£500k in the bank

[LandSeal]

What would you do with £500k?

Late 30s, no mortgage, no kids, no loans.

I think it's stupid to leave the money sitting in a low interest account but DH, whose money it is, is reluctant to do anything with it. He won't speak to a financial adviser and seems to think investing is as risky as putting it all on a three-legged horse at the grand national. I could cry! I've convinced him to buy some premium bonds but that's about it!

So I'm wondering what others would do with the money in our situation.

He's depressed. Why do you not have children? Do you not want them yet or against having them x

You have my sympathy. DH is a bit like this - in an ideal world he'd keep savings in used pound coins in sacks under the bed where he can see and feel them every day. Everything else is sharp-intake-of-breath risky.

Unfortunately it is really hard to invest money at the moment. We now have some money in Zopa (peer to peer lending, pays much better than a standard account) but of course it's mildly risky. Now that premium bonds are not a ridiculous option he's put some in there too. But I do dispair.

That said, it sounds as if there are bigger problems than you not being able to invest money.

I know you've said it is spread between different banks, but please please please check that they really are different banks! Lots of the banks are part of larger groups, and the government only cover the first £80k ish within each group.

Lots of information here - www.money.co.uk/guides/which-banks-count-as-one-under-the-financial-services-compensation-scheme-fscs.htm#which-banks-are-linked

At 5% average return (totally doable if invested) - that’s £25k a year...

Inflation vs cash savings interest is an absolute killer at the moment. We’re between houses so have our equity in various accounts and I’m struggling to just keep its value.

If he’s suspicious of stock market gambling (as am I) he should look into passive/tracker funds. Vanguard Lifestrategy are great if you want something easy with low fees and you can adjust your risk levels. Perhaps you could convince him to at least fill up a S&S ISA each year (and use your allowance too if you can’t use it all).

The other option is to pay into a SIPP and he can accelerate his retirement from his hated job!

Don’t use SJP - too expensive.

InFiveMins I know that's how some people roll but it isn't how we work, and definitely not how I see things. I have a portion of it in my accounts at the moment but wouldn't use it without his agreement even if he is wrong

Christmasfairy2020 I think he is. Its really hard! Neither of us want children, it's completely by choice.

xela21 he's director of the family business. It's manufacturing and wholesale. And an added complication!

Purplewithred frustrating isn't it! But you're right, there are other issues to deal with. I suppose I feel if we can tackle this it might help him see there are more options! Maybe clutching at straws there though

HappyAsASandboy thanks - we definitely have that covered (again, though, only at my insistence. Sometimes he seems really clueless)

HappyAsASandboy - sorry, my reply sounds a bit sarky. That was a genuine thanks

CryMeALiver This is what I'm trying to get through to him. I think he's picturing wolf of wall street. I've just got myself some life strategy funds and am hoping that might demonstrate that isn't quite as exciting as that. (hoping I'm not wrong as I've just launched a big wedge of my own savings in)

You have said a couple of times that he “imagines” and “pictures” what investing means or could end up like. He needs to “know” what it looks like with the help of actual information given by an expert. Is there any reason why you can’t go to an IFA and ask what their strategy would be for a low risk approach? You could then show this to him rather than him playing guessing games.

The other thing I’d say is that if he were to fall under the proverbial bus tomorrow there’d be a potential shitload to pay to the taxman. Does he really want that? Has he made a Will? Have you? You need good tax planning advice.

Finally, has he ever indicated what he’s “saving” for? What’s the dream? Massive house, fleet of Ferraris, round the world cruise? With no children to provide for you could decide to blow the money - life is short, and for living. Don’t be like my late father in law who squirrelled everything away for years but Lead a pretty constrained life, only to leave millions behind on his very premature death.

@VanCleefArpels He's not really saving for anything. It's just sort of accumulated over time. We don't live frugally by any stretch- it's not like he doesn't spend but I know he feels he doesn't 'deserve' it in many ways, and that certainly colours his attitude to spending it. I think he feel uncomfortable about it. I know it can be difficult to start a conversation up!

I suppose I could speak to someone myself but I guess I don't feel it's my place. Although perhaps there's nothing to lose by trying. I'm not sure it would sway him though- I think he's mistrustful of them.

He does have a will, I don't though.

Does he know what the person he inherited the money would have liked him to do with it? Would that help him doing something more useful with it? If I was him I'd put the max yearly allowance in pensions (40k).

Also, with investing you dont have to invest via someone else, you can do it yourself. Would he be more interested in that? I invest myself after doing research on how to. I see it as bying a share in companies I like, that I feel are well run and that I can see a future in.

See a financial advisor. They will recommend an amount to keep in cash based on your risk profile.
Then invest the rest. There are lots of reputable platforms to invest in the stock market. They are managed finds so it's not like dabbling in shares yourself. You will make money in long term investments, but you need to keep the money invested. An IFA will advise you. That amount of money sitting in the bank is crazy and its value will erode significantly over time.

Maybe demonstrate the impact of performance on the accrual of capital with a conservative 5 % return for a Stocks and Shares ISA to show the difference investing is likely to make (compared with saving). In other words work out the compound interest on the lump. Using this compound interest calculator, www.thecalculatorsite.com/finance/calculators/compoundinterestcalculator.php the return on £500k after a ten year period is as follows:
Future investment value
£823,504.75
Total interest earned
£323,504.75
Initial balance
£500,000.00
Effective Annual Rate (APY)
5.116%

My ex was like this. Almost a hoarder when it came to money. Had over £100,000 in a single current account (so not even eligible for protection if the bank went bust). Even more infuriating was that this person worked in financial services, but was truly terrified of doing anything sensible with the money. Refused to open post, go to an IFA, wouldn't spend money on anything, lived like a frugal pensioner (bit was earning close to £70,000 with stock options).

We broke up. Money was a big reason why. I think the fact they were on the spectrum had an input. Sky high anxiety issues and this translated into the money thing.

No real suggestions I'm afraid but good luck.

Thanks for all the replies- after trying to talk to him about it again over the last few days, I think I'm on a hiding to nothing. He's dead set that he won't trust an IFA, doesn't want to 'hand his money over' and doesn't seem to want to listen to sense. He hasn't even got a cash ISA as it turns out. I despair!

Sounds daft but I hadn't really put figures on it in my head before... the 5%/ £25k returns a few pp have mentioned is the same as I earn working full time. I was hoping for some inspiration but I've actually just made myself miserable with this thread

He spends his life worrying about 'if the money runs out' I might punch him next time he says that but isn't even prepared to look at options so what can you do!

When mitigating risk in the short term, one often pays a price in the long term.

“When Mr William Nestle died in 1922, the value of his trust fund (after payment of debts, legacies and estate duty) was about £50,000. In November 1986, when his granddaughter Miss Georgina Nestle became absolutely entitled after the death of the last life tenant, it was worth £269,203. That, it might be thought, was a substantial improvement. But during the same period the cost of living had multiplied by a factor of 20, so that it would have required £1 million to provide equivalent wealth: see the BZW Equity-Gilt Study of 1988. The same source shows that an equity price index rose by 5203 per cent in that period. An equivalent appreciation in the value of the trust fund would have left it worth £2.6 million in 1986.”

Not sure what area you are in but I'd buy property and take BTL mortgages...
Could say buy 4 x£300k flats in London...
Take a 66 LTV mortgage on each
Keep £100k back for rainy days
Interest only Mortgage on each will cost you £1k - £1.5k pcm depending on rates you fix in and you could get a rental income of say £5k pcmy.
Spread it across multiple properties that way when one has a void or issue you have surplus from the others to cover it...

Short term fab returns
Long term asset growth
Long term a sound pension

Max out premium bonds. Buy NSI certificates (index linked). Some in cash. Rest in range of equity investments. Look for this with long hold strategies. Wouldn't buy property as an investment just now unless you could buy mortgage free.

If he is worried about the money ‘running out’ tell him that whilst it is doing nothing / earning nothing, that’s exactly what it is doing. In real terms it IS running out. He needs to make it work for him and the only way to do that is to seek advice and MAKE IT EARN ITS KEEP.

If he's not investing it, then all it's doing is depreciating by the day. I was the same, saved everything in low-interest bank accounts for a house deposit and now kicking myself! There's so many ways to earn passive income on that kind of money - you could live off dividend stocks for example. I don't really know what to suggest if he won't listen to you though, you can take a horse to water.....

My husbands grandfather held onto his money all of his days to the detriment of his life and his relationship with his wife what is he keeping all this money for?
It could be growing exponentially if invested properly
What a waste

It's definitely a waste... I'd retire on it, even if he doesn't want to

He's not really keeping it for anything... the whole situation is just baffling. He wants to buy a house with it (for us to live in as opposed to an additional property) so it isn't 'in the bank' but I don't want to live in an unnecessarily massive house and it seems stupid for all our/his money to be tied up in one property.

I don't think I can keep bringing it up though, I've said my piece more than once...

I’d recommend the meaningful money podcast, it’s now on season 16 or something, but go back to season 1 for the basics. The guy who does it is an IFA and he explains things really clearly and sympathetically.

He's being pathetic. Needs a financial advisor

Others have better luck than me, but whenever I have made any 'investments', no matter how 'safe' the financial advisers tell me they are, I lose money. So personally I would spread it out in very safe savings accounts, max £85k in each, simply so that it didn't go down in value.

I'd buy a couple of rental properties.