The recent hype surrounding record-breaking lottery wins has got everyone talking, so the question is, just what would you do with a windfall? SunLife has delved a little deeper into the question, and it looks as though many people are more sensible than you'd think…
SunLife found that 69% of retirees expect to leave their children an inheritance worth an average of £101,818.52, so their survey asked respondents what they'd do if they were to receive this kind of windfall. Perhaps surprisingly, 87% said that they'd save more than half of a £100,000 sum, committing to put £55,994 into a savings account.
Of course, spending would be on the agenda as well, with three-quarters of those surveyed saying that they'd spend £19,568 of the total. The majority of respondents (72%) said they'd spend the cash on a holiday, while 50% would earmark it for home improvements and 40% said they'd be on the lookout for a new car. A generous 31% would spend it on their children or grandchildren, while 19% would put it towards an epic day out, and 16% would use it for a celebration or party of some kind.
However, most wouldn't splurge mindlessly, with more than a third saying that they'd use around a quarter of the windfall to pay off their mortgage (£19,860) and other debts (£4,577).
"It is really encouraging to see that if we were in the lucky position to inherit, or perhaps win, a large amount of cash, most of us would do the sensible thing – pay off debts and save," said Ian Cooper, head of Savings at SunLife. "You will rarely be able to earn more on your savings than you will pay on your borrowings, so paying off debts before saving is a good rule of thumb. However, you don't want to be in a situation where you have no savings at all to fall back on," he cautioned, so it's all about balance.
As long as you can keep up with your mortgage payments and credit card bills it's quite possible to have your cake and eat it, and you'll want to make sure you've got an emergency fund stashed away so you can cope with any unexpected events. This is where a windfall can come in particularly handy, but you don't need to be gifted the money to build up a suitable pot.
Whether you win some money, receive an inheritance or simply want to use your disposable income to grow your savings, it's all about making your money work as hard as possible. That's why finding the right savings account is so important, but with savings rates languishing, you may be tempted to look at the alternatives – which is where a stocks & shares ISA could come in.
The phrase "stocks & shares ISAs" could well sound intimidating to those unfamiliar with investing, but as Ian Cooper explains, these forms of investments don't have to be complicated. "There are plenty of stocks & shares ISAs out there for people looking to beat cash," he says, and although they're inherently riskier than their cash-based counterparts, you can often choose how risky you want your investment to be.
They could be a viable solution for those looking to secure better returns than they can achieve from traditional savings accounts, and could be a perfect home for a windfall – provided the saver is aware of the risks. Find out more about stocks & shares ISAs by reading our guide before taking a look at the market, or if you'd rather stick with cash, check out the top savings accounts to make your money work as hard as possible.
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
Moneyfacts.co.uk will, like most other websites, place cookies onto your computer’s
hard drive. This includes tracking cookies.