Inherited 140k- what would you do? Get a little buy-to-let property or invest in S&S???

[icantwaitforsummer]

Recently inherited 140k, would love some advice from experienced people, what you would do with this amount?

For info, married mum of 44, mortgage of 300k, both have pensions. No real debt other than cars on finance. Have one ISA that is full and dabbled in shares with £1000 S&P 500 and Vanguard ETF global, which is doing poorly and at a loss.

Husband and I have been thinking about getting a little buy to let property for 200k, interest only mortgage and just manage ourselves for 15 years. This appeals to us as you can ‘see your investment’ in bricks and mortar, Dad was a builder so doing bits doesn’t scare us.

BUT I have researched and stocks and shares seems better for long term gains. But you invest and it just ‘disappears’ into the magic invisible investment world and that’s so scary.

Im not very experienced with S&S and my little play around investing £1000 last year hasn’t done well, I know you have to leave it for years, but I think I will be so stressed if it’s now 100k+ invested, I would be watching it all the time. I think I would find it more stressful than a physical investment or is that just ridiculous because other people do it?

In your situation I would use most of the inheritance to pay down the mortgage and shorten the term or lessen the monthly payments and go part time. My aspirations are early retirement/ more free time though rather than wealth building.

Same

I'M CURRENTLY SELLING MY ONE BUY TO LET - DO NOT DO IT THAT'S WHY I'M SHOUTING. THE EXTRA STAMP DUTY, THE EXTRA TAX BURDEN, THE EXTRA HASSLE, TENANTS RUINING YOUR HOUSE, THEN THE CAPITAL GAINS TAX TO COMPLETELY FINISH YOU OFF. I WORKED OUT IF I HAD JUST PUT IT IN AN ISA I WOULD'VE BEEN BETTER OFF.

Agreed pay down mortgage. Prob can only do max 10% a year so check. S&S is difficult as you’re not an expert but you could perhaps use 10k to play? And buy to let is not as good as once was. The challenges of being a landlord have increased and the returns aren’t always worth it.

I have a tiny flat (200k in an expensive area, it really is small) that I’ve rented out as I’ve had to move to care for my mother. It just about covers its own expenses tbh, as there are property management fees, etc. And don’t underestimate the time it will take dealing with various issues. If I could have invested the money instead I would have, and if/when I sell it I probably will invest until I can settle again. I suppose it depends what you can buy in your area though.

When you say your ISA is full, do you mean for this year’s allowance?

With regard to investments, I’ve found that I look less when I use a provider like Vanguard, where it’s harder to tinker with it, than eg T212, where you can just move things around at a whim! Set and forget! If your ISA is down it might be a good time to invest more tbh! I watch The Compounding Investor on YouTube to keep myself sensible about investments, he’s very measured and I think has a good strategy.

Another ex Landlord here. Don't bother with a buy to let and I agree with the others, pay down the mortgage.

Definitely do NOT invest in a buy to let property. You’ll kiss the lot goodbye in tax. Invest in your own home and pension. Open junior ISAs for your children. Anything! Just NOT a buy to let.

Partially paying off your mortgage seems the obvious one.

Having been a landlord for years I wouldn't touch the BTL idea with a 10 ft bargepole. As a PP its a nightmare hassle and a very poor return on your investment.

If you buy a property in both your names and at some point you split, your husband will get half of your inheritance. I'd be taking some legal advice to protect this money.
Sounds harsh but no point crying about it in ten years' time

Don’t bother with the BTL - complete pains and the finances don’t stack up as the shouty user has said. Nightmare.

Overpay your mortgage and retire earlier.

ETA - interest only mortgage could well bite you in the ass. Just don’t do it

The challenges of being a landlord have increased and the returns aren’t always worth it.
Governments have turned against BTL and made life more difficult for landlords. Also, the first rule of investment is "diversify" so putting all your funds in one sector (BTL) and one product (one particular property) is not a good idea.

I’d pay off some of the mortgage, use a little to play with in S&S, go on a once-in-a-lifetime holiday for minimum two weeks, memories are so much more than invested wealth.

100% agree with this.
I'd also never do the stock market again, as I lost a lot of money that way. It's called 'posh gambling' for a reason.
I'd just stick it in a 4 to 5% savings account and bank the £6k+ a year interest.

Small landlords have been pushed out of btl industry, one property will be a financial liability not an investment.
As someone who lost a very large chunk of my inheritance from both parents due to divorce (ex husband parents both alive and wealthy), please seriously consider how best to make sure you would keep all of this money should you divorce).

I hen you say you ‘both have pensions’, do you have an option of paying more into the pensions? I am 52 and definitely regretting not overpaying into my pension much earlier. You get the tax relief and increase your options of taking early retirement, or going part time, down the line. In your position I would put some into a high interest fixed term bond to stop me being tempted to spend it, a bit into emergency cash savings in a high interest account or ISA, and as much as possible into mortgage overpayments and pension for a year or two.

I really wouldn’t recommend a buy to let, they’re really not the best investment and you’re not landlord’s- the expense of becoming one can be huge. My aunt & uncle did this and their property ended up in an absolute state, it cost them a fortune to evict and get the tenants out and when they did eventually leave the damage they had done to the property was beyond belief, far surpassing what their deposit would cover.

If you had millions then maybe, pay someone to deal with it all for you, can afford to take the hit if a property is left in a state, but when at 44 you already have a 300k mortgage and are getting 140k I really wouldn’t risk it on something that the wrong tenants could destroy.

Definitely not the property.

Are you on a fixed mortgage rate? If so you can probably only pay off 10% a year. If I were you I’d pay off a chunk of mortgage, put a chunk into pensions and a chunk into a S&S ISA- not more than you feel comfortable with. personally I’d put a lot into S&S but I’ve been investing for years and am comfortable with volatility. If you know you are not and are likely to panic and sell at the wrong point, that’s a good thing to know about yourself so you can avoid that situation arising. Obviously your pension will also be at least partly in equities but for some reason people don’t seem to
mind volatility there so much.

Defo not BTL.
Not sure what you mean by your ISA being ‘full’. You can put 20k a year in, so if you do that for both you and husband, maybe start a pension and/or ISA for your children, some vehicle for a future house deposit for them.
Overpay whatever your mortgage allows you to, and a nice holiday and that’s about 140k…

Another vote for over paying your mortgage. Check early repayment fees, but might still be worthwhile. It'll lower your outgoings giving flexibility for illness, lots of job etc.

Then look to max both partners ISA allowance for this year.
I assume you get the most employer matching on your pensions already, if not do! Also you could up your pension contributions to save tax whilst living off some of the inheritance.

Remaining can be put in premium bonds for a bit of fun and tax free returns.

Alternatively you could put into accounts for your children now. You may well be in inheritance tax territory (value of house, plus savings, plus DC pension pots). Especially if you die in the years close to, or after retirement age because that is when assets are highest.

Avoid BTL like the plague

Regarding overpaying the mortgage.. Obviously only pay the annual allowed amount to overpay (mine is 10%), stash most of the rest of the money until your current fixed rate ends (2 years left in a 5 year fix in my case) then chuck the rest of the balance at your next fixed rate, so you’re borrowing less.

Stocks and shares isa. Markets tracker

Like everyone (nearly) has said - the BTL ship has sailed long ago - avoid like the plague - big chunk to overpay mortgage.

I’d look at my AVCs and likely tax rate as a pensioner, and then I’d look at my mortgage before I took on the stress of a second property for low returns.

Pay off your debts (car finance, credit cards etc) and put the rest into your mortgage. This will reduce your monthly outgoings and enable you to save more for holidays and anything other fun things you enjoy doing.