How to invest £280,000

[user0507]

We are very lucky to have received an inheritance from a relative. It's £280,000 so a good sum of money.

We are also in a fortunate position in that we own our own house and the mortgage is paid off. My pension is good. DH's is fairly good but he is currently (short term only) a top rate tax payer and so he can't stick extra into his pension due to the pension tapering rules. We are both mid 50s aiming to retire at 60.

What would you do with it? I think we probably need to see a financial adviser but I'm not entirely convinced that they're worth the percentage they take.

Have you looked at the Rebel Finance School (Facebook and youtube ‘lessons’).
It provides a wide understanding of decision making relevant to your own financial situation.

Very detailed, quite time consuming, but really helpful with making big decisions based on you fully evaluating your own circumstances, future use of money etc.

In times gone by I’d have said buy to let flat. But don’t go there. My simplistic advice would be to split it… some investment, some savings. Do you have kids? Would you consider giving them some money for a specific purpose (uni, house deposit?)

Definitely consult a financial adviser - it will be worth it in the long run.

A spread of investment, mix of high and low risk depending on your appetite. Also maximise tax efficiency where possible.

Maybe we should see a financial advisor. I'm reluctant because in the process of this inheritance we have seen the statements from the relative's investments and the management of the funds has been poor with high management charges.

Go and see a financial advisor and get some ideas. You don’t need to sign up. We went to St James Place (I know I know…. Not suggesting you use them). We went through financials and retirement funds. I think he thought we were a lot more high net worth than we are!!! He wanted us to transfer pensions to SJP and their rates are v high. We did however get comfortable that we have our financial ducks in a row. Said thanks but no thanks.

I would put 50k in premium bonds and 20k each in an ISA for the time being.
you don’t mention kids - if you had them I would say private school and deposit for a flat for them.
if you don’t have kids, then why not retire now? Use this money for travel etc?

We are maxed out this year on isa allowance but will put more in in April.

Both kids at Uni.

Get financial advice.

I set up an execution only account with Charles Stanley Direct and ask ChatGPT for a list of the best undervalued investments in certain sectors. I do £5k in funds/Unit Trusts/UCITS/ETFs and £1k in direct shares.

We wouldn't retire just yet because Dh has a short term role where he is earning very well. But yes we might potentially retire slightly earlier than planned. It's what we do with the money in the meantime. I suspect the sensible thing is to buy shares.

Also live a bit! Splurge on that holiday, buy that fancy bag, go for a nice family meal. Life is for living so I'd say keep £30-50k back for fun times.

Also 1+ rebel finance school

Pension / ISA / LISA for DC, your own ISA then low cost ETF - IBKR is a good platform

No need to pay someone really

In similar circumstances I split it between my three sons. Thought its more use to them now than when i die🤷‍♀️One of them put the full amount in premium bonds that your allowed to and wins something virtually every month which is tax free. He is very good at maths and says its the equivalent of 4 % interest. Other two put it towards property.

Try your bank first, they will have a range of investment portfolios which usually perform pretty well.

Maybe look into paying off children’s Uni loans?

As it is family money I would put it aside for your children to use in the future for deposits. You can put it in premium bonds and tracker funds. Drip-feed it across so they build up their own portfolios (or put it in LISAs).

Lots of folk offering advice without asking about risk?? Also any recommendations would depend on existing investments and where those portfolios are placed.

It also depends on when you would want to access the money? Term and risk are the keys for making a good decision.

If pensions are not an option perhaps a VCT. However, it would depend on the tolerance for risk and volatility.

Don't do that.

Having worked for 2 banks whose performance and charges were grim I would go for independent advice.

Really? I’ve never heard of this.

I’m pretty risk adverse I woudnt buy shares for just a few years

If you can afford it I’d suggest varying the will to give it to your children and avoid additional IHT. What they then do with it will depend on their plans but perhaps a flat deposit, in which case (assuming they might buy in the new few years) they ought to stay in cash or similar. Or if that’s already sorted then they could invest.

It's unlikely that young adult children just out of uni would want to buy straight away. That's exactly the age where you don't want to be tied down by property - while you're establishing your career, possibly moving cities (if not countries, in some cases).

Even if they were buying in the next few years a lot of that money in cash is just going to be eroded by inflation probably.

OP, I would do lots and lots of research myself if I were you. I don't necessarily think you need a financial advisor. You just need to read lots and look at quality financial advice on youtube. Maybe some of the FIRE subreddits.

And I hate to say it but a good quality AI can give some decent suggestions of possible options. Or at least once you've done your own research and come up with some ideas you can use AI to check that your thoughts are on the right track. Be very specific in the detail you give it in terms of current levels of savings and pensions, appetite for risk, future retirement plans, how you'd like to help your children and when. Ask it for different scenarios eg "is it better to do X or Y if I want to be able to retire at Z age and give my children a lump sum of $ in 5 years time?"

Another vote for Rebel Finance School.