Hello wise mumsnetters
After some advice please. My OH and I have recently received an early inheritance from my grandparents (£200k) They're still alive but wanted us to have the money now (they're both in their 80s so hoping they'll make it another 7 years for tax purposes - and beyond of course!!)
We're under no illusions as to how lucky we are but feeling lost as to what to do with it?! We have a mortgage of about £110k on our house plus outright own another property. Savings of about £75k and no other debts. We're quite happy in our current house but may look to move in a few years for better schools / space etc.
Do you think we should be looking to move sooner rather than later as we have the cash, or should we be looking at investing the money somewhere? Know the basics of investing but never actually done it before.
Thanks in advance! Know it's a lovely problem to have but fearful of making a bad decision...
invest means risk, of course. Savings means no risk but you won't get above-inflation interest on most of that.
got any pensions?
In your position I would pay off the mortgage, but that's just me.
Some of my investments are spread over low risk companies (footsie 100) and move according to the market. Although anything to do with the stock market means a certain level of risk but there are different levels of risk but of course that is linked into the levels of return
Thanks for the replies. Very tempted to pay off the mortgage and then invest the rest. Inherently risk-averse but thinking investments will be better in the medium to long term!! Any tips on where to read about investments for people starting out?
See a financial advisor. Either independent or from a company such as a mutual who share your risk adverse values, I would never consider investing such a big sum of money without getting some professional advice.
I would pay off the mortgage too but if you have to pay a big fee in order to do that then maybe pay off the most you can without paying the fee and then wait till your fix is up and pay off the rest.
I think you're right about getting some financial advice. We keep going round in circles with no idea what to do. It does feel scary to be talking about investing such a large sum when we've no experience of stocks and shares.
Guess property is where we feel safest putting the money (we understand it!) but I realise this is the most inflexible option.
Is there any benefit to keeping the mortgage on our main house (we're almost at the end of our fix so could get a much lower rate) say if we bought another place? Maybe not...
Definitely make an appointment to see an independent financial advisor.
I do know a very good one - he's in the West Midlands if you're interested.
It is of course very difficult to comment without a fuller picture of your situation, your ages, incomes, tax situation, mortgage interest rate, future plans etc.
However your choice comes down to some combination of paying off the mortgage and investing. You sound quite risk averse and uncertain of investing. Paying off the mortgage is probably going to be the best risk free investment you can make, although I've no idea what interest rate you are paying.
You need to learn more about investing, I recommend reading Smarter Investing by Tim Hale and the Monevator blog. Avoid the noise generated by the mainstream money media.
There is no harm in going to see an IFA, but make sure you have educated yourself before you go so you can decide if they can offer you anything. Only pay an IFA if you have some particularly complex situation, or feel that you are unable to cope with opening an online broker account and purchasing Vanguard Lifestrategy funds for yourself, or enjoy paying someone else thousands of pounds a year.
You want to make as much use of ISA's and pensions as you can to shelter the money from tax.
You might want to keep some money in cash for the potential £80k IHT liability, or alternatively be prepared to remortgage the house if necessary.
Other than that, make sure you have one year of your living expenses in cash.
If you want to move house now, then move house now. If you know you want to move house in 3 years time and need X amount of money at that point you might put X amount of money in a 3 year term savings bond/account.
If you already have 2 houses, I suggest that you have enough property already and need to diversify.
No need to rush into doing anything while you are still uncertain. Take your time to learn more and consider the options.
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