money to help their children or grandchildren – to help loved ones on to the property ladder or with university fees. One admirable reader reflected: “I would buy myself a Mars bar and give the rest to my grandchildren.”
See the full poll results below: