I’ve just inherited 500K WWYD?

[Rubbishwithmoney]

Name changed and looking for advice. I appreciate this is a lovely financial position to be in but it’s also come with the loss of my parents and I don’t want to be accused of bragging. I’ve also not told many people in RL because of the current situation and I don’t want people to treat me differently.

I’m 30, married with 1 child. My father died a while ago and my mum suddenly died last year. I didn’t expect I would be in this position so young but I’ve inherited just over 500K. I had recently bought a house, so I’ve used 200K to pay off my mortgage and around 50K on some home improvements, paid off the cars and paid off a credit card. I’ve also put some in a child saver account.

My husband and I both have relatively low paying jobs (£25K) but we both really love our work. I’m currently working towards a qualification paid for by my employer and would need to remain in my area for at least 4 more years.

I’ve spoken to a family friend, who works in finance. He thinks I should lock the remaining 250K up in a bank and doesn’t believe in any form of risk.

I went to see a St James Place advisor and that seemed really positive but since reading St James Place reviews online. I’m worried about expensive fees, losing a lot of money in stocks/shares and paying large exiting fees if I want to take the money out.

I’ve also looked at property to buy to let as an investment but family friend and financial advisor both say this is a bad investment.

My main goal is to move away from the area we live and buy a property with land in a much more rural location. However, I would need around 750K to do that. I would be able to transfer my job and husband could either get a new job or work from our property doing holiday lets/Glamping type work. I don’t want to have to take a gigantic mortgage out that our small wages would struggle to pay back.

My mum would normally give me honest advice and I’m really struggling to make decisions without her.

So I’m asking WWYD with the remaining 250K?

AIBU to find a stockbroker to invest it for me? Should I put it in a ISA for 4 years and not touch it?

Thank you for any advice and sorry for long post x

Who would take any risks with 250 though?

Surely the majority would be safely invested and maybe 10 grand in some sort of gamble scheme if one must.

It depends on the timeframe. If OP may need the money within the next few years, then yes it should be invested in things where there is no risk of loss of capital. The price for that security is that the returns are likely to be pitiful - she will struggle to stay ahead of inflation.

The way to grow your investments in real terms is to take risk, because that’s where the reward comes. However, you need a longer timescale to be confident of a good return overall.

If you are investing for 10 or 20 years, “safe” investments will end up losing you money in real terms.

@CaraDuneRedux

My experience with premium bonds (30Ks worth bought when I had a 6 month gap between selling and buying a house) was that by the time you've got that much money in them, you do indeed get a return roughly in line with the odds which at that point was better than the rate banks were offering on savings accounts.

It's not guaranteed of course, but if you have a large amount in there (multiple 10s of thousands) it is highly unlikely you wouldn't clock up a handful of modest wins.

I'm sure there must be an online calculator out there - there will be some sort of probability density function along the lines of "for every 10000 people who invest 10K in premium bonds, 10 will be really unlucky and get nowt, 100 will be relatively unlucky and only get between 10 and 20 quid, ..., 40% will average out at bank of England base rate plus 1%, ..., 1 really lucky bastard (in 10,000) will actually win the jackpot." (Made up figures, but you get the idea.)

There is no guarantee you'll win anything, but for large amounts most people will win something, and you definitely get your money back at the end of it (which, frankly, is all most bank savings accounts are offering at the moment).

I haven't this amount of money but my ds1 did the same with Premium Bonds. You do need to buy a certain amount to get pay back, but mine said he's got far more back than interest in the bank.

Avoid all banks there robbers and avoid any financial advice about investing in anything been they only want to get rich themselves.
Keep as cash securely at home and you know it will be safe

I'd buy another property and rent it out if you've enough left over for a flat or similar?

@SavannahMiasMum

Avoid all banks there robbers and avoid any financial advice about investing in anything been they only want to get rich themselves. Keep as cash securely at home and you know it will be safe

Yeah, stick it under your mattress where it’s “safe”

Just wanted to add that while tracker funds have their place, I'd not dismiss actively managed funds either. They charge an annual fee because of their skills in picking baskets of shares to outperform the general market. And they don't all charge 1.5% annual management fees, most of mine are in the 0.5-0.85% category (and HL give a rebate on some of this fee for certain funds). I'd say active fund management is particularly useful at the moment when some companies (e.g. airlines and leisure companies) are disproportionately hit by the lockdowns.

I agree not all funds are in this category and there are some underperforming funds but Trustnet (free access) has some great tools where you can compare the performance of different fund managers against their peers in the same sector. They make it easy to analyse performance by year, cumulative performance, how their portfolio is invested (by company, sector and country), their volatility, fund manager rating and risk rating. We have an interest only mortgage with ISAs to pay off the capital (hopefully....) so I find this website brilliant for managing our ISAs and SIPPs.

I think the best advice here is to consult an independent financial adviser who will take into account your target reward to risk ratio and advise you on the best investments. We're all different and you will know what types of investment (whether property, savings or investments) appeal to you.

@JiminyLeeCricket

Oh yeah, GameStop shares tomorrow, 2.30pm GMT ...

This^ is the reason you need to be very careful about stocks and shares at the moment.

There's a drive to see how many hedge funds can be bankrupt.

Are you able to buy small property to let? It would provide a steady income into retirement.

My retirement money and DD’s education savings are invested in diversified age based funds. They are low fee and become less risk taking as you age.

This also means I don’t have to worry about conflict of interest disclosures if that is a concern in your career field

Don't do SJP, their fees are too high (although they aren't an outright scam)

If you keep your money in a bank at 0.1% interest, it will be eaten by inflation.

I think you should drip feed (meaning add say £1000 per month) into a low fee stock market tracker fund, that is wrapped in an ISA (you don't want to put all the money into stocks in one go because what is the value goes down 50% the next day!!)

Whatever else you decide, put some in a pension.

I have money due to being widowed. I’ve paid off the mortgage, have a significant amount in an easy access count and the rest is invested. I have a fund manager who talked me through it step my step and did a risk assessment. I get a good return and my capital grows. It does go up and down but far better than sotting in the bank / Isa etc. Happy to share the name if you DM me but it’s not st James place

My H has shares managed by Hargreaves landsdown and he's very financially savvy

Far safer than any bank however I don’t remember saying under the mattress but as you like to make things up carry on

You need proper advice from an advisor who will do a full risk assessment with you - please don’t take advice from the internet.

We are delighted with our SJP advisor - Independent Advisors are a minefield and I’ve know so many who have not acted correctly with clients monies.

I’m really sorry for your loss. Take your time, do your research x

@RB68: Use oup tax allowances in ISAs etc but know when you pull things out they could be subject to income tax on capital gains. MIL had one at around 30k but capital gains were 16k and tax will have to potentially be paid on that (although there is a sliding scale for how long she had it etc.)

Could you explain what you mean by "pull things out"? ISAs are exempt from Capital Gains tax. Withdrawals are tax-free, as are gains made within the ISA wrapper. Are you sure she didn't withdraw some so it was no longer in the tax wrapper, and then it made a further gain outside the wrapper, for which she was then liable to pay CGT?

And I guarantee that every poster here who complains about SJP fees is actually an IFA and is taking an opportunity to throw dirt when it’s actually completely rubbish.

I agree with all about the pension. Money you invest now will pay out enormously in 30-35 years.

If you put £50k in right now and never added to it again, you'd have £275k in 35 years (at a 5% interest rate, which is reasonable).

If you put in an additional £100/month, you'd have £384k.

And if you decided to put in £100k and then £100/month, you'd have £659,000 at 65, meaning you could happily and comfortably retire and live for the next 30 years.

If you want to use the money in the next 4 years, then I'd invest in some very simple short-term government or corporate bonds. The interest rates stink right nowabout 1-2%, give or takebut it's a very low-risk, liquid investment (or, it will be liquid in 4 years). £100k would yield about £4-5k extra over four years. It's better than a savings account.

I’m sorry for your loss.
Unless you know what you are doing I wouldn’t invest it in stocks/shares, let alone let anyone else do it and pay them.
Put it in an ISA and think about it, do plenty of research.

If you buy a property you are benefitting twice, as hopefully it will go up in value, plus also bring you £1000 a month. If you don’t fancy being a “landlord” you could buy some where that is rentable on a short term holiday let basis... Airbnb type. I reckon there will be a huge rise in people taking U.K. based holidays and the right place could let out for £1000 a week or more.

I wouldn’t buy 2 £60k properties however... I’d be worried about the type of tennant you would get, and having to go through non paying and eviction process is costly and frustrating.

I have shares through Hargreaves Landssown. It’s a long term thing, with some shorter riskier funds. I enjoy it, but obviously they are a lot higher risk

What sort of area would you like to move to eventually?

Find an IFA you feel comfortable with.
You have a medium time frame to move - it sounds like you want a rural home with a business, so a mortgage loan should be feasible, with a sizeable chunk from the sale of your current home.

Presumably ISA/NSI limits are per person, not per couple, so some could be in your husbands name.

Also - you are studying and in a low paid job - is it possible for one or both of you to reduce your hours and enjoy more time with your child? Or devote to your studies. Not reduce madly - but three or four days rather than five to maximise tax allowances. Dropping from £25k to £20k would mean a drop of less than £300 a month net.

I’d buy two smaller easily rented properties if I didn’t plan to move . In your situation I’d research moving sooner and buy a property with some land somewhere more affordable .

Buy a house for £350k, somehow invest £100k into some sort of pensin scheme, £50k in premium bonds as my emergency fund

I would put the max into premium bonds so its easily accessible at short notice. Then I'd invest the rest in property.

I use Moneyfarm - a robo investor - and it's fantastic. It asks you a series of questions to determine a suitable risk level. Definitely DO NOT just lock it in a bank - whoever advised you is an idiot given today's interest levels.

I'd call them and have a chat.