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

I couldn't think of worse advice than investing in a crypto currency.

@Rubbishwithmoney

And be thankful.

Speak to your bank. They love this kind of problem. My parents bank gave them a meeting with a great financial adviser, they explained they wanted very low risk and he sorted them out with a great investment that gives annual income - more than their annul pensions - and their pot of money was a lot smaller than yours.

Property will be at all time lows soon with people having to sell and being in a recession if you can buy something mortgage free you could be laughing

@Viviennemary have you ever invested in crypto? Or done any proper research into it? There's a reason why the richest man in the world is tweeting about it and endorsing it...But you stay there saving via the bank and getting a measly 5% interest a year

Another one that says DO NOT invest in crypto currency. It’s value shot up significantly with Silk Road on the Dark Web but since that no longer exists, the value plummeted. Those days have gone.

I would not recommend St James Palace for financial advice. I would go on to your local Nextdoor community forum and ask for recommendations:
nextdoor.co.uk/news_feed/
I have found it an invaluable source of good advice from neighbours on many topics.

St James Place probably do have hefty fees because they are used to dealing with very rich people. But I have a friend who is a St James Place advisor (he doesn’t advise me as I’m not very rich!) but I would TOTALLY trust his advice. They have a very good reputation.

@Scotland32

St James Place probably do have hefty fees because they are used to dealing with very rich people. But I have a friend who is a St James Place advisor (he doesn’t advise me as I’m not very rich!) but I would TOTALLY trust his advice. They have a very good reputation.

SJP is just basically an umbrella for IFAs to work under. They take care of compliance and often back office systems for the IFA They have IFAs of all sizes affiliated to them who work with clients who have all budgets. Quite often the IFA will sell all or part of his business to SJP but still run the face to face aspect of it, it’s not unusual for the company owner to use SJP as a way to semi retire or hand over entirely As the IFAs are to some extent independent there are a whole range, some good and some bad The reason SJP have a bad reputation in some quarters is that there have been accusations of them treating the IFA co owner badly and not delivering what was promised. A lot of Independent IFAs hate them but equally there are many who work under the umbrella or who have sold to them who are very happy. The other issue is that there is allegedly some pressure for the IFA to steer clients in the direction of products that make the most money for SJP rather than the ones that suit them best. SJP fees also tend to be on the higher side because both the IFA and SJP will be paid in a lot of cases I know it’s not what OP asked but I thought it was worth clearing up some misconceptions

There are other Financial Advisors that can help . You do not need to go to St James Place. I would not just leave in banks as the interest rate is so low. I would ask around for recommendations for financial Advisor. They will look at all your plans and help you find a path that will help you.

Sorry for the loss of your parents. Sounds like you've been really sensible with the money. If you don't already have an emergency fund then allocate for that and keep it in premium bonds so you have easy access. Before the end of the tax year max your isa contribution, for you, your husband and your child. The rest invest into s&p index, platforms like vanguard and fidelity have very low fees. If you'd prefer to invest via an advisor look for an independent advisor, 0.5 - 1.5% commission of your total fund is usual or you pay a flat fee. Investing it is less hasslesome then property which has become less lucrative for a one off property, also means your money is completely tied in. Good luck!

Top up your pension : the government give you 20 percent on top of your contributions. Long term investment. No-brainier unless you have a life limiting illness and expect to die before age 55.

5% interest in a bank??. Please tell me where. Property is the best investment but choose carefully and buy at the right time.,

Or...you could make regular additional pension payments from the money you no longer pay into your mortgage.

And have a think about what to do with this capital.

Personally, I would buy a house/new build to rent out.... then I’d probably give that to my child later on in life! I wouldn’t spend the full £250,000 though. I’d definitely be planning a nice holiday and something nice to look forward to.
I wonder what your mum would’ve advised you to do?

I manage our family's investment portfolio and can share what our advisor has taught me.

At the very basic level, you need to understand both what your investment horizon is (the longer the better) and what your risk tolerance in.

Keeping money in a bank account if you have no need for it past 24-36 months makes no sense as it will not keep up with inflation and you're essentially losing out on any growth.

If you do have a long term horizon I would suggest a very basic 60/40 split. 60% of your money in equities (stocks) and 40% in bonds. This is a standard formula for asset allocation that ensures you have diversification within your portfolio and thus brings down the risk. In the equities piece of your portfolio you have to look at it through a risk lense as well. You take on more risk if you have a concentrated equities portfolio, I.e you chose a few stocks and are more at risk of your portfolio losing money if one of the stocks doesn't perform. If you are not a sophisticated investor investing in an index which gives you breadth may not be a bad idea.

When evaluating advisors, there are two types of camps. Ones that own the products that they sell as they have investment teams in house. The other camp goes out and puts together best in class products across the industry. In those instances you are paying two layer of fees. One to the investment advisor and often built into that are the fees you would pay for that specific product.

When asking questions, I would think through the following:

1. How much liquidity do I need from this money over the next 10, 15, 20 years
2. What is my risk portfolio and how do I define risk? Am I going to be emotionally ok and not take the money out if the markets go down for the next couple of years?
3. What are the fees? Not only the management fees but also fees if I want to send wire transfers, do trades?

Just some thoughts!

Sit on it till the world is the right way up. Hopefully we will be ok by 2023. sorry for your loss but remember your mum would be happy with what you have already done with it.

@Pipandmum

Bouffant? Bouyant!

Buoyant (sorry 😬)

Don't put more than £85K in any one bank.

Peer2Peer lending is fun - good interest rates and high risk: the better the interest rate, the more the risk.

Avoid SJP , far too expensive and under performs.

Jesus Christ @Rubbishwithmoney, there’s some dangerously ignorant, bad, wrong and double wrong advice here. And this is your parents’ hard earned inheritance!!

I have worked in this industry a long time so I do know what I am talking about. Please get independent financial advice before deciding anything. Proper independent financial advice. Not Mumsnet. Not a relative. Or a neighbour or family friend.

Not St James’ Place. Whoever said SJP is a network of IFAs is WRONG. They are chartered financial planners and they are not independent: their job is to recruit customers to SJP & SJP funds. They charge extremely high fees, including an exit fee if you take your money out in less than six years. Yes they give very attentive service, but you need your money to work as hard as possible for you, not giving it away in high fees.

A proper IFA will ask you lots of questions about your financial goals, how much risk you want to take, what your employers’ pension provision is like, and they’ll factor in how old you are too. They can set you up with a sensible strategy at a reasonable price across the whole market, and if you want to, they can help you manage it going forwards or you can do it yourself.

In the meantime:

Do not do crypto, peer2peer lending or crowdfunding if you want to see any of your parents’ inheritance again. It’s the equivalent of betting in a casino - fine if you can afford to lose the lot.

Get independent advice first before considering buy to let. A whole generation got rich doing that, but the rules have changed recently and it is much harder to make money now from BTL than it was for them.

Do NOT put it in a cash ISA. And unless you want or need to spend it very quickly, DON’T keep it in the bank. (Obviously you need to keep it in the bank until your IFA can help you invest it, and it’s always good to have a few months emergency cash to hand, but nothing beyond that.) Inflation is higher than interest rates at the moment so you are actually losing money if you keep it in the bank. Cash ISAs are even worse. Premium Bonds have terrible rates of return at the moment but even they are better than keeping it in the bank or cash ISAs.

But my best advice is please for the love of God and all the saints and prophets, please don’t listen to MNers about where to put your money. (You’ll notice I have not told you where to put it... just where NOT to put it...) If you want information before you see an IFA, go to the Martin Lewis Money Saving Expert website - it is accurate, impartial and wise.

I didn’t say SJP were a Network or that they were independent
I said they were an umbrella for IFAs to work under.
I used to work in M&A for IFAs so we were effectively working in competition to SJP who were also trying to get the IFA affiliates with them.

Independent financial advice from 3 bona fide advisors. If you need to ask what to with the money you need professional advice.

Sorry about your loss. I would a good few hours (up to 10) researching investments before you even speak to an adviser, just so you understand all the options and the financial jargon. Good luck! :)

I’m sorry if this has been mentioned upthread but an incredibly useful resource is the Reddit U.K. Personal Finance flowchart: drive.google.com/file/d/1clNuqtkPLYPs2vAijYki8K9eShbbMh9P/view (not a dodgy link - just a high quality image).

Use the flowchart to track where you are, what you need to do to put solid financial foundations in place, and achieve your financial goals.