40K to invest right now

[worm]

Hi there - I realise that I should be able to figure this out from existing posts but..

I have the following situation:

We owe 91K on our home worth about 350K, no other loans, etc but three kids so I guess the college fees will be starting in about 6 years.

We recently received a lump sum of 40K after a relative passed away.

What are our best options for savings ..? This is what we were thinking

Option 1:
10K in RABO
10K: in mortgage
20K in savings account to drip feed 1K / month into anglo-irish bank 7% regular savings account

Option 2:
10K in RABO
20K in investment fund - e.g one of the rabo-thingys or perhaps quinn life .. don't really have a clue about these.. any recommendations?
10K in Mortgage

Do these look like wise paths forward to you, and can you suggest any alternative strategies? I know nobody is going to tell me what to do but I'd be interested in some of your opinions. The gist is we'd like to put ourselves in a position in 6 years time that we could think about perhaps buying an apartment in whatever town that the kids end up going to college in (if property prices continue to fall).

 

[ClubMan]

Option 2 due to the investment in a unit linked fund differs significantly from Option 1 in terms of risk/reward. It's not clear how you arrived at either option. I suspect that you might need to get independent, professional advice from an authorised advisor or good multi-agency intermediary who would be better placed that people here (acting on partial info) to do a comprehensive fact find/financial review and recommend a range of possible options to you that are specifically designed for your particular circumstances.