Before anything else, check your emergency fund. If you don't have 3–6 months of essential expenses in easy-access cash, £5,000 goes there first — full stop. Premium Bonds (4.4% tax-free equivalent for basic-rate taxpayers) or a high-street easy-access account are fine here. An investment account that can drop 20% in a month is not.

£5,000 is the ideal ISA starter amount. It's enough to build a meaningful position in a globally diversified index fund — VWRP (Vanguard FTSE All-World Acc, 0.22% OCF, the community default), PACW (Amundi Prime All Country World, 0.07% OCF — cheapest per Monevator), or HSBC All-World Index (0.13% OCF) — without the psychological pressure of watching a large sum during a market dip. The £20,000 annual ISA allowance is use-it-or-lose-it at 5 April, so if you're reading this near year-end, this is time-sensitive.

For 40% taxpayers with a funded emergency fund: consider a SIPP top-up alongside the ISA. A £1,000 gross pension contribution costs you £800 net — HMRC adds 20% basic-rate relief automatically, then you reclaim another 20% via self-assessment. That's a 67% instant return before any investment growth, and it's hard to beat even with easy-access savings at ~4.6%.