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

Just put it in the bank and give yourself 12 months to think . There's not a great deal on offer in investment at the moment anyway.

I'm so sorry for your losses. How awful for you.
Regarding ISAs:
It's only a small amount of your money but I'd put 4k for you (and 4k for your husband) in a LISA and repeat each financial year. The government will pay 25% on top each year so long as you don't touch the money before you turn 60. I'm sure other investments will earn you more, but this has no risk and will give you a nice little earner pot for very little investment. So if you put £20k in an ISA as everyone has been recommending make sure £4k of it goes into the lifetime one.

You’re only protected up to about 85k per bank so you can’t lock it all in one bank account (you can but shouldn’t)

I’d think about buying a second property to rent out. Then your child could have the second property when she becomes an adult.

@BubblyBarbara

The above are low risk.

Yes they’ll also make your cash pile shrink by 1-2% a year in real terms.

I'm wary of theories like this because cash in the bank is...well, cash in the bank. Nothing is risk free but for me the point of savings is rainy day, etc.

If you want to stick to your goal of a rural propery with land, do some more research. There are many places in the uk where you could do that for much less than £750k

We have buy to let. We've been landlords for 20 years. No regrets at all.

I would just put in accounts and not think about it for a good few months. You don't need to decide yet, and right now you're grieving. It's the worst time to make a choice that big. Take however long you need to come to terms with the loss of your parents, and then go and speak to a financial advisor. Probably not the ones you mentioned, they dont sound great.

If you are looking at getting a lot of land could you buy a building plot now? That way when you come to move it will be ready to go!

First of all, I'm sorry for your loss. I hope you're ok.

In regards to your money, take your time to decide what you want. Definitely put £40k in ISAs (£20k each for you & your husband) and another £40k in April in the new financial year. Spread the rest in banks up to the limit of protection in case they fail.

Once you've had time to think and research what you want to do, speak to an independent financial advisor that you have personal recommendations for who can help. Make sure they access 'whole of market' so they won't recommend only the products they receive commission on.

Personally I invest in unit trusts via AJ Bell as fees and charges are low and I spread the money out. This is for long term growth so it does go up & down.

Whatever you do, just remember to take your time - there's no rush. Good luck.

I would really urge you to just carve some time each week and just read the finance sections of newspapers or just popular online finance sites. The majority of financial advisers will end up recommending the most popular funds anyway in each sector e.g Fundsmith Equity/Scottish Mortgage Trust/BG American/Polar Capital Technology, etc but for a fee and ongoing commission when you can just select the funds and do it yourself! It really isn't that hard to gain some knowledge regarding fund/stock selection.

You are correct about SJF. They are extremely expensive and will take in excess of 5% of your investment in up front fees alone.

Please look for an independent financial advisor rather than just sticking it in the bank where it will erode year on year from inflation. They will advise you. You might be better just paying a one off fee for advice rather than ongoing.

What I suspect they will direct you towards is investment trusts using your ISA allowance each year to wrap the money up tax free. If you hurry, you can make use of yours and husbands isa allowance this year and again as soon as April arrives which would take care of £80k.

Using an investment trust should give you a reasonable return each year. There are companies like Investec and Brewin and Dolphin that offer these and I have attached a link to the different types of risk investments. Open the PDF alongside each risk profile and it will show how he have performed.

Congratulations albeit at a sad time.

I’m really sorry for your loss, OP

In your position I’d put the money in savings for now and sit tight for a year. Bereavements can leave you reeling, and not in your right mind when you make decisions. I’d wait for a year until the pain of your loss is less raw. Also by then the pandemic may be over, and you may have a better view of how the economy/stock market is fairing, and have spent a good year doing your research re investments.

I think if it were me I’d use the money to buy a bigger house and still be mortgage free, albeit saving £50k or so for yourselves in future, and a chunk for your DS.

Re financial advisers- try and see a range of IFAs to get different views. See if you can meet one who shows you a range of options, rather than one who just says they’ll manage your money for you and take a cut.

Others here will be better placed to advise, but I think if it were me I’d pay off debt (which you’ve done) but then leave it a while until my head stopped spinning.

My head would put it in International Bonds with, for example, Prudential or Standard Life.

My heart would snap up the vacant house in Greece that we've seen. And I wouldn't be letting it out.

Another organ (liver maybe?) would contemplate how much difference Brexit would make.

Definitely carve a little bit out for your pension.

I have a btl (accidental landlord who had to move for work). It has been a complete pain and I'm having to evict the current tenant, who owes me a lot of money and has trashed the place. However, in the time I have had it, it has increased in value significantly and when the tenant eventually goes, and I refurb and sell it I reckon it will have been worth it.

If you can face it, then a holiday let is maybe a better investment than btl, you will have more to do maintenance wise but the tax situation is much better on these. I think holidays in the UK is the trend for the next few years and this will give you a trial run for your glamping business.

Become a landlord. As long as you buy at the right price in a busy area you will always have passive income and a pension

I'm sorry for the circumstances that have brought you to this, but there are lots of ways to look after your money, and I'm not sure sticking it all in the bank will give you the best return.

I inherited 125K a few years ago and so far have 'locked up' about 40k -I want to invest some for DC, which I still need to properly do.

I did chat with St.James' place but didn't like their pushiness. I ended up speaking to a few different financial advisors and ended up with the following suggestions - Private pension for some of it, perhaps a short-term ethical investment for some, premium bonds & ISA's + normal bank acc?

Don't make any decisions for a year.

Sorry for your losses.

Well done for steering clear of St James' Place.

All sorts wrong with their model.

I am not sure about the popularity of ISAs on this thread - the rates are pitiful at the moment, really bad, and you have to make a lot of interest these days before you are taxed on it, so many of the tax efficiencies of an ISA have vanished.

Stocks and shares ISAs seem popular, but you need to invest for about 5 years to be sure of a benefit. Buying at low prices atm could really bear fruit...or not.

How are your pensions? And what is your pension plan? What are you doing with the money you used to pay on your mortgage etc? It would be well worth your while paying extra into a private pension - and the Gvt tops it up for you!

A Financial Advisor will charge but should be able to make it worth your while by giving good advice.

St James Place are generally not to be trusted. The papers have lots of stories about them hosting parties in Dubai for those earning the highest commissions. They didn't have a standard set of fees so it was pretty wild west.
I believe they're trying to sort out this now given all the publicity but I wouldn't trust them one bit. I personally know a woman who was mis-sold a pension (she didn't need one, she had a great work based scheme).

Back to your 500K.

1. Go ahead and pay off your mortgage and give yourself a treat or two.
2. Put the max into ISA per year (so £20K now, £20K from April). I reckon you can't go wrong with a US and European INdex tracker type investment like those offered by Fidelity.
3. Think if you can stomach being a landlord/lady. It isn't easy money but can bring in more income than interest.
4. Do put voluntary contributions into your pension every year. That's either 100% of your salary or £40K whichever is lower.

Enjoy your financial security and I'm sorry for your loss.

Another vote for 50k in premium bonds

i'm sure there are many people on mn who would like a 'low wage' £25k pa in your op, that and only that made me judgy of you tbh,

Sansu exactly!!.
I did a year research starting from zero and came back the same is but low cost index trackers.

Did loads of cross reference in financial papers, sites, googled etc...

I cringe when people have large amounts in banks doing nothing.
Yes all investments are a risk but it comes down to buying say the US index... Classic capitalist society, many innovators wanting to Create and make and the society to promote that.
Buying a little of everything in it... How can it go wrong... Over the long term...

The problem with stock and shares is needing the money urgently at a certain point eg 2006 credit crunch or march 2019.

That's the biggest risk..

Don’t go to St. James’s place . Very expensive.
Don’t lock in a bank , foolish . You could get a huge increase in that invested low risk and very safe

Hello OP, and I am sorry for your losses. It sounds like you are not actually rubbish with money, but have already made good decisions and you know what makes you happy - you'd rather trade job satisfaction for higher earnings, for example. You've also clearly articulated an important goal - property with land, out of the city, relocating your job, not too big a mortgage as you plan to repay it out of your salary. So you need to work out how much equity you would have to put in (bearing in mind you are trying to work on a 5 year horizon - is that right? you have to stay put for at least another 4 years?)

Jason Butler is a very good writer on personal finance. I'd recommend you look at his blogs. Claer Barrett of the FT is also very good (you can listen to her FT Money Clinic podcasts for free via Podbean).

Most PF writers will guide people away from expensive actively-managed funds - the fees/commission charged by fund managers tend to be around 1.5% or more, and the compounding effect means this eats into your profits. Index funds (that track the FTSE or other indices) are known as passive funds, they are automated, they simply follow the fortunes of the global stock markets and the charges are very low. I'm looking at opening a Vanguard Life Strategy Stocks and Shares ISA, (one for me, one for my son) for example, that charges 0.22%. But everyone will say the same: whether you go for active or passive funds, these are long term investments, you need to be able to leave them for at least 5 years and preferably 10-15 years. If you don't have a good occupational pension, such funds might form the backbone of your pension plan - that's proper long-term!

The UK's ISA regime is really valuable - you're not taxed on the growth of the fund. So you should use it.

Cash is eroded by inflation, so over time is risky and a poor choice. But you should keep a rainy-day portion in an easy access account. Money Saving Expert is always up-to-date with the best offers.

Your house is all paid for now and in a popular area. Could you rent it out, rather than sell it, and use the income to ensure that a bigger mortgage on your longterm home could always be paid? What sort of rental income is achievable for the area? Again, this could be an additional means of supplementing a pension, or helping your children.

You don't have to make decisions in a hurry and I would really steer clear of financial advisors until you have done a lot of reading around and hard thinking about your plans and goals. And then probably ignore them (unless you need tax advice - not getting good tax advice can be very expensive).

Good luck, and best wishes for your future plans.