What would you do with 40k to make money?

[Kevinisnotacatname]

Name changed for this but been around here for yonks. I have no private pension (long story) and was due to inherit nearly 300k so it wasn't something I worried about. My dad then left nearly all his and mum's money to a woman he'd met 2 years before he died. I now have 40k total with the inheritance and a little savings.

What would you do to make this money work for you? I can't afford to make real risks really as this is all I have. I'm looking at starting a private pension now (I'm 48) but the most I can put into it is maybe £100 a month. I'm also wondering if something other than a pension might be a better option?

I've been googling so much I've confused myself so thought I'd post on here. I know I know, I should have started a private pension years ago but I can't turn back time. I don't own a home, I rent and I would not be able to get a mortgage.

There must be many people 40-55 in the same boat- people who missed out on financial 'helo to buy schemes' from govt, but we're too young to benefit as some others did from lower house prices.

Maybe govt could have savings vehicle top up for this group too.

If you go down the S&S ISA route, you need to think of it as a long term investment- ie money you don’t need to touch for at least 5 years. That way you can afford to weather any ups and downs and not be forced to sell at a loss.

I would make sure you have some short term savings in cash so that you don’t have to dip into the ISA in an unplanned way.

I also feel the same about home owning at this stage. I do have security in my home as it's a housing association tenancy.

I am also quite frankly petrified as my previous home was repossessed and it was the worst period of my life. My exh left the country leaving me with loads of debts and I couldn't sell the house or meet the mortgage payments so bank took it back and I still owed them thousands as it does for less than the mortgage

I was thinking of 20k in an ISA for 10 years

But saw you were in social housing. I would stay put. Best place to be right now. Security, low cost. I wouldnt be thinking of property at this point then.

Then I'd focus on building investments and savings- a mixed pot. Get specific financial advice on what's there - ask a few. Build on this.

And move to a role with better pension options. (Which you are already doing....!)

Ah, then I would stay put.

And I would do as pp suggested, put the absolute maximum in my pension as possible that my employer will match or that gets me tax savings and use this money to fill in the gap.

If you work out how much of this £40k you need to do that for a year and then lock the rest away in fixed term savings until next year so it earns some interest while it sits there. Rinse and repeat.

good that you're in housing association- that's secure for life. if you put the money into a savings account, then when you reach retirement age if your pension isn't enough to live on and you need pension credit top up to cover your living costs, they'd make you use your savings to live on first.

another option could be to buy a really cheap property in a low cost country, but which attracts a lot of tourists. it could be an airbnb rental or a holiday let, if that area allows airbnb rentals. that would bring in an income and not affect you, should you ever need help in the future. all that income could go into a pension. i'm thinking somewhere which is warm all year round, so that you have a steady stream of guests. you'd have to pay someone local to clean and organise between visits, but might be worth it.

How serious are you about a public sector move? That would be a game changer in terms of pension- 20 years in the civil service with a £30k salary would give you a (real terms) pension of about £14k per annum with state pension on top, so about £25k per annum in total.

If you do move into the public sector, in your shoes I would put £5k in a high interest easy access account, £15k into a global tracker in a GTA and £20k into a global tracker in a S&S ISA, then move the £15k across next tax year. With fairly modest growth you'd be looking at around £100k in the ISA by the time you retire.

If you don't move into the public sector, I'd be inclined to put £35k into the pension.

I would not pay a financial adviser- you don't need one and their fees are high.

She cant put £35k in a pension!!!! If her salary is £25k, she's limited to that.

You can carry forward your annual allowance for 3 years so she can easily put £35k in.

£35k can go into a pension over the next few years, and sit in the best available cash ISA in the meantime.

https://www.gov.uk/guidance/check-if-you-have-unused-annual-allowances-on-your-pension-savings

Inheritance isn’t ’swallowed up in care fees’. Inheritance is what’s left when someone dies. No money left = no inheritance.
Inheritance isn’t a bid given right.

You're right it's not a god given right and I wish to god I could turn back the clock now. Mine wasn't taken up in care home fees but another woman coming along - my mum would have turned in her grave as there expression goes but what's done is done

Believe me I've had countless sleepless nights over this and trying to decide the best way forward now.

Op do you still have debt then re old house?

Will you loose housing association house if you have over 16 grand?

I think in this circumstance you are very lucky to have this house and as you said the rent isn't bad and it's stable unlike mortgages have been.

I agree with the poster who said 1) emergency fund in high interest paying account.
2) longer term savings still accessible.
3) sipp, self invested personal pension

And what's left into a stocks and shares isa, to not touch for at least 5 years.

Op this happens very regularly re a man giving away family assets leaving his child high and dry and dishonorable to his first wife whom usually, both slogged away at house and assets for the dc.

I worry about this also I think the only protection is putting the house into joint ownership where each owns one half?

I've begged dh if something happens and he re marries to not jeopardise our assets for the dc

Forget the narrowboat advice as you seem settled in your housing association property. Although, I do think you should consider the possibility of getting your own place with a 30k deposit and a 500pm mortgage - that way you have that money in equity rather than giving it to your housing association. That bit is your call, it might be six of one and half of dozen of the other. Houses need maintaining and I think at 500pm rent I'd be okay with the HA holding that risk.

The previous advice is sound about putting it into a pension. You could watch some Dave Ramsey videos online to learn the baby steps to financial peace. That should help you get your head around it. Don't forget to enjoy your life though, whilst planning and saving!

Sorry your dad left it all to the new woman, but you appear to be taking it well! And that's admirable.

Absolutely talk to a financial advisor. Yes you have to pay for the service but it may save you thousands in the long run. They may or may not be able to advise re mortgages, but if not you can likely get some free or low cost mortgage advice.

Thank you so much, I'll admit I have not think about it because I can't change things. I'll watch the video you suggested.

I have to admit I've struggled for years and years bringing up kids alone and it's only these past maybe 4/5 years I've had spare money so I do still want to enjoy life and not suffer to put away every single spare penny - none of us know when our time is up.

You could the bulk of it into a pension if you earn enough - for every £10k, you will get £2500 tax relief added.

No other investment will give you that and you can add to it, every £100 becomes £125 etc.
Then it needs investing depending on when you intend to access it.
Be aware though that if you think you will be dependent on benefits/ help with rent in later life, a small pension can make you much worse off if it puts you just above the limit for HB etc.
For the sake of a tiny pension of £20 a week that put my Sister £5 above the limit for help, she lost £70 a week and had to pay full rent etc.

What's the point of putting £35k straight into a pension when OP only pays tax on earnings of around £15k per year?

It makes far more sense to put only the amount into a pension that they can get the tax relief on, then do the same again in subsequent tax years.

Yes, you can carry forward the annual pension contribution allowance but not the tax allowance. Be careful.

You get tax relief on the whole amount you pay in, don't you?

Even if you have no income so pay no income tax, you can put in about £3k a year, which is topped up by a few hundred pounds in 'tax relief'.

video is a reasonable place to start.

Yes but you still can’t exceed your annual earned income.

Why on earth do you think that you would lose a HA property for having 16k? The random stuff I read here in unbelievable at times