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 would buy a property to rent out, I would wait until the end of the summer, as I think the prices will go down this year!! That way you always have a income from them and also will be able to sell in when your own kids need help to get on property market in the future. Obviously put £7000 each year In ISA’s

Pay off your mortgage first , then spread the rest , if you both top your pension up to max yearly allowance , you get 20 % added from the government too every year .
ISAs also are good.
Keep some accessible.
Do not tell anyone else !!!

Sorry for your loss.

Please don’t just leave it in the bank - you will actually lose money. I know hard to get your head around but interest rates are so low even on savings accounts, it’ll not make anything while outside of the bank things get more and more expensive. So at the end of say 5-10 years in there it’s worth less than it is now.

Do you know anyone who uses an independent financial advisor? Could you ask locally?
They’ll help you spread risk / reward investments.

Put some into ISA + stocks ISA for you and your husband as you get an allowance each
Put some into premium bonds
Put as much as you can bear into your pension
Put the rest into stocks and shares - if you’ve no interest in monitoring yourself then this is where you need an IFA.

When people on here have mentioned ISA I would be assuming they mean to use that tax wrapper around Stocks & Shares, possibly with some bonds/gilts, not using a Cash ISA.

You need to look at your risk tolerance. You need to take risk to get a return on the money. If it sits in a bank account or low interest savings account, it will lose money due to inflation.

As has been mentioned several times above, decide what you want to do with the money... some for fun, some for short term use, some for long term investing. Have a clear idea of what soon, short and long term objectives are and seek professional advice or spend time learning yourself.

I am with SJP and am happy with them, the returns are good. However, there are some nasty exit fees with some of their plans, so you do need to take care. I have a transferred ISA and my pension pot with them, other than my company pot, but also keep cash savings and my current ISA. I like to have some control myself.

With the amount of money you have it might be worth buying a property to rent out. I don't really like people having second homes, but providing a quality home to a tenant is a good thing to do.

Finally are there any small charities to which a small donation from you might make a real difference? If you give £500 to Cancer Research it goes into a huge pot. If you give it to the local youth club it makes an enormous difference to what they can do.

(I should say when I refer to an ISA I mean a stocks and shares ISA)

And yes to premium bonds.

A good independent financial adviser is what you need to give you best advice. They will talk you through options and do an assessment to decide what risk level you are happy at.
If you buy the right buy to let in right area at right price you want loose long term but its not easy money and its not quickly accessed when you want to free it up in future for a property to live in.
Don't feel you need to rush this decision take your time and weigh up all options

I'd put everything towards moving back home to Australia from the uk with my daughter and partner to be with my family. We're trying to save to move later on in life but with both of us losing our jobs to COVID it seems completely impossible. Anything left over for savings, and will put some away for my daughter when she turns 18.
Congratulations!!

90% s&p 500 tracker (lowest cost)
10% us treasury bonds

^ there you go Warren buffets advice for everyone

@Rubbishwithmoney as I'm feeling particularly kind today I am willing to take it off your hands for you! Only kidding

Congratulations! Pay off your mortgage, plan to book a fantastic holiday once the world reopens, donate some to a cause close to your heart, save some for you and save some for dcs and splurge on something completely and ridiculously indulgent!

Omg just ready how you e come I to the money. I am so so sorry for your loss and so sorry at my insensitive post. Sorry again I feel awful xx

Avoid SJP!
Cazenoves are reliable.

I really would not bother with a financial advisor for £250k. It is the low end of what they will be interested in and they will charge significant fees for minimal advice.

If you are interested, you cannot beat doing your own research and taking an interest. Ultimately, it is your money and no one will manage it more carefully than you.

However, as a simple recommendation:

Keep enough cash for a rainy day: maybe 20-50k, depending on what your plans are.

Put another 50k or so in building society 3-5 year bonds. These are very low interest but are protected by the UK government.

Put the rest in a variety of funds, depending on your appetite for risk and view of the markets.

A company called Morning Star gives funds ratings based on performance and safety. Again, choose a good combination. Maybe spread the rest over 5-10 funds, too many and you will lose track and too few and you will not be sufficiently diversified.

And, then leave alone for a minimum of 1 year and up to 3 before reviewing them in light of their performance and your own situation.

Don't put in property, not at the moment. Economy is wobbly. Also, you have the constant worry of upkeep, renting it out, doing it up, all the money gets eaten up in fees and stamp duty and taxes etc. Been there done that got the t-shirt, don't bother.

A friend of mine with £120K inheritance has done this:

Opened a share ISA and a share account, you'll need both.

Start off by putting £20k in the share ISA. Split the 20K three ways between FTSE100 tracker, FTSE250 tracker and S&P500 (USA market).

Trackers are a low-cost way to track the market and over decades they repeatedly beat most other forms of investment.

No other worries about tenants, broken washing machines, trying to sell it, etc etc. Just set it and forget it.

With the remaining 100K she put this in a share account. But she didn't invest it all. Again she put 20K in FTSE 100, 20k in FTSE250 and 20k in S&P500.

The remaining 40K she kept as cash. Always best to have some cash.

Then the following year, start to ISA away the rest of the money.

So take £20k out of the share account and put in the ISA share account.

Over six years she ISA'ed away all her inheritance and it's now in a tax-free account, growing at an approx 7% per year annualised.

Whenever she needs that money, it will be tax free.

You don't get much in life that's free - but ISA share money is.

In 4 years time, when you've finished your degree, have a look and see how the money has grown over time.

You may be able to afford a bigger property by then. Maybe.

Stocks go up and down.

Personally I'd stay away from financial advisors. Hefty fees and no real knowledge.

If you want to become a good investor, start reading about shares and companies and learn to read balance sheets, looked at LinkedIn and see who runs the company and what their track record is, etc. Look at the economy, what is going up, what is going down.

USA is full to the brim with new money at the moment. My personal choice of stocks to invest in right now is USA. SO much innovation. Wow wow wow. We just can't compete in the UK or Europe...

And don't tell anyone and try to forget about it.

Don't buy premium bonds. Waste of time. Again, been there done that. TERRIBLE RETURN!!

Do not just lock it up in the bank. You can only invest up to £85k in each financial institution (anything over that amount is not covered in case of bank going bust). Virgin Money, for example, shares an owner with Clydesdale Bank and Yorkshire so you cannot put £85k in each.

I, personally, would buy a property to let, which would provide you with an income. It will also be a pension fund for yourself.

If you don’t want to invest in property, invest in a SIPP - benefit from the government top up. Start a pension fund for your child. You can invest 2.8k each year and the government will top up to 3.6k. I started mine for my son at birth, and his pension pot is already bigger than mine.

Interest rates are low at the moment, but several accounts give decent interest, especially if you have a current account. Virgin Money giving 2% on first 1k, and their linked savings account 0.5% which isn’t bad as a place to hold some extra cash. Santander 123 current account give 0.6% on the first 20k.

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

No, no, no. If it were me, I wouldn't be doing =terribly much with it at the moment.

I'd put it in a stocks & shares ISA that tracks the stock market - there are a few about (I have the Legal & General one).

Have a read of information around the "Tracker ISA" - I think quite a few firms offer them. Very low/no fee, just automatically track a "basket" of shares, so your risk is spread, and you aren't vulnerable to the vagaries of a particular area.

You could also invest in a rental property, but unless you do the management & maintenance yourself, it's not a huge money-spinner,IME.

It must feel a bit scary, and also not really something you ever wanted to have to do as it is a consequence of the loss of your parents.That's tough, to lose them when you're still so young.

Just take it slowly, and good luck!

Really sorry about your mum op.
Don’t stick it all in a bank account - you’re only covered up to 85k per banking group. There is a bit of an extension for inheritance and other exceptional circs but only fir (I think 6 months) when a higher amount will be guaranteed. Protected and guaranteed should there be a crash. Used to think that was so unlikely but last decade or two and current situation mean I wouldn’t be surprised by anything.

In the short term make sure it’s safe - National Savings & Investments have instant access online bond account ts with upper limit of eg2 mill - 100% guaranteed. Plus up to 50k premium bonds.
Good luck deciding what then to do with it !

I am also sorry for your loss.

It is actually very difficult. The kneejerk 'property rental' advice is not a license to print money, although there are no other ways to make money grow at the moment. Savings rates through the floor (and have been below inflation for a decade anyway), stock market high but unstable...very tricky.

National Savings are the only one exempt from the £85k single institution limit, but their highest rate is an insulting 0.1%. Their monthly income easy access pays a disgusting 0.01% - yes, you read that right. Premium bonds are also not inflation proof although with 'average luck' (hah!) they pay the best at the moment.

You did the right thing in paying off the mortgage. The trouble with property rental in England is that the laudable concept of rights for tenants has now become a license for free accommodation, and it will get worse. Someone can move in, pay the first months rent and then pay NOTHING (while wrecking the place if they like) and you will not be able to evict for at least 18 months, probably longer.

at 30 you (with luck) have a long time to go. Fill your pensions as much as you can - do that before the end of this tax year and then again after April 5th. ditto for a stocks and shares ISA each, although the market is high so you are in for a long and rough ride on that. Keep a year's living costs accessible. Think about insurances too, especially as you have a child.

I think tracker funds with a wide spread of investment - no need to pay an adviser for that. But I am only a random on the internet!

Mine's in stocks and shares, I use the same adviser as my DF did. It is a discretionay account, so the adviser does all the thinking, buying and selling.

Remember, shares pay dividends so do give an income. Though I imagine some companies will declare smaller dividends than before covid.

Forgot to mention, I also have some in cash.
Also, I roll my dividends into the portfolio (ie I don't have them paid to me, adviser buys more shares instead). I'm living on the cash and my pension.

I have been in a similar situation, OP, so here's what I did.

1. Read, read, read and read some more about personal finance and investing. You soon realise that some people make suggestions on threads like this that are outdated or a bit daft, while others are very good.

1. Paid off our mortgage (a fantastic feeling).

1. Bought new cars (nothing terribly fancy) for DH and me. Was a nice luxury having the first brand new car we've ever owned, and less stressful than the worry of our ancient bangers breaking down again and needing work.

1. Held the rest temporarily in my easy access savings account (that previously I'd used to save for holidays etc) while I shopped around for longer term savings accounts, and considered what else to do. At the time there were some decent savings interest rates (decent as in slightly above the rate of inflation) and I luckily fixed a couple of them for 5 years so make a fair bit in savings interest. This won't be the case for you, though, and it sounds like you will need access to your money in the next few years anyway, whereas I won't and am happy to leave it. Any that you do put into savings you need to spread around so that you're protected by the FSCS. And be prepared to keep an eye on the savings rates.

1. Dismissed the idea of putting too much into premium bonds. They're nice for the idea of having a flutter I suppose, but they shouldn't be considered an investment in my view. I did put a small amount in NS&I income bonds though. Again, rates change so keep an eye on them.

1. Dismissed the idea of buying a caravan/lodge on park (money down the drain and in reality we wouldn't be able to get much use of it ourselves), dismissed the idea of buying rental property or holiday home as the ethics of it concerned me, plus the major hassle of it as others have listed, not to mention tax implications now. If my children were slightly older and at university, however, I WOULD have considered the possibility of buying a student house instead of paying out for student accommodation. Would depend on the market though and whether it could be maintained without too much hassle.

1. Opened a stocks and shares ISA through Vanguard (Lifestrategy index funds are good in my view and you don't need to be an expert, just be prepared to do a bit of initial reading) and drip fed regular amounts into that (to mitigate risk of putting everything in before a big drop in the market). (although I would put the full 25k in before the end of this tax year if i were you, and then drip feed next year's).

1. Opened a SIPP and I now pay in each month what I used to pay towards our mortgage. I do have a workplace pension but am not sure about staying in that job longterm so wanted something independent of that.

1. Did nothing else except go on a nice family holiday and each year withdraw 25k from my least profitable savings account to put into my S&S ISA.

1. Kept reading about financial stuff (including basics like Martin Lewis), watching the stock market (and not panicking at drops), watching savings interest rates and moving money accordingly, keeping an eye on the property market (including what's going on elsewhere in case we ever want to retire away from where we live).

My aim is to have enough to give me some choice about when I can retire, to be able to do any home improvements when needed, to help our children out with any university costs and with deposits on first car, properties or wedding costs).

Your aims are different to mine. I personally would be very careful about making decisions about buying property or starting a holiday business right now. We aren't living normally at the moment. You could end up buying a holiday let anticipating great demand due to travel restrictions and then the travel industry could end up picking up again (albeit slowly) and pent-up demand on people wanting sunshine holidays means that you struggle to rent out your holiday property in a profitable way.

I would also keep a very close eye on businesses used by tourists in the area you want to buy as I think many will go under unfortunately. If you market your rural holiday home as being near a pub and a village shop, for example, but the pub had to shut down as it wasn't profitable, or even worse, was converted into flats, and the village shop had to shut down meaning you now need a long drive to a supermarket, then the appeal of your property would drop.

You also need to think what would happen if one of you becomes very ill eg with cancer, or worse, died. Would the other be able to manage to run the holiday let alone? People don't like thinking of those scenarios but it happens, and you want to be in a position to have some options rather than be worrying about how you will manage.

I would BTL too. Student HMOs are a great investment. The idea is not so much to make the money instantly but instead as a long term investment. In the meantime you take out interest only BTL mortgages and use the income to leverage against taking out a bigger mortgage to move where you want to.

I know lots of people who are doing this to enable them to move up the ladder. I am planning to buy my first one in the next year

I haven't RTFT yet so don't know how safe your job is, but I would also remember that if you lost your job and struggled to get another one then I think your savings would prevent you from claiming any benefits and have to then live off your savings till you got another job. They could dwindle fairly quickly if you don't get another job for a while.

Basically, don't just think about NOW. Think about short-term and long-term future. Your pension plans need to thought about and dealt with NOW.

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).