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

Make sure you do your own will as well.

Premium bonds would be a safe bet, better than bank savings and they protect more money. Then do your research into investing. You right, some places can be really expensive to invest and you also need to play the long game, invest for 5-10 years Speak to an independent financial advisor, they will help you determine your risk appetite and how to split between low, medium and high risk. There's MissLollyMoney on instagram who is a qualified and good advisor. We had an amazing session with her through work. You might suit her clientele or she might know someone, if you're not sure how to seek an appropriate independent.

Things you want to consider:

1. Immediate access cash for 3-6 months expenses
2. Annual treat pouch
3. Low risk, semi easy access like premium bonds
4. Start researching investing, you can start small
5. Top up your pensions

@EuroTrashed

Don’t do anything in a hurry. Max put your ISA for this year (& after April 5th, next). Stick £50k into premium bonds. Rest - whatever 30 day access accounts give the best rates (remember not more than £80k in one). The take your time to evaluate things - don’t make big decisions so soon after a bereavement. Speak to a few more truly independent asset managers in the meantime (I think at james’ are tied to specific products??). It’s a good position to be in, don’t make it a problem for yourself in the short term x

Absolutely this. I'm sorry to hear about your parents.

My family has quite a few investments with SJP. Always been extremely happy (I have a local advisor who does a complete financial review for me every year) and although there are ups and downs, average performance has been in the region of 12% growth over the past ten years or so, in medium risk, ethical investments.

It depends on how quick an access you want to it. Stocks and shares are great but they are typically long term not short term investments.
If you want to move in the next 3 years I wouldn put it into stocks and shares. There are other cheaper stocks and shares management options other than St James as well with lower fees.

If it was me I would probably divide in 4 - 1/4 to stocks and shares longterm, ISA a part of it and split between savings options which can all be accessed relatively easily (first 70k is protected hence splitting it up).

If once you move you decide you have more then stick more into stocks and shares but always keep a certain amount for instant access.

My DH split up his inheritance like this and so far has had a reasonable return from the shares despite losing 5k in 2 weeks in March!

I wouldn't put a penny into the stock market at the moment. (Unless you're buying gme for a laugh).

The US stock market has only been higher at two points in history - just before the dot com bubble burst in 2000 and just before the crash in 1929.

First of all use up your ISA allowance and your husbands

YY to using up your ISA allowance now (and again after April 5th) but do not put it in your husband's ISA allowance, you never know what could happen in your marriage.

Premium bonds have had the lowest return of any 'investment' I've ever had so I wouldn't use them either.

We use SJP for our children's investments - it made 8.5% last year so we're happy with them (who knows about the future of course though, I know!)!

I'm so sorry for your loss.

We were in this position when MIL died, did similar (paid off a mortgage, debts, etc. and were left with a decent amount).

Put that money somewhere safe and wait until the grief has passed before making any decisions. My mum gave me that advice and it was 100% right. Things that look "right" at the moment aren't going to look right in a year, or five years maybe. So give yourself some time to settle down before making any calls on what to do with it -- get it somewhere that can grow in line with inflation and exposed to as little risk as possible, and leave it be until life settles down a bit.

I'd buy a house for rental income. But keep some for a nice holiday, something extra special as a treat from your parents. We did this when my nana died, I was only little, I swear I remember her being there.
When you're ready to move you'll have two assets you can sell, or remortgage and you'll have had a income boost too.

In your position I would look to invest rather than lock up in a bank account. Interest rates are low and IMO likely to stay so for a while.

Have a look at places like www.which.co.uk/money/investing this will give you some guidance on different things to think about like tax.

I wouldnt get into buy to let as a business as while you can make a reasonable return you can also find yourself stuck with difficult tenants. I would only go into it if I had a number of properties so could spread the risk.

can you put it in your pension plan?

I'm no expert but in your shoes I'd buy a flat in a decent rental area and rent it out til I was ready to make any life changes. I don't know why your friends have said that's a poor choice, they may be right but it's definitely what I'd do.

Are there any fixed term bonds doing any pre Covid rates?

How are you with risk? I'm very risk averse so only have basic info.

As you have a large sum, there is still something to be made from opening up current or savings accounts with good interest rates and feeding the money through different accounts to get the interest. I know some banks say it has to come from your employer but not all.

I have lost the plot on whether these things still go on post Covid.

Definitely use your ISAs, you can have one each and a joint one if married?

With the £250k inheritance, how much short of the £750k you need to make the big move would you be if you sold your current property?

Would it be feasible to trim some off that £750k budget and maybe have a slightly more modest scheme? Or pick a cheaper area to do it in, and bring the costs down that way?

DP and I were going to sell up and buy a place with an existing annexe or outbuilding that could be converted to a holiday let. With my pension and holiday let income, DP would have been able to work part-time. Our budget would have been a fair bit less than £750k, although we weren't bothered about having a lot of land. (Sadly, he died and I don't feel inclined to move hundreds of miles away on my own.)

It's hard to know what's a good investment these days. Interest rates are so low that money on deposit basically shrinks, anything that gives a decent return requires you to lock up your money for a long time or is risky and no-one knows what the property market is going to do post-Covid and its economic fallout.

Would it be enough to get a property to rent out? At least that way you'd get an income, and if it fell in value, whatever else you bought if you sold it would have fallen in value too.

Can I recommend EQ Investors for financial advice/investments? They’re a B-Corp business committed to doing investment better and more ethically. I don’t work for them but they support the charity I work for and I’ve found them really impressive. So many investment managers just seem like arseholes!

eqinvestors.co.uk/

I am so sorry for your loss. I hope you are taking care of yourself and being taken care of.

I agree with people saying don't make say drastic decisions yet.

Put £20K into ISA before April 5th and £20K afterwards, put maximum in premium bonds etc and put the rest in high interest accounts for now. Remember to you are only insured for £85k per person at any bank.

Once the dust has settled and you feel more able, think about your attitude to risk, your life goals, how much want to retire on and when you want to retire.

Good luck. OP.

Yes, ISA for you and your husband - that's £80k before and after April 4th altogether.

So sorry for your loss OP, losing both your parents so close together...

I would say neither of your options! (stick it in a bank/get a stockbroker).

If you put money in a savings account it will actually shrink in value over time due to inflation. And gone are the days of decent interest rates on savings accounts .

Stockbrokers will charge you a fee .

My approach would be to look into tracker funds (sometimes also called a fund of funds) - eg through Vanguard.
A tracker fund essentially aims to mimic the behaviour of a sector of the market
So you can buy eg FTSE 250 fund. This fund owns bits of lots of other companies (the top 250 in the FTSE).

The advantage of this is you are not picking individual companies to invest with (which frankly is too much like betting for me).
This only really works if you are happy to leave the money there medium term (5 to 10 years I’d say).
If you’re are planning on buying a house within 1-2 years then it doesn’t work.

I’ve done both in the past by the way - I’ve put inherited money in savings accounts with piss poor interest because I was planning on buying a house , and I didn’t have the headspace to do anything else. Later on I stated reading financial independence blogs and read about tracker funds.

And talking of IsAs - you can get stocks and shares ISAs so that you can invest in funds while having the tax protection that an ISA gives you. The cap is £20k/annual/per person.

Have a read around. Don’t give your money to advisors/fund managers. And actually, if you can’t wrap your head around all of this now, put the money in savings for up to 12 months while you decide what to do long term. (Make no major life decisions shortly after a bereavement they say).

You need to speak to another financial advisor or multiple until you find one you click with.

If your house is worth say £200-£250k (as you say you used £200k to pay off the mortgage) and you have £250k left then you’re going to need to invest in some higher risk investments to double that in 5 years so you’d have £750k to buy your dream property unless you’re happy to take out a £200k mortgage at that point.

Where are you with pensions? In all honesty I would be more focused on securing your retirement with the remaining £250k than thinking of buying land and glamping.
Holiday let’s of that nature is a lot of work, and you don’t say whether you guys have any experience or knowledge of running that type of business.

you could always move house in a few years to a more rural location but if it was me I’d Plan to stay mortgage free forever more now.

I’d keep £50k in the best account you can but one you can access if you needed to, such as a bond and have it as income back up / rainy day money / have a great yearly holiday with the interest.

Put £200k in pensions for you both (FYI a £100k pension should give you a yearly income of £5k so it’s not as much as you may think) and pay at least half of what you paid on your mortgage into pension / holiday savings etc

Info on pensions

moneytothemasses.com/saving-for-your-future/pensions/how-much-income-could-i-get-from-a-100000-pension-pot

Banks paying zilch at the mo, but do not rush into investments without good advice. I inherited some money, nothing like 500,000K but put most safely away, and spent some on things like a really special holiday (which I know you cant do at the mo) and upgraded house a bit, heating, bathroom, etc. If you are not used to having mo ney, like me, its a big temptation to splurge, resist !

After seven years with a highly recommended investment firm (i put in about £500k), I earned far less than when I bought and sold property. They of course advised against it, as they would not make any money. But I made more in two years buying a house, renting it out for two years (which covered stamp duty and mortgage and fees) than I did investing twice as much with them over seven. If rents are bouffant I'd buy a small flat near you, rent it, then cash in a few years down the line when you need it.

Can’t believe I had to scroll so far to see the first mention of pensions!
You’re mortgage and debt free. The next logical step is to invest in pensions. I’d also keep a years worth of bills easy to access in premium bonds. Finally I’d allocate a fun fund, to give your child the best memories and experiences you can, and remember your parents with great love while you’re doing it 💐

I am so sorry for your loss.

I agree not to rush into anything. You can stick into a bank account and make a decision you are comfortable with when ready.

FWIW when we were in a similar situation we bought a buy to let and the income from that has meant that not only do we have capital secured, the rental income was a nice boost when we were still working. I am in a situation now that I am considering giving up work as one of my DCs is very ill, and it gives us the freedom to lose my income.

Personally l think stocks and shares are just too volatile at the moment. It just needs some bad news like a new covid tranche that the vaccine doesn't work for to cause a drop in the market.