What to do with a £300k inheritance?

[adviceseeker22]

Yes I know it's a good problem to have.

I line an easy life so even though I though in RE at first, it seems like too much hassle and not enough ROI.

Investments (via a broker/advisor) I don't know, but for some reason I don't fully trust it. I'd be happy to do it with a bank though.

The last option (and most sensible one) seems to be to pay off the mortgage, and get an ISA where we put our savings.

BTW pensions wise, we seem to be doing OK (even if I think it's quite small these days, projections show it will be ok once we retire, and I'm pretty sure we don't need 2/3 of our income).

Just pay off your mortgage, but check early redemption fees. We paid ours off ours very early as we had an investment make good. It means that ultimately we will both be retired by age 58. In theory DH could retire now but he wants to see out a major research project he is involved with.

Put the rest in an ISA, look to your pension. Do not put money in children’s names they can do what they want as it’s theirs when they hit 18. They may be a sweet 6 year old now but you have no idea what they will be like at that age. I still have money for DS, he is actually incredibly sensible as it turns out. DD was less sensible at that age, no drugs or anything but she subbed her BF at the time.

We have never used the services of a financial adviser but we are financially savvy. They get paid to sell financial products. But both DH and I were dabbling in the stock market for fun as teenagers.

To be completely unromantic, if you pay off the mortgage then split it will be counted as family money and you'd lose half.

I've actually spoken not to one but to three financial advisors! The last one gave me some insight which is why I concluded that maybe I'm better off by paying off this mortgage.

To answer some questions:

Yes were planning to move house to live closer to DHs family (that's about 6 years in the future)

Which brings to the whole idea that making massive improvements in our current home doesn't make a lot of sense

Refreshing kitchen/bathrooms absolutely, but that was always planned to come from our disposable income.

As of today, our monthly disposable income is of £2300. (That's after all bills, food, insurance, mortgage, some savings etc...) If we pay the mortgage it would be £3500. So some of it would go into the ISA world. Compound interest calculators show, that staying within our ISA limits and with average interest, we can reach close £800k within 25 years.

Personally I don't think I want early retirement, but I say that now!

Always pay of debts first as they cost you money.

@YoBeaches That's faulty logic.

If the interest rate you are paying for your mortgage is lower than the money you make from investing/ saving the money (which it often is if you invest wisely), then you are better off doing that.

We paid off our mortgage, got the bathrooms done, got a new kitchen, replaced some windows - all stuff for the house. Our feeling was that it we did all of it now then we wouldn't need to do anything when we retired (only 10 years to go for me at the time) and it future-proofed it for if/when we got decrepit. We have a little bit left in savings for contingencies, we don't dip into that. We keep within our income and save a little, to make our retirement more comfortable, but we know we won't have to worry about whether our home is safe and comfortable to live in and we won't have to move out.

I'd buy a house 300k buys something fairly nice, but not overly large or fancy round where we are. Then move in and sell the house were in now. Then buy a holiday apartment in Spain's and help the kids with some of the left over.

Scratchcards

Talk to an IFA

paying off mortgage is unlikely to be best option, many investments will offer a stronger return than your mortgage is costing you.

ensure you’re maxed out on pension contributions

I think the point of paying off the mortgage is that givez instant "relief". There might be ways of multiplying the money, but I wouldn't have it in my pocket for a day to day. I want to enjoy as much as possible while I'm still young(ish).

1000% pay off your mortgage before doing anything else x

Pay off some of your mortgage and put the rest in a couple of bank savings accounts. Don’t waste money on a financial advisor or bother with stocks and shares in this volatile market

Not that I know the UK financial situation but my 2c is from a newspaper article here a couple of years ago about retirement prep.

The recommendation was that if you have older appliances (car, fridge, oven, hot water, washing machine), then update them if you can as they will cost you less in the long run.

What is your house like in the heat? Could you spend a little to shade your southern windows with a pergola and creeper/shade cloth or something? Do you plan in staying in the house for a long time? Would you need to think about access? A little planning and prep now may go a long way in the future.

I'm so sorry you had to lose someone to have this money.

In your position, I would pay off the mortgage, have a lovely holiday, upgrade my car and put the remainder into a pension scheme. That way you will see an immediate benefit with the holiday and car and long-term benefits with a pension. Every single month you'll be grateful for having that extra money.

If you have children would you want to consider private secondary schooling? Tbh I might consider that if I personally was comfortable enough.

100 per cent Premium Bonds. I have the max amount allowed and I’ve won a prize about 12/13 times x

How old are your dc.
I had a surprise with dd 2 and ideally she needs private school. We've had a very different educational journey with her than dc1
So bear that in mind. If I had 300 k I would be putting some aside for tht.

Have you got savings for the dc, if not open up isa, stock and shares one, sipp, self invested personal pension for them. Put about 5 grand in each, this will be a good sum esp if they add to it later on and a wonderful boost for them with very little effort.

Sipps for yourselves and pay something off mortgage but don't put everything off it.
It's very rare to have access to such cash!

Pay off your mortgage and set up regular savings into ISAs and your pensions. Depending on your house and location investing in renewable energy retrofit (solar, heat pumps) will pay back in a few years now bills are so high (and add value to your home).

Pay off mortgage and debt. Put any surplus into pension. Then use the freed up monthly mortgage money to split between increased pension contributions and increasing lifestyle (whether that means more treats/holidays or rainy day savings, or a mix).

I have an independent financial adviser and he'd say pay off debt and put all surplus and increased monthly money into pension but I'd prefer more of a balance between planning for the future and enjoying life NOW.

Just be aware that a bank can only offer you products from their range.

Most banks can’t give advice unless they are a financial advisor. If you pop into branch to open a savings account you’ll probably be seen by a “consultant” (my job) who can only give you info to make an informed choice, where as an IFA can advise on what to do with your money.

Plus for that amount of money we’d have a duty of care to signpost you to a financial advisor.

If you pay off current mortgage, will you need a mortgage when you move in 6 years time?

Yes, we'll most likely need a top up mortgage for the new house. We wouldn't spend on private schools, just not the biggest believer in them.

What interest rate have you got on the mortgage?

Heart says pay off mortgage.
Head says you could well get a better return elsewhere we paid off the mortgage and are now putting that extra cash into S&S ISA and premium bonds

3.5% is our current fixed rate if memory serves well

Definitely pay off mortgage. It’s not the best ROI but it will give you options if you want to retire early. Then you can invest your income in a more productive way if you choose.

When I was younger, or even 5 years ago, I couldn’t imagine wanting to retire early and thought I’d always work even if I didn’t need to do so. Today I would jump at the chance.

We had an inheritance and paid off the mortgage and put the rest into savings. We’ve never regretted this course of action. It meant that when the DC went to uni the monthly mortgage money could be used towards the parental contribution to uni costs. Before and after uni we saved the mortgage amount each month.
Also don’t dismiss the fact you might want to retire early eve though you don’t think so now. After a couple of friends/family died at a young age and increasing discontent at office politics/targets etc we decided to retire at 56/58. The fact that we have no mortgage to pay means our fixed direct debit outgoings are less than 500 quid, this meant we could take pensions early and still live well.