Stressed about investing inheritance

[70smillie]

I have inherited 500K. This comes with a huge amount of grieving and sadness but its been well over a year and I still feel completely crippled. I had hoped we would have at least 15 more years and never imagined it would be this much as I have several siblings. There's nothing we need now but we do have 3 pre teen/teen children and our pensions aren't great. Currently its just sitting in bank accounts and doesn't feel like my money but I do feel a responsibility to deal with it now.

My first thoughts are to now put £20,000 each for DH & I into ISAS this week and then another £20,000 each after the 6th April.

But that still leaves £420,000 and anyway which ISA's? Aaargh!

I'm determined to get a handle on it now. I'm not financially unsavvy but we've never had cash to spare as we focused on investing in our homes hence we are now almost mortgage free and have no need to move. I work part time so have time to research and manage money but don't know where to start.

Has anyone been in a similar situation or have any advice?

It depends on where you are and how the market is but is there an option to buy 2 or 3 apartments to let? Or 2 and then try to use the extra income to buy the 3rd? It could be a nice idea to give each of your children a starter home when they've grown up and maybe you can make a little money out of them in the mean time to enhance your lives and pension pot.

I plan on doing something similar for my only. I don't need a leg up anymore so focus on giving her one. This might not be the best idea financially (I'm really bad at investing so don't do that anymore) but to me it feels like the best thing that I can do. We're already saving the fees for uni, as is her grandad, so that is more than sorted.

Get some good financial advice from an IFA. Depending on the ages of your children you may consider setting up trusts to enable them to buy property later. You should put as much as possible into a pension. Don’t become an accidental landlord unless you absolutely know what you are doing, but this may provide a useful income with an appreciating asset in the background. But bottom line is take advice to make sure whatever you do is tax efficient.

Echo the advice to see a good IFA - this is exactly what they're there for, the majority of people know very little about finance and investments which is fine, it's kind of a one in a lifetime event to have this much money available, and advice/research off the internet isn't the best as (a) it can be ill informed depending on your sources and (b) it can't take into account all your personal circumstances which is highly relevant when investing.

For the ISAs you want to set up before 5th April, are you planning on having this as your 'ready cash' that you may spent in the short term, or are you wanting to keep in longer term? I use Nutmeg for my own ISAs, it's a very easy to use platform and lets you set your own goals and risk appetite, withdrawal very easy/penalty free from the cash accounts so good if you wanted to have this money accessible. Probably not the very best app/provider in terms of return/fees but low stress just to make sure you use this year's ISA allowance.

For the rest of the money I'd agree you probably want to go for a mix of maxing out ISAs, putting some in trust for DCs (do consider carefully when and how much you want them to get direct access to aged 18/21), putting a good sum into pensions (depending on your ages/pension schemes/income), possibly paying off your mortgage and any other debt esp anything unsecured, then investing the rest into a good balanced, managed fund - depending on your immediate needs/future plans you could aim for higher risk/more short term income, or longer term capital growth... BTL is not necessarily something I'd recommend personally unless you are up for spending quite a bit of time managing it but it can work well depending on your circumstances, maybe something to discuss with your advisor? I'm not an IFA myself (just a random on the internet with an interest) but personally I certainly wouldn't recommend putting all £460k into BTLs, that's way too much capital (alongside your current home) to have all in property and likely not very tax efficient either....

I wouldn’t go down the BTL route. If your pensions aren’t great I would use your annual allowance and any carry forward allowance to pay as much into your pension as possible. Depending on your income tax band you will get 20% tax relief from government on anything you pay in, more if you pay a higher tax rate. It will greatly increase your pension pot and set you up for retirement. Most tax efficient way of saving. Please see an advisor (I’d be v surprised if they did not suggest something similar)

If you are looking to put money in an ISA before the end of the current tax year then you need to be quick. This Thursday 1st April is the last working day for most institutions.

I agree with others who have said ISAs, Pensions ( in both your names), however before you invest the majority of the cash have a long hard thing about any possible expenses that you might have in the next 5 years ( uni fees etc) a financial planner could could sit down with you and do some cash flow modelling, working out what if situations and calculate how much money you as a couple need for retirement etc before you can then decide if you want to gift some to your children. Whilst the idea of a BTL is attractive, they are not as tax efficient as they were so do go into it with your eyes wide open if that is the avenue you decide. There are lots of annual allowances in addition to ISAs and Pensions that a financial planner will also help you to utilise to ensure that any investments are as tax efficient as possible.