Inheritance help?

[Adviceneeded77]

I'm looking for some advice on what to do with an inheritance I have received. I have inherited around £200k. I'm still fairly young, in my 20s, so not the most financially literate person. I currently do not own a house, but do not need to at present as I have housing tied to a job which costs me £0 and it is far nicer than what I could afford to buy so I'm happy to stay put at present. What would be a sensible way to invest this money? Buy a buy to let, low risk stocks and shares, high interest fixed bond etc.

Speak to an independent financial advisor, they will look at your current situation, future ambitions then advise accordingly.

Pp beat me to it. Don’t get financial advice on the internet off strangers. There are ‘independent financial advisors’ who can definitely do a free consultation for you. You can try through your bank if they offer this or look up options local to you. Check their references and credentials first.

I second @Hadalifeonce's advice.

Ask around, your friends (or even better their parents!) for recommendations for a good IFA.

Good Luck.

Thank you. I hadn't really thought about that, I've always thought they were for people with LOTS of money!

Property is historically a good long term investment, but being a landlord can be a proper ball ache, even if you use an agent.
The younger you are when you start decent pension contributions the better.
Agree you’d be best finding a IFA.

A friend of mine lost many thousands of pounds because of a financial adviser. I have worked in a bank and found that advisers are very interested in commission.
I would be boring but safe. Put the maximum in premium bonds (£50,000) and then find a couple of building society bonds which give the best rate of interest.
Look at cash ISAs too.

Be aware of the £85k maximum with one institution. An exception is NS&I.

Look to transfer your £20k per year allowance into ISAs or a LISA. The interest is tax free.

As @Freddiefan suggests, find high rate bonds.

Give yourself some time to research and learn about investments, including buy to let properties.https://www.moneyhelper.org.uk/en/savings This is a government backed service.

Whilst a becoming a landlord is complex you don’t own a property and getting a foothold on the property market may make sense in the longer term.

A financial advisor may help but do your own research so you understand what the implications and risks are.

You are in a very fortunate position. I would consider a spread as suggested earlier. I would also look at your pension and invest the equivalent of and rent you would pay on your current property. I know you are young but the earlier you invest the greater the return.

Premium bonds are making much interest at the moment. Ida's are better. But if you absolutely do not need the money then I would buy property

I meant premium bonds aren't making much

My premium bonds made over 4% tax free last year. I am not a gambler but enjoy looking at the results every month.

Most people would consider £200k lots of money.

But no, you don’t need lots of money to speak to a financial adviser - and commission was banned some years ago.

Two priorities...

1. Put £20k into an Isa for this financial year. Probably best to go for a cash ISA. Coventry BS are offering over 5% on their flexible cash ISA.
2. Put 50k into premium bonds. Returns are tax free!

You MIGHT get better returns elsewhere, but both those options give very decent returns with de minimus/zero risk.

Then seek professional advice.

No one who has commented above has asked any further questions about your current situation or future ambitions.

I'm not sure you need a finical advisor to be honest, not unless you have some clue of what your objectives are.

Pay off any debt if you have any.

Are you a basic or higher rate tax payer as that will determine whether you get £500 or £1000 a year interest from savings tax free. Whichever one you are find the best paying instant access savings account that will keep you below your annual allowance.

You are in the fortunate position that we are about to enter a new tax year in April, so you can put £20k into an ISA pre and then another £20k when the new tax year starts. If I was in my 20's I'd invest the £40k in a global index tracker with the objective of having it in then for 15-20 years.

You still probably then have £150k left. I'm not usually a fan but you could put £50k into premium bonds, they are tax free and on average you could get a 4% return and they are government backed.

You then still have £100k left. What is your pension situation? I'd strongly consider paying some into a pension. Depending on what rate of taxpayer you are. You can pay in an annual amount up to your annual earnings and will be able to claim the tax relief back which is probably the best investment you can make. Downside is that any pension money is then locked away, possibly until you are 60ish, but then again that's kind of the point.

Spend some. Life is short. Take £10k and assign it as fun money, travel and see stuff. I've never regretted spending a single penny of travel.

Whatever you have left, is likely going to be subject to tax on any returns you make. Where you put it will be down to your risk profile and whether you have any future plans for big expenditure such as a house. You could park it in the best savings account you can an then feed it into future year ISA allowances.

You are young, it's all about balance, but don't fall into the trap of putting it all into cash ISAs and savings accounts. No one builds future wealth that way.