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Original poster

Please could you help me decide what to do with this inheritance?

42 replies

rainbowee · 21/10/2015 22:34

I lost my wonderful df this year and have therefore inherited just over £200,000. Please could you make any suggestions as to the best use of this money?

My first instinct was to pay off the remaining 100k on the mortgage, but a friend gave me pause for thought by saying it might be an idea to invest it in something so that it could earn a bit. I am able to pay my monthly mortgage without recourse to this money.

I will seek out an independent financial adviser but I'm not very bright as far as finance is concerned, and am a bit embarrassed to show myself up. So I wondered if anyone here might have some suggestions or opinions. Thank you very much.

OP posts:
BackforGood · 21/10/2015 23:14

First of all - sorry for your loss. It must be lovely to have such a decision to make, but the circumstances that have led you to it, aren't. Flowers

It will be affected by all sorts of things
-your age - are you young and starting out in life, or counting down to retirement?
-your family circumstances - do you have dc? how old are they? are you likely to have (more) dc in the future? Are all of them likely to be independent or is there someone who will rely on you to support them into adulthood?

  • your attitude to risk
  • if you like your job - is this your chance to escape, or are you already doing something you really enjoy?
  • Will you still be wanting to do the job up to normal retirement age?
  • How secure is your job? (ie, will it still want you ?)
  • your "wish list" in life - do you want to see the world? Do you like designer clothes or bags or have you always hankered after a sports car?
-Are you passionate about a charity or 'good cause'

Obviously, I don't expect you to tell us the answer to these things, but they are the kind of things that will influence what you decide.

At 30, my decisions would have been very different from at 50, for example.

specialsubject · 22/10/2015 11:56

further considerations:

  • mortgage interest will be much more than you can earn as savings interest
  • very difficult to get reasonable interest on this month
  • can put it in the stock market, think very long term, consider attitude to risk
  • can put some in a pension

for now, make sure it is safe in 3 separate banking licences; the protection is about to drop to £75k per licence. Thank you, EU...

specialsubject · 22/10/2015 11:56

this month??? This MUCH!!

Original poster
rainbowee · 22/10/2015 13:42

Thank you very much for the replies, and thank you also for the condolences.

I have 4 dc and, fingers crossed, they will all be independent at some stage. The first one is in last year of uni and the second is earning so we will have two more possibly (if they decide to go) to put through university.

I don't really want to make any great lifestyle changes. The only thing I would have liked to do is travel, and I can't do much of this as my dh is disabled - and he is the one I would have liked to explore the world with.

I'm sorry special but do you mean it would or it wouldn't be better to pay off the mortgage in your opinion? Told you I was daft re money ...

Thanks again both of you for taking the time.

OP posts:
Hoppinggreen · 22/10/2015 13:59

Please don't be embarrassed to see a financial adviser, they won't expect you to know anything and if they make you feel stupid they are no good at their job.
As for the mortgage it's pretty unlikely that you will be able to earn more interest on your money than you are paying on the mortgage borrowing so definitely consider paying at least a good chunk of that off.

specialsubject · 22/10/2015 14:07

in my opinion (and I am not you, and not a financial advisor) - yes, pay off the mortgage. That's what I would do!

do check if there is any life insurance with it that you need first - you could always leave a token sum on the mortgage.

Original poster
rainbowee · 22/10/2015 14:08

Thanks Hopping :)

OP posts:
FadedRed · 22/10/2015 14:09

Sorry for your lossFlowers
Please do not worry abou 'showing yourself up' - many people seek advice for all sorts of reasons, a good advisor will not expect you to know much, that's why you're asking iyswim.
Agree with pp about protecting the money in the short term, and really advise you take some time making decisions in view of the advice you get.
Think through a few scenarios before you go, for example: the emotional security of being mortgage-free may outweigh the potential to 'make more money' by investing it elsewhere; you might wish to avoid the potential stress from higher risk investments vs the security of lower risk investments; money in trust for your DC's; using some of the money to have a trip with the assistance that would make it possible for your partners to accompany you, that sort of thing.
Another thing I will say, and trying hard to find the correct words. The money is yours to do what you think is best. Don't get hung-up on any feeling that you have to justify your choices to your family/ your late father/any body else. You haven't said anything in your post to indicate that this is the case, but it needs saying because many people feel that way with inheritances IME.

wickedwaterwitch · 22/10/2015 14:12

I'd definitely pay off the mortgage
Then I'd want to keep £50k in rainy day savings (in separate banks as someone said, re banking licences)
I would do some of the things on your bucket list, with your dh
And take some time to think about what to do with the rest

I'm sorry for your loss.

Original poster
rainbowee · 22/10/2015 14:12

Oh x-post, and thanks also special.

OP posts:
Original poster
rainbowee · 22/10/2015 14:13

Oh dear, lots of x posts - sorry! Off to read them, thank you.

OP posts:
ImperialBlether · 22/10/2015 14:20

I would definitely pay off your mortgage. It would be so liberating to do that. If you then save what you're now spending on the mortgage, you will build up a nice savings account.

Would your husband ever be able to travel? If he couldn't, although I know he's your idea travelling companion, but I do hope you'll take the chance to travel a bit yourself.

specialsubject · 22/10/2015 14:39

£50k doesn't need to be in separate banks, it is under the protection threshold which will soon be £75k.

but it will need splitting to get any interest. Search interest paying bank accounts and set up a network of standing orders shifting money between them. Few hours work but is the only way to stay ahead of inflation on cash.

happy reading and let us know if any more questions. And yes, no-one is born knowing this stuff so get advice!

Siwi · 22/10/2015 14:46

Pay off the mortgage.

IsItMeOr · 22/10/2015 14:53

rainbowee just another to say please don't worry about not knowing how all the finance stuff works. You are the norm - most of us find it a bit muddling.

As a rule of thumb, it generally costs you more to borrow money than you would earn if you saved it.

The only way that you can really earn more on savings is if you are prepared to invest it in higher risk ways - but the risk is that you may not get back all your original amount of money, so you could actually end up with less than you started with.

The interest % you pay on your mortgage is likely to be higher than the interest % your bank will pay you on any savings you have. Also, interest on savings are usually subject to tax, so the difference is even greater.

It means paying off your mortgage and any other debts (e.g. credit card) is always a reasonably sensible low risk option.

Good luck finding an IFA. You can find advice on places like money saving expert on how to pick one.

Sidge · 22/10/2015 14:53

I'm sorry you lost your dad.

Pay off your mortgage. Even with the current low interest rates it will cost you far more in interest over time than you will gain in interest from savings. Occasionally there is benefit from leaving a token amount outstanding especially if you have redempton penalties but best to check with your mortgage provider.

With that sort of sum I'd be inclined to see an IFA, and make the money work for you. I'd also spend some on something 'treaty' that you fancy - maybe a lovely piece of jewellery or artwork that will remind you of your dad Smile

Original poster
rainbowee · 22/10/2015 16:06

Thank you everyone for posting. Faded, your words were very timely - I do indeed feel guilty that I am sitting on this money when times are hard for so many folks, and I feel that some family members have been dropping some not so subtle hints. But in my head, that money is for my children's future, so I'm resisting any attempts to guilt trip me.

Most of you advise paying off the mortgage and that had been my first thought, so after reading your kind words, that's probably what I'll do. And thank you for the advice about splitting the money - I didn't even know that. I don't think dh will ever be able to travel, no :( But he's resigned to that and I am too. I love the idea of buying something in memory of my df.

So glad I posted - thanks again.

OP posts:
Siwi · 23/10/2015 08:25

Hi Rainbow

I spoke to do about this last night and he agreed with everyone who advised paying off mortgage.

I, otoh, think that you should invest the lot in a toy shop.

;)

gonegrey56 · 23/10/2015 08:29

Definitely pay off the mortgage as the priority !

FrankUnderwoodsWife · 23/10/2015 08:36

Don't pay off all of your mortgage. Interest rates are very cheap on mortgages and it's useful if you ever want to borrow in the future to have a bit of "debt".
We paid off our mortgage, tried to get another one and found it almost impossible due to lack of credit history.

That will leave you with say £150,000
With that buy the maximum amount of premium bonds. It's tax free, safe and you have the opportunity to win in the monthly ballots.

That would leave you with approx £120k. I'd suggest you put £20k in a high interest savings account and invest the rest. Find a good financial advisor. There are so many bad ones out there.

Do you have ISA's? They're a great way to invest in the stock market with the risk being spread across a variety of asset classes.

Good luck and sorry about the way you came into this money.

Trumpton · 23/10/2015 08:37

Just a thought on this ...if you pay off all or part of your mortgage then set up a standing order for the amount you are paying now to a saving account of your own . If you are used to paying it , and it's manageable , then you don't notice it and can always access it if you want.
We did this when we finally paid our mortgage off but paid straight into our pension fund as our last child finished university the month our mortgage ceased !
That was a happy day financially!

Blu · 23/10/2015 08:56

Are you in area where you can buy a flat for £100k? If so I would consider paying the £100k off your mortgage , buying a flat to rent out, putting the money you currently spend on mortgage into a rainy day account (maybe with a set % for having fun) and using the rent income for supporting DC through uni (but keep
A % for repairs and maintenance). This may not all add up, but it would be a model
I would discuss with an independent advisor- one you pay to consult.

Blu · 23/10/2015 09:00

Do not be guilt tripped by hinting people! Don't discuss it with them : none of their business! You have 4 DC and a disabled partner, you need this nest egg, and it was left to YOU!

specialsubject · 23/10/2015 09:48

there are no high interest savings accounts in the UK. The best the OP could do with that 20k is 3% before tax.

premium bonds get destroyed gradually by inflation, which is NOT zero or negative. And you could win nothing, zero, nada on that £150k.

BTL returns 4% at best before fixes and so and is a lot of hassle, especially on a cheap property like that.

the point about credit history is valid but mortgage rates are higher than savings rates, and will go up long before savings rates do.

IsItMeOr · 23/10/2015 11:05

Ooh good tip Trumpton and Blu about transferring what would have been mortgage payments into a savings account/pension.

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