Advice re 30k

[Appliancedesparation]

I have been fortunate to inherit 30k but have no experience of investing and would be grateful of advice.

I'm single, own my own home (mortgage paid off), have no debt and enough savings for emergencies. My pension is fine.

I'm late 50s, in secure employment and hope to reduce hours significantly in about 5 years, ahead of full retirement at 65.
I was thinking of 10/15k in a cash ISA and 20/15k in stocks and shares ISA &/or something like the Vanguard Target Retirement Fund (not even sure if these are actually ISAs).
Does that sound sensible (I realise there's an element if risk)? I have no idea re tax implications, this is literally the first time I have had surplus money and I'm frozen trying to decide what to do.
Thanks in advance for comments, advice erc

Stick it in premium bonds for now until you make a decision. Chance of winning some prrizes

Given your age put it in a sipp. You'll get the gross up.

Normally I would say put in a fund but the market is very unstable at the moment. I would put in premium bonds for 3 months or so and see how the market is playing out.

You could look at putting it in a private pension, getting the tax contribution and then taking it out tax free when you retire?

I'd agree with the other suggestions.

Given your age, a SIPP (which can be invested in funds, as with ISAs) would give you an immediate uplift in the value of your investment due to the tax relief. For example, a basic rate tax payer could invest £2,000 into a SIPP and the government adds another £500 (more if you're a higher rate tax payer).

As with ISAs, there's no income tax or capital gains tax to pay on the investments (you will pay tax on the annuity or whatever you buy when you want to take a pension).

We have an interest only mortgage backed by ISA investments so I think ISAs are a good option (you can invest £20,000 per tax year in a Stocks and Shares ISAs). However, I agree that the markets are difficult at the moment (some of my investments have fallen 5-10% since November). The markets have performed strongly over the last few years, but there's question marks over whether this will continue, particularly given high inflation.

There are ways of minimising this risk. You could invest £20,000 in a Stocks and Shares ISA, then drip feed it into your funds on a monthly basis over a period of time or even leave it in cash in the S&S ISA and invest it later. The drip feed method is a good choice in falling or volatile markets as you average your purchase price. You could pick more cautious/defensive funds. These can protect you from downside in a falling market (although typically offer less upside).

Some of the larger ISA and SIPP providers are Hargreaves Lansdown, AJ Bell and Charles Stanley. They can offer financial advice or, if you're happy doing some research, they have a list of recommended funds.

Just to add that you can get some very attractive returns investing in funds. I made about 25% in 2020, but 10% in 2021 (some good gains were offset by losses in Asian and Emerging Markets funds). I've had the odd fund that's gone up by 80% in a year.

But, as with all equity based investments, you tend to get a year or two of losses for every 3-5 years of gains. The higher return does come with higher risk than savings products.

Thanks so much for the advice. I have never even heard of SIPPs, which sound like a good idea (have been paying into a public sector pension for all my working life). Are these OK even if I want to take all the capital out at some point? I'm not looking to boost my retirement income, just have enough capital to maintain a house/pay unexpected bills.
Will definitely move some into premium bonds whilst researching and deciding

You can withdraw money from SIPPs from 55 (changing to 57 in 2028). They're pretty flexible, you can withdraw lump sums or use it to buy an annuity. It's worth checking the taxation implications though.

SIPPs are basically like ISAs, but for pensions. You have the choice of what to invest them in, or you can leave it as cash in the SIPP and decide what to invest in later. Mine's with Hargreaves Lansdown but there's a wide range of companies offering them.

I'd honestly suggest speaking to a financial adviser. At your stage of life it can really pay off to get an impartial opinion and a full assessment of all your assets.

You say you don't need to increase your retirement income, for example. If that's really true (an adviser will help you asses this) then why not just spend the money on something you'd enjoy (e.g holidays)?

Some people see an adviser and realise they're way short of what they need and find they need to be investing more. Others actually find they're being too conservative and could afford to live a little more comfortably.

Well worth paying a one-off fee to get a professional opinion I think. It may also be the case the your circumstances mean there are significant tax benefits to be had depending on your circumstances. None of us will be able to asses that properly on an internet forum.