Don't know what to do

[Motnight]

My DH and I are in our 50s. Always just about had enough money but struggled at times like lots of people.

We have now come into an unexpected inheritance of over £300k. A life changing amount. We have paid off our mortgage (less than £20k) and our credit card bills. We still have £300k.

At the moment it is sitting across 3 separate savings accounts. We have no idea what to do with it. Don't want to buy a second property to rent out, my DH doesn't want the additional work and stress. He has several life limiting conditions. So to put it into a pension for him seems taking a chance. He could live for the next 30 years or die much, much sooner (I sound heartless here, I am not sure how else to explain things, apologies). I have a reasonable pension that I have been paying into for 30 plus years though it would be good to have a little more money when I retire. We are both still working - me full time, him part time. He could be able to carry on working for the next 10 years, or have to give it up much sooner, his health conditions mean that there are no definites.

We earn well enough not to have to dip into our savings apart from for really big things, IE expensive house renovations. In fact at the moment we are saving money from our 2 wages as well.

We would like to in a few years gift our mid 20s DD with around £50 k for a house deposit.

Currently, we really don't know what to do with the money to help it work for us. I have looked at ISAs but they seem to be offering a worse interest rate than our current savings account. Am I not understanding them properly? Is there anything else that we can do? We don't want to take any risks. Is it better just to leave the money in different savings accounts where it is safe?

Would it be good to speak to an independent financial adviser? If so how do we find one?

Many thanks for any advice or signposting that anyone can give.

Risk is a funny thing. If you leave it in savings inflation may be effectively reducing the money you have over time. That's a risk too.

I guess by 'not taking risks' you mean investing in stocks and shares?

It's best to have a mixture of investments. So you have your house, that's one kind of investment. You have money in savings, that's another.

A good financial advisor might cost you a good chunk of change, but if you don't want to take risks then that hamstrings the advice that you might receive. Fee free advisors will take commission from products you are recommended instead.

I would say: don't rush. Perhaps put the money in NS&I (not bloody premium bonds) while your decide because they guarantee the whole sum in some of their accounts and not just the govt backed £85k in other banks.

And take your time, do some research. I have a stocks and shares ISA, I started it with £50 a month and overall I've had 7% growth which isn't bad (just tracker funds, I'm no financial whizz).

Are there renovations you may want to do to the house for your DH future? Or move to a more accessible property?

I would say enjoy the money if you can, you seem to have the right attitude. Good luck with it. We inherited a similar sum & we're about to move to the seaside for a better quality of life. Still working, but the money is going to be used well.

As you’re in your 50’s I think you might be able to get some free pension advice.
I wouldn’t discount pension contributions , I think that if it’s a direct contribution pension and you use drawdown rather than buy an annuity it can be inherited. It doesn’t die with the owner. If dh is in a direct benefit pension I think it’s different but he might be able to set up a 2nd direct contribution pension. You’d get the tax uplift and be able to access the 25% lump sum at 55 so not locking it away for long. Worth asking the pemsion advisor, for both him and you.

Definitely use quite a bit for lovely holidays. Good luck and enjoy!

As you're in your 50s already and pension access is at 55 and pensions are outside of your estate for inheritance purposes then I imagine a financial advisor would be telling you to look at pensions in the first instance despite your husbands condition and perception that it's a waste of time. It's quite the opposite. You likely won't be able to put all of it away due to your income and other rules but some of it could be made to work harder even in the shorter time frame purely from the tax treatment on it

Many thanks for the responses, really useful and given me lots to think about.

If you don't want to tie up your inheritance in pensions and/or stocks and shares over the longer term, I think a FA would be of limited benefit to you, and would charge a fee.

Many people do opt for cash savings and avoid pensions and stocks and shares if their circumstances mean they want to avoid the restrictions and risks imposed by such investments - it sounds as if your husband might be in this category.

I have found there are a number of options for this: (I'm not a financial adviser so do your own research)
Cash ISAs offer a slightly lower rate than many other savings accounts but the interest is tax free. Also, even fixed rate ISA accounts must offer access to the capital if you need the cash, which many fixed rate savings accounts do not. You will receive compound interest on the savings.
Each of you building up your cash ISA's would allow you to put £40K in each year.

General savings accounts for the surplus can provide a good return provided you keep track on the interest rates offered and switch when better ones come along. You could also make use of fixed interest accounts of varying maturity dates to build a savings ladder. (Savings Champion is a good website for this - if you sign up it will alert you when a better rate comes along).

Another option you might want to consider - a bond ladder.
Although UK bond markets seem rather volatile at the moment due interest rate jitters, it is possible to buy UK government bonds, receive a fixed dividend twice a year (the coupon)- and hold them to maturity when you will receive the par value (face value) back.
These types of investments fell out favour during the periods of very low interest rates as the return was poor. (Bonds can be bought and sold on the stock market as bond funds and this is where their current volatility arises). However, buying specific individual bonds with a fixed or index-linked return and holding it to maturity is a stable and secure investment with a guaranteed return.

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ISAs have lower interest rates, but the interest earnt is tax free.

The first £1000 per annum in interest on savings is tax free, if you earn more than that, which you will on £300k you will get taxed at 20% (assuming you're on basic rate tax)

I've got £150k inheritance, so like you I've suddenly had to work out where to put it. Mines currently in NS&I in ISA, bonds and premium bonds (premium bonds because any winnings are tax free) and long term on average you should win the same amount you would in interest

I would read forums like money saving expert savings forums, read financial books like Rich Dad Poor Dad so you understand stocks, shares and passive incomes.

Then once you understand it more see a financial advisor. You need to understand what the advisor is recommending. If you have any rich friends ask them for FA recommendations, many rich people use them as they don't necessarily know everything themselves. And you don't have to do what the FA recommends but it's worth paying for their opinions.

Oh and as a PP mentioned, if you do keep the money in a bank instead of NS&I do not have more than £85k in any bank, that's the maximum the government will give you if the bank goes bust.

That's why mines in NS&I - I couldn't handle the stress if a bank went bankrupt.

as someone said upthread, to reduce risk you want to spread your money about between several options. the main choices are

• property - high risk and hard to sell if it goes wrong. avoid
• cash account - the risk is that the value goes down if inflation is high
• cash ISA - a bit better because you get tax benefits but inflation is still a risk
• premium bonds - some people say they are great but probably not much better than cash
• stocks & shares ISA - a tracker fund should just follow what the stock market does. there is a risk it will go down, but over the long term, these tend to do better than cash
• NS&I / government bonds - a bit more potential for growth than cash but not as much as stocks & shares
• pension - often a good idea but you still need to decide how to invest the money as above

you probably need some combination of the above. if you want to find a financial advisor, look on Unbiased.co.uk. I always think it is better to pay a fee upfront (e.g. £2K - 5K) and have someone who really works for you & gives good advice than look for a cheap advisor who steers you to the products that give him/her more commission

also, be very careful to AVOID anything that promises to let you get richer quickly or that promises to remove risk. There are lots of dodgy investments out there. For an ordinary person with less than £1million, a standard stock-market tracker is about the most adventurous investment you should try. anything that claims to be better than that with low risk is probably dodgy.

How many dd do you have.

I would stick 20 grand in an is for her and also 20 in a sipp (self invest perosnal pension for her).
With broad index funds that could accumulate nicely without her everything adding to it. We don't know what life throws at us and that money tucked away until she pensions age could be the most timely gift for her and her family

Aside from savings and so oh can you use other for fun?
I was dreaming about how 250 thou would boost our life's styles even with 70 k for loft room, 80 k for dd private school, some in to isas and savings and emergency top up and pensions leaving a good 26 grand for pure fun and far flung holidays!
Bahamas, Thailand... Sighaopre... Switzerland etc...

Theatre....

Oh and grandchildren slush fund!

For yourself have an isa and a sipp.. The isa is 20 grand per year and it's all tax free and dint need tk declare it.
With the sipp the gov adds % so if you put in 80, they address 20. If you put in 800 they add 200.

However it's taxed on lump sum 25% when take it out. Three are cleverly ways a round this.

I wo) uld get an isa going, cash and another stocks and shares one ( 20 grand split between two a sipp and sipp and isa for dd.

I would also stash someone for holidays in pb.

"If you don't want to tie up your inheritance in pensions"

Then proceed to give advice to tie up inheritance in financial instruments inside estates.

Many(most) pensions are outside the estate in terms of inheritance

I don't understand the premise of your post?
You seem to be confusing two types of inheritance - the one the OP has just received as a beneficiary, and a possible legacy they might choose to leave behind.

Yes, most pensions are outside the estate in terms of inheritance for the beneficiaries - but the OP's post 'He has several life limiting conditions. So to put it into a pension for him seems taking a chance. He could live for the next 30 years or die much, much sooner' would seem to indicate that leaving a large legacy is not what they envision, and the additional restrictions imposed by a pension is not necessarily what they are looking for, at least for her husband.

As I stated clearly in my post, I am not a financial adviser - and the post was possible options they might want to explore if they didn't want to utilise pensions or risk stocks and shares investments. You had already explained the advantages of doing so in a post before mine - I saw no reason to repeat that information. Exploring possible viable alternatives might be useful.