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

You could do a bit of everything?

100kish on a cheap terrace property as a BTL. I’m not sure why your friend said it’s risky. You could view it as a long term investment/pension. You’d always be able to let it out and have that income.

50k max on the stock market. I’ve no idea about st James palace. But you can find funds which are low risk, med risk, etc. Spread the money out between some different ones. Again you need to view it as a long term investment.

Keep the other 100k safe in a bank or premium bonds?

Keep 5% aside for the made up nonsense wealth tax.

If you want to make a bit more money: BTL.

If you want to make a bit less but not propagate inequality: anything else.

Given the amount involved I would contact a financial planner and have them assist with creating a plan. You want someone who will do that on a fixed fee basis, so you can then implement that plan yourself if you feel up to it, or continue with the financial planner and have them help with implementing the plan. Expect to pay £1500-£3000, so it is 1% or so of the amount involved.

If you want to learn to do things yourself, you could do so. There are books, podcasts and courses you can do to lean how to invest with a core of a multi asset globally diverse fund.

Your child could have a pension... £2880 per year put in to that for them. They could have a Junior ISA, £9000 per year put in to that.
You could maximise your ISA allowance every year. You could have a pension (it would be dependent on your income).

You should consider how much risk you want to take with the money so that it grows over a period of time. You might want some of it just sitting being available to use... £50k in Premium Bonds perhaps. You may want some invested really long term... as you are age 30 you could put £4k per year into a Stocks & Shares Lifetime ISA and have access at age 60.

There are various possibilities of what you can do with the money to have it spread around at different risk levels.

Another vote for a financial adviser and using your annual £40k joint ISA allowance to open a stocks and shares ISA. Use a platform such as Hargreaves Lansdown, AJ Bell or Charles Stanley which offer low fees and have good fund recommendations. (I pick my own funds, as do my children with some help although I have a financial markets background.) You could also invest in a funds SIPP and benefit from the government top up (within limits) but that's locked away until you retire.

Investing in funds doesn't have to be high risk; they can be tailored to your risk appetite, from cautious/managed funds to more risky areas such as emerging markets. Yes, all funds can go down but you should make a decent return over a 10 year time horizon and you have access to the money if you need it.

I've just looked at our fund performance for 2020, my funds increased by 18% and my husband's by 25% (I withdrew some money from mine when the funds recovered a few months ago and missed out on some of the subsequent increase). One fund I held increased by 76% in 2020, but equally, some of my UK funds are still 5% or so below their prices at the beginning of 2020.

Funds have been rising fairly sharply in the last few months, although they dropped off last week. One way to avoid some market volatility is to invest in funds on a monthly basis - in a rising market, you lose some of the upside but smooth your average in cost in a falling market.

Good luck with your investments and hope you get to enjoy some of the money, now or in the future.

One thing I would not do is ask total strangers on a net forum for advice on use of a large sum of money.

Properties with land are not 750k all over the country. Haave a think about places further North.

I'd be cautious about buy to let at the moment - things are all a bit up in the air with Covid. Also, if you're planning on moving out of the area it would make sense to buy-to-let somewhere nearish to where you move to.

You've already spent half of it by the sounds of it so maybe now take some time to let things setttle, No need to tell anyone at all, it's your business.

I'd be all over right move to see where you can get the most bang for your buck that you can also find work in and really put some thought into moving forwards.

Your money's not going to disintegrate in the bank Leave it there and make good, solid plans. You could burn through the rest of it so easily and really regret it.

Sorry to hear about the circumstances of your windfall, OP.x.

I’m so sorry for your loss. Both parents in such a short space of time must be incredibly hard to deal with.

Long term, I would not leave the money in the bank. As a PP said, they only guarantee deposits you to 85,000 and even with the best interest rates at the moment, they’re below inflation so long term you’re losing money.

There are some investment ISA options where you can do tracker funds - so instead of investing in individual shares, you invest in a basket. It’s lower risk than individual shares.

For property - buy to let us taxed as income tax, so you could end up with very little return. It would make sense if you’re buying in an area where the value of the property is guaranteed to go up, so even if you aren’t able to get a tenant the whole time / there are expensive repairs, you would make some gains.

I'm really sorry for your loss. My father died 4 years ago leaving me a similar amount. What I really wanted to do was talk to him about it, he was my go to on money, it was terribly hard and I still miss him so, so much.

I bought a car and paid off some of a chunk the mortgage and moved to a nicer house. We spent some on a couple of great holidays. I've a chunk left, we have an emergency fund, we could live off that for nearly a year if needed. I could pay another chunk off the mortgage at this point but I'm wondering if that's the best thing to do, I want enough saved so I can pay for university living costs for my kids.
Like you dh and I aren't high earners, dh income has nearly halved in the pandemic.

Grateful for those who posted about the £80k limit, I'm slightly over that an hadn't thought about it. Will sort that soon.

I would echo taking your time. I certainly feel more comfortable with making decisions now than when my father first died. It felt then like an incredible burden, I was quite scared I'd fuck up and lose it all.

Best thing we did was move to a bigger house, at the time it was very stressful to make the decision, we didn't get a great price for our old place and felt the new one was a bit expensive for what it was. I worried so much that it was frivolous. But we are so happy here, particularly now having a bit of space and not having a list of jobs we're saving up to get done, its fantastic.

Best of luck with it all.

My main goal is to move away from the area we live and buy a property with land in a much more rural location

So why not work towards that
Does it have to be such an expensive property , is there no halfway medium that provides rural living ?

I’m very sorry for your loss

I agree with pp, hang onto the cash and don't make any big changes now. It's more than enough coping with your loss and the grief at this stage.

I inherited after my father died and felt burdened by the financial choices for a long time. Not that having money is a bad thing, but my feelings were all mixed up with the grief. After about a year I felt I had the mental space to make some decisions.

Bereavement is not easy, be kind to yourself. And see an IFA when the time is right

You must contact an IFA. Get a recommendation from someone you know and trust.

If you will not need the money in the next 5 years you should invest it in the Stockmarket. Interest rates are historically very at the moment and so you won't get a good return on savings.

A tracker fund is the cheapest as it just replicates the index so they charge less fees.

Sorry for your loss OP. Put 50k each in premium bonds, share any winnings, not a great investment but your money is 100% safe. Not sure if I would want to invest in shares at the moment. I assuming you have paid off your mortgage, if you had one? Invest the rest in property, always the best investment long term. And you are right to keep it private. Wishing you all the best for the future.

We are in a similar situation to you although no where near 500k its still plenty. We have put it into our one account so no mortgage is being paid currently, but we are slowly investing it in house updating as we have a fairly run down 3 bed cottage and if we put some money in the return on sale would be significant so worth doing. We are also building a home office in our garden freeing up several areas of our overcrowded home so we can after 12 yrs self employed enjoy our house as just our home. We have put some aside for child's education should she want to go further.

In terms of investments it really depends on your appetite for risk and interest in financials. Personally I am quite risk adverse so will probably have one or two multiple policies where several fund types are available at differing risk levels - less risky than straight stocks and shares but more risky that straight savings. 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.) ISA can be savings or shares so you can increase the risk for a better return.

It is worth seeking and independent Financial Advisor but remember its your decision at the end of the day and they do get commissions on products even if they are upfront with them. I would set some aside for a bloody good holiday at some point in the next few years we have that in mind too

Best investment is probably a rental property, interest only mortgage. HMOs have better returns. Obviously upkeep is an issue, if the boiler goes kaput, the fence blows over, new rads needed etc. You’re basically responsible for everything that may go wrong because it’s your property, even if the tenant is to blame.

For £500K, you can get about 15 acres, fab house in mid-Wales. I can’t think of anywhere else so cheap. Trouble is, you then need to invest more to set up a business if there isn’t already a going concern. Also, outfitting a big house isn’t cheap.

I might have misunderstood the last post but gains in ISAs are free from capital gains, whether you withdraw the money or reinvest it within the ISA.

I would buy a better property. I wouldn't invest in stocks and share at the moment. Too risky.

If you didn't want to use a IFA - Hargreaves lansdown do do advice

So sorry for your loss. I'd speak to a wealth management company (like PPs have suggested) and let them do the investment picking for you. I have a financial background but much prefer a professional doing it for me than picking stocks myself. They will evaluate your attitude to risk - remember that you should be prepared to lose the same percentage as you stand to gain. For example, my risk appetite is roughly 15%, meaning I'd be happy making 15% but I could weather losing 15%. Investments go up AND down and a professional will talk you through this and help you understand your own risk appetite.

I'd keep some of it as cash in the bank so you can access it immediately for emergencies, special holidays (when those days return), treats, etc.

Lastly, do you have a pension? Would be worth sticking some of it in a pension and forget about it, as by the time you need it it could have grown to a nice amount, without you really doing anything to it. Whoever you pick for your wealth manager will talk you through this as well.

Best of luck with everything - a daunting time in so many ways.

I am sorry for you loss.

I wouldn't be in a hurry to make decisions- apart from some ISAs.
£250K is not a huge amount of money, and given your relatively low income any speculative investments would be too risky. Even in property. £250K is a low amount to buy, pay for renovations, factoring, maintainance etc.

You are working towards a qualification that ties you for 4 years. Would it be worth fast tracking that and qualifying sooner- studying full time? That would enhance your earning potential in a shorter time and be a very worthwhile investmen.

Premium bonds are good for short term but the return is pitiful. You are very unlikely to win meaningful amounts even with 50k invested.

Long term, stocks are fine. My isa from 2020 has quadrupled in value.

Its only an issue if you might want the money after a covid like crash. But again my pension is actually up 10% yoy.

As you are low wage I’d earmark it as a pension. Use both yours and dh ISA allowance so that means £40k pa and do it each year.

You can top up existing pensions. As far as i can see you can top up to a total of £40k pa each. So if you currently pay £2000 pa in to a pension through your work then you can add £38,000 but would get tax relief on £23,000

Find a decent financial adviser and do some googling!

Btl - might make sense and leaves a property for you children.

I meant isa from 2000

I'd do buy to let property in some area like London.

Im so sorry for your losses. I dont understand why buy to let in a up and coming area won't be a good long term investment. I would buy 2 houses with and use the rent to pay the mortgage. Its a long term investment x