Huge amount of money, no idea wtd with it(32 Posts)
Looking for some help please, I lost both my parents before I turned 20 and inherited the family home. I don't really have anyone to ask about money so thought I'd ask here.
I'm now in the process of selling the house and have an offer for £560,000. I've found a property I like and have put in an offer for £340,000.
Obviously there's going to be an awful lot of money left over once it all goes through and I have absolutely no idea what to do with it.
I guess the obvious thing to do would be buy more property but I don't really want the responsibility of being a landlord.
I'm so sorry you lost both parents so young. That must be really tough on you.
As far as the rest of the money is concerned, could you buy a property to let and allow a management company to deal with it, so that you don't have to do anything?
I would ask the services of an independent financial advisor. you will pay for their advice but it will be of better quality than the advice your bank will try and give you. I imagine they will make nice and invite you in for a chat thinking all their Xmases have come at once. They will only sell you investments in their own company.
I guess you need to factor in long term objectives for when you have your chat - put it all away as a nest egg for the future (pension or equivalent) pay for university?
you should also look at making a will ASAP so that in the event of your own death, money goes where you would like it to.
I am sorry for the loss that brings you to this point. Please do take advice from a professional.
You could use agents to manage the property for you. they'd want a good management fee (between 10 and 12% probably).
Actually, it's a bit of an 'awkward' amount - not enough to get the kind of help that a really high-level financial advisor is interested in, but too much for most people to know what to do with.
You could ask your bank if they provide financial advice, larger ones do.
But, having had a similar amount to invest over the last few years, as far as I could work out, property has still been the most reliable investment over any other savings, unless you have millions to put aside.
Or you could buy a Ferrari (joke).
Thanks for all the advice so far and the kind words. I think I'll do some reading up on management companies and letting out a property.
It sounds so daft but my big decision was deciding to sell the house, it's time for a new start and I just didn't think of the money that would be left.
And what part of the country are you in?
Get financial advice, preferably from someone recommended to you. Invest in stocks and shares and cash ISAs.
Sorry you are having to cope with this. Selling the family home is heart wrenching.
If you are recently bereaved then take deep breaths and leave critical decisions for 6 months to a year. It's just too much to deal with right now.
Sorry for your loss
l am a landlord, l really think your best bet is to invest in another property as realistically anywhere you invest you are not likely to get a return above the rate of inflation, so your nestegg may be shrinking year on year.
I realise it seems like a big responsibility but l invested in my first letting flat at 22 and it really was not hard and has given me a really good return with little hassle over many years.
Things to beware of,
Go for a freehold small 1 or 2 bed house ideally, as then you will not pay service charges ( which can be very expensive and are not in your control) and can simply do repairs as needed. If not possible then a leasehold flat with over 100 yrs on the lease and in really good condition.
Period properties need lots more maintenance, so a nearly new build is ideal, totally new means you will pay a developers premium, but 1-5 years old is ideal (bit like a car you pay a LOT for brand new) but don't want old either.
Must be close to good transport links, and within a 5 mile radius of large town. Simple trawling of rightmove will identify where gives a good return....
Lastly never believe anything an agent tells you, do your own research online re prices of properties and rental returns.
Consider full management, but hammer down the % you pay at the start before signing the contract, and make sure you do not pay for renewals if a good tenant stays for years.
It is quite a bit of work to start ...research, buying and then finding the right agent but once that is all done you can be fairly free of it.
Also as mortgages are so cheap currently you could get a 50% BTL mortgage and buy a better property...with a better return...if you do this l would fix for 5 years now.
It really is worth doing this now for future security...good luck
Have a plan, spend time researching what to do, don't rush in to making decisions.
You and young and single? So you don't need somewhere big to live. Owning a property outright, in the right location, can be a very good investment. Think about location, resaleability, avoid any kind of leasehold/management fee (new build estates can have these even on houses). Consider renting in an area before buying, so you can decide if you like the area or not and learn where the good streets are in which to buy property.
Avoid consumer debt - you can now be debt free. Stay that way by having an emergency fund (cash in an easy access account) of around 6 months expenses.
Invest in your retirement. Start a pension scheme. Use stock&shares ISA. Use tax efficient wrappers like ISA to protect the growth on your investments. You have a substantial amount of money, do talk to an IFA. Try to get a local recommendation for an IFA.
Using agents to manage a property only takes away the silly o clock phone calls. Landlords still need to become experts in the business because guess where the buck stops?
Pensions, proper financial advice, risk assessment. Possibly b t l but there appears to be a long term plan to get all rentals into the hands of housing agents (heaven help tenants then...) So as always, spread risks. Btl is not worth it with a mortgage.
Inflation is double official figures and savings rates are half.
Sorry you lost your parents at such a young age.
You really need to talk to an independent financial advisor. People here are well meaning, but that is no substitute for professional advice.
Poot - sorry for your loss
Sounds like you have a lot going on for you, and assuming your loss was quite recent you will still be grieving/ perhaps not able to 'think straight' about the future yet.
My advice to you would be along these lines:
1) Get the family house sale completed
2) Complete the purchase of your own new property
3) Put the balance of the cash somewhere 'safe' temporarily while you consider what to do next. Cash savings in banks and building society are only protected up to the first £85,000 under the Financial Services Compensation Scheme (and it's per 'parent institution' so check here for any overlaps www.moneysavingexpert.com/savings/safe-savings) so you may need to spread it across 2 or 3 accounts.
Alternatively NS&I, is state-owned/ HM Treasury-backed, so you could safely store the whole amount temporarily in e.g. a www.nsandi.com/direct-saver account, while you decide what to do next.
4) Spend some time settling into your new home and making it yours
5) Consider what to do with the balance of your inheritance:
- research options e.g. talk to local rental agents
- talk to 2-3 independent financial advisors
- talk to people in real life and online for ideas
There's no need to rush into a decision immediately.
Big thanks for all your responses. I'm going to start researching financial advisors and have a look at what advice they can offer me.
Unless you want to landlord, I'd say no to property.
You can find really good advice online so I'd start with thinking about how you feel about risk, stocks, long term, short term.
Most urgent, get the money divided into accounts with different banks, remember who the parent company is in terms of ownership. There's a guarantee of up to 70 or 75 or 80k - sorry forget which - in case of any bank going bust.
Sorry, didn't see Jng post which covered all of my points properly! Ruddy phone.
There are loads of investment opportunities. A good financial advisor will look at your whole situation and advise you on that. Is your pension fully funded? Have you used your isA allowance? Do you have money in safe and high-risk investments? Buying a rental property is not the only option - and has become less attractive since the govt recently cracked down on landlords.
Ask friends for recommendations for financial advisors - my dh is an IFA and gets all his work from word-of-mouth referrals.
KickAssAngel - a 'high-level' financial advisor - and a good one - will be interested in all clients. Not just HNW ones.
Invest in classic cars. No capital gains tax and the market is booming...
In all seriousness our financial adviser told us that we should have at least 3 months salary saved for emergencies. So I'd make sure you had that. Split savings between long term investments, mid term and short term.
I agree with all those saying to speak to an IFA. Even if you think their fee is high for meeting with them, they will earn your far more than that much back.
Ask your parents friends, colleagues, Aunts, Uncles, maybe neighbours you trust for a recommendation, as just searching the internet could land you with anyone.
I'm so sorry for your loss, I can't imagine my dc (similar age to you) having to cope with all this at your age.
Just to add my tuppence worth...
Firstly, so sorry that you've lost both your parents at such a young age. .
Make sure you go to an independent financial advisor as some can only sell products from their own company or limited amount of other companies, Don't be pressured into doing anything you don't feel comfortable with- you don't have to follow their advice! Read the money pages in the newspapers- The Guardian, Telegraph, even The Daily Mail, and you will start to acquire more understanding.
I'd also say, don't lend friends money if they ask, you're unlikely to get it back as they will see you as loaded. Do any of your friends have financially savvy parents that you trust that you could talk to about your various options? There are lots of possible pitfalls to be aware of that an older financially savvy person could advise you about...
Property is probably the best way to go to be honest, and people here have already given good advice about the type to look for. Property is so good as it keeps pace with inflation plus you get the rental income.
Being a landlord is not that difficult in the main, so long as you have a decent property in the right location. I have a couple myself that I self manage, but do use an accountant annually to do my tax returns. A good accountant, though not cheap, should be able to actually save you money.
If you decide not to do anything immediately, do be aware that it's easy to fritter away quite a lot of money quite quickly, so you may want to keep the large sum in separate accounts to the one you use for day to day expenses.
Lastly, it's well worth using your ISA savings allowance each year, to squirrel away the maximum allowance of £20k so that you don't pay any tax on the interest earned.
I think this is probably a good place to come to talk over your thoughts and get some feed back whenever you need to get a second (or tenth!) opinion.
I hope it goes well for you and that your new home goes through smoothly for you
POOT, I strongly suggest that you listen to TRAVAILTOTRAVEL, good, solid advice.
I'm very sorry for your loss. 💐
I disagree that BTL (buy to let) isn't worth it with a mortgage! So long as you own the property you live in, then an interest only mortgage on a btl is well worth it. Depends on the loan to value too. You also have the long term capital gain as profit.
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