Investing an inheritance

[ladywhistledownton]

DH has had a very unexpected inheritance of £500k and asked me to post on here for advice about what to do with it (I've name changed).

I will help him find an IFA but does anyone have any starting suggestions of what we could do with it just to get an understanding of what might be sensible aside from paying off the mortgage. We need an extra bedroom but for various reasons cannot move at the moment, so I'd like to figure out what to do to make the most of it until we can buy a house.

I think you would do better to post on money saving expert site, there are so really knowledgeable people on there.

there is a really good guide to steps to financial security that start with an emergency fund of six months living costs, and then looks at pensions for you both, mortgage, savings for kids. It is a flow diagram and is really good.

but enjoy the freedom money can buy

I'd be dividing it up into lumps of £85k and putting it in separate banks while I worked out what to do next. Make sure you don't choose any banks which share FSCS. Then it is protected if anything happens to cause your bank to close down.

You can quickly open savings accounts (see investments forum on MSE about which have the best interest rates) You could open all easy access accounts, or a mix of easy access and fixed term. Then the money will be safe while you decide your next moves.

Always start by paying off the debts, mortgage etc. Then, yes spread it around. Stick maximum in both your pensions and ISA's. Find some high interest bonds fixed for 1 or 2 years. Then look to put some in shared on a platform like AJ Bell, get some advice for this and you can choose a spread of high, medium, and low risk depending on how you feel about your circumstances, and what age you are.

There's temporary higher cover for things like inheritance, but yes - if it's going to be more than 6 months or so then divide it up into 85k chunks.

There are still a few days to use the current year's ISA allowance, so put a chunk into an easy access cash ISA today.

For the IFA, check fees carefully. I've just seen on another thread someone is paying 5%. Don't make that mistake. Also check lock in periods/exit fees. For that amount you probably don't need ongoing management. A one-off session with a good financial planner will give you a map you can follow yourself.

If you're prepared to do some reading, there are plenty of good resources online. You don't necessarily need a IFA if you're fairly savvy with money already.

We're partway through the process of investing a comparable amount received last year (very very lucky, parent downsized massively and we've got an "early inheritance" as a result). I stuck a chunk in premium bonds to start with, we'd already got self-select share ISA accounts to use. With fixed term interest rates hitting highs last year I put some in 12 month fixed rate accounts, and some with ns&I when they had 6% 12 month accounts (sadly they did not stay available for very long at all). Effectively that has given me some breathing space while we more slowly work out what to do. Last month we figured out how much was worth paying into pensions for the year.

Don't feel like you "have" to make investment decisions in a hurry. Read and learn and gain confidence. You want this money to make a real long-term difference to your family, there may be specific things that maximise that difference.

This!

Would say to be wary of any financial/wealth advisors who approach you, you should seek them out! X

How long until you’ll need the money?

@ladywhistledownton be prepared you ll be paying tax on that! It’s above the threshold!

go for fixed term bonds before interest rates come down!