£450K what would you do?

[Louloubelles]

I hope this doesn’t sound like any kind of boast. It’s not. The money has come from awful circumstances.

I have £450k in a variety of instant access accounts at the moment. I know I need to see a financial advisor but in the meantime I’m interested in finding out what others would do to invest.

I own my house outright and have a job that covers all outgoings but not a luxurious lifestyle. My income could go up but it’s not a priority for me at the moment, a low stress life is. My work pension on retirement will be pretty low due to working part time since my kids were born.

I have two early teen children, no partner or income from anyone else. I have no debts. I’d like to leave money or property for my children to inherit eventually. They both have a smallish inheritance currently, in trust until they are 25.

What would you do to invest? I’m fairly risk averse by nature but understand that no risk investment brings tiny amounts of interest that won’t keep pace with inflation. Investing in a buy to let is something I’m thinking of but I haven’t researched properly yet.

Any thoughts?

For an easier life, I would have a diversified portfolio of ETFs. Fill up your isas, sort your pension. Get dividend income.

Btl is work if you do it properly.

I would start with filling up tax efficient buckets:

ISA - £20k each adult
JISA - £9k each child
Pension - max each adults pension contribution this year. How you do that depends on your circumstances, check with work pension administrator for details of their scheme, fees etc. If workplace pension does not have good fund choices, high fees etc, then use a simple SIPP such as from Vanguard, Interactive Investor, Fidelity, AJ Bell, etc. Be aware of Pension Annual Allowance.

Premium Bonds - max £50k each. You are risking the interest and inflation, but you can get the initial capital back again.... and you may win!

Spend some money learning about how to manage money. Buy some books/audiobooks, do an online training course which gives access to financial planning software, get professional advice if you don't want to manage things yourself.

I own two rental properties, started managing them in a crisis situation when my dad had dementia. Very stressful at first so I wouldn’t recommend if your head is not in the rig it place and for example you are debilitated by grief. However if you are well informed, understand homes and diy and have the energy it can be an option. As a financial proposition I would have thought less risky than shares but others may disagree.

Yup agree with nannynick especially pension

I have 50k in premium bonds in my name and 50k in my daughter’s name. I put any winnings into a bank account for her for future but the 50k is mine if i need it, not hers. Then I put 20k every year into a stocks & shares isa for me and 9 for her (which of course will be hers). I have 200k in a school fees account which is managed as stocks and paid directly to school. I have a holiday let and then remaining 800k is in shares. I usually try to keep about 100k aside in case of emergency.

@icedancerlenny

I have 50k in premium bonds in my name and 50k in my daughter’s name. I put any winnings into a bank account for her for future but the 50k is mine if i need it, not hers. Then I put 20k every year into a stocks & shares isa for me and 9 for her (which of course will be hers). I have 200k in a school fees account which is managed as stocks and paid directly to school. I have a holiday let and then remaining 800k is in shares. I usually try to keep about 100k aside in case of emergency.

The 50k in her name is yours not hers? How does that work? Learning about finance myself at the moment to try and build wealth for retirement

Please see a financial adviser who can assess your tolerance and attitude towards risk. They might suggest a manager to look after your money in a pension for you.

What would you do to invest? I’m fairly risk averse by nature but understand that no risk investment brings tiny amounts of interest that won’t keep pace with inflation. Investing in a buy to let is something I’m thinking of but I haven’t researched properly yet

I have a similar amount (430k) and risk averse too! , i put it in a low/medium risk investment account and 20k in a S&S ISA (medium risk) so far, it returns around 8%, on those returns plus some other savings, i ve retired early and still haven't touched my pension.

Be aware of charges, there are set up fees and on going advice from most IFA's plus the fund fee's, i did mine via my bank and avoided this.

I didn't do BTL as i don't agree with it, having seen my own DD struggle to buy a property with her BF and constantly being over looked in favour of cash buyers.

I think P/Bonds are a complete waste of time under the new lower prize structure, pays out about the same as deposit.

I would put the maximum you can in a pension so you get the investment returns and tax benefits.

BTL I think is a lot of stress so would avoid that at least until you feel more ready to handle additional stress and I think its always worth really thinking and researching well before investing in property.

Unfortunately returns on cash in the bank and premium bonds are well below inflation which the BoE says may rise to 4% this year. So I would put £20k in a SSISA. If you are 100% certain about leaving money to kids put in JISA. Rest if there's any that needs to be an emergency fund then premium bonds are fine for that but returns are low and will be below inflation.

Rest I would probably put in investments somewhere like Vanguard (split in 85k units for financial protection) though I am also risk adverse and its scary but you can access the money quickly. I have money in their Lifestrategy funds, 2040 retirement fund and a couple of others and it can be up and down but they are rising well atm. Mine did go down before it went up. I would say something like one of the retirement funds may be good for you as its mainly for a pension. Vanguard has low fees which is good. I have an actively managed fund with them which is doing fine but higher fees and underperforming the lifestrategy fund for me.

What is the buy to let market like where you are? Could £450 buy 3-4 flats (at around 1k/mth income after maintenance fees from an estate agent are taken off so you can be hands off?) It can where I am and if it’s possible for you that’s what I’d be going for. The income you get from these BTLs can then, if you want to later, allow you to get mortgages to buy more. Or you can have 3-4k / mth and just enjoy it.

I would contact a Financial Advisor to get some sound advice. Pension contributions should be top of your list. I have a buy to let property but wouldn't recommend it unless you like diy and sorting out problems. They are often more of a hassle than you might imagine.

Agree pension and ISAs probably a better way to go than BTL as much less hassle. I would suggest the book “reset” as a quick easy read on investing. We have found a financial planners advice very useful (note not a financial advisor) looking at where we are now versus financial goals

Find 2 or 3 Chartered Financial Planners (Level 6) who charge fees. Ask them for their suggested plans for your situation

Select the one you prefer

Don’t do anything significant until you’ve done this

BTL? Can be great or lousy. Not for everyone.

With a similar amount (I was also mortgage free and with a modest pension) I did the following:
Buy to lets, not experiencing any of the hassle talked about on here so far and coming up 10 years since I started. In fact we've just bought another.
Holiday cottage with my partner (we don't let it out but it is a tiny one bed and we've been told that if we did we could expect £10k a year)
Premium bonds £50k
I leave £10k in my current account
Stocks and shares isa I invest £20k a year.
I dabble in collecting fine wine, gold, jewellery etc
Have a campervan and motorcycles and lots of holidays.

Agree with other posters about filling up the tax-efficient buckets. But after that, you could tally up what you've got left and decide what to do with it on a percentage basis. What % do you want to keep in an easy-access account so you can draw on it for monthly income? What % do you want to keep locked up, safe and generating a (fairly low nowadays) predictable interest rate? And what % would you feel comfortable risking on stocks and shares - 10%, 25%, 33%?

Stocks & shares ISAs can be more or less risky depending on what funds you choose to invest in, so look into it carefully. Bonds are more stable than equities, and some offer guaranteed return rates. "Investing for income" can be a safer bet than "investing for growth".

Caveat - I'm not a financial adviser, this is just what I've picked up from my own experience....