Wwyd if you came into large sum of money

[sulasuka]

NC for this.

We are in the next year or so about to come into a large sum of money. About £400,000.

I am feeling completely out of my depth about this. I know we probably need a financial advisor, but just wondering what other people would do in this situation.

We have a small mortgage left of less than £40,000. On a tracker so probably would pay that off as obvs interest rates can only go up. House probably worth just over £400k.

We also have 2 separate loans which we are are repaying. One was for an extension which was £30,000. We have half left and due to repay in 2-3 years. Another is a car loan which re repay about £500 pcm.

I also have my student loan from years ago- about £8000 left and I pay just over £200 pcm for that.

My first thought is to pay off all debts. Would it be best to include student loan in this??

Then no idea what to do with the rest of the money. We sometimes think about moving but to get a nicer house than ours in a suitable area close to dc school would be a lot of money- around 600-700k which is silly and would cost a lot to run.

I’ve always worked FT and am now in a very demanding job, and whilst the joint of having more time and a better balance appeals to me, I think I also enjoy the level of control that my senior position gives me and atm am loathe to give that up. I do fantasise about doing more studying tho. Obviously I couldn’t give up work altogether.

My other thoughts are saving for dc for uni fees, a holiday cottage. A dog? DH would probably love a camper van.

Wwyd? Feel like I’m out of my depth as I said.

@AlternativeTentacle your tone is so aggressive it’s really unnecessary. My understanding is that huge numbers of people take out thousands of pounds in students loans and NEVER pay them back because they earn so little. Maybe your wrath should be directed at them or the system which has resulted in that......I have been paying mine back for a decade and will continue to repay it, whether I had his windfall or not.

I would clear all of your debts, buy yourself something nice or frivolous as you only live once then invest the rest but take financial advice on the best way to do that.

How old are you OP? Aren't student loans written off at 50?

If you were, for example, mid 40s, I'd wait

We are lucky enough to potentially be in a similar position a few years from now. The plan is to buy a different property that gives potential for income through something like air bnb or a self contained unit that would enable nevto set up by business from home. So make the money earn money basically.

your tone is so aggressive it’s really unnecessary.

You asked a question and I answered. I have not been aggressive, just pointing out the premise of a student loan. If you were only after 'ooh I am so jealous you lucky thing' posts then perhaps you should not have asked the actual question?

My understanding is that huge numbers of people take out thousands of pounds in students loans and NEVER pay them back because they earn so little

Yes that is the premise. And you will be able to when you get your inheritance so my opinion is that you should. What is the problem?

After paying off loans / mortgage I would buy a flat to rent out and then use the net income to support the Dc through Uni. And save as much of your newly liberated salary income as possible, maybe in your pension. Or if either of you / DH are higher rate tax payers, do a salary sacrifice of the amount paid at higher tax rate, and put that into your pension. Very tax efficient. And you can live off the money you no longer need for paying mortgage / car loan.

Buying a flat outright gives you a rental income every month, and means you keep the capital.

Not sure of the implications if you later transfer it to the Dc etc.

Bloody hell, AlternativeTentacle, you ARE being aggressive. The OP is paying her student loan - she's wondering whether to pay it off in one go or not.

OP, I would pay off the car and the student loan now - it would be great to be £700 pm better off. Having said that I think I'd put that into a pension scheme.

With the rest of the money I'd be tempted to buy a holiday home which I could rent out and use for family holidays.

One more thing I did with my inheritance - give a chunk to Refuge. Thankfully I have never had to use their services but I know they do an amazing job and are underfunded. That was one of the most pleasing things to do with the money.

Be very careful about going PT; it’s really easy to become irrelevant. You miss out on meetings that go ahead with you, decisions are made without you, projects are assigned to people who are there every day, etc.

If you enjoy your work, you may be better staying put for now but planning on retiring earlier.

@ftw yes, sadly I have seen that happen far too often to PT people at work and that’s partly the reason why I’ve always been fT. Think if I did decide I wanted a better balance I’d have to do something else altogther rather than go pt in my current place. I’d find it too demoralising otherwise. Feel like my work is a big part of who I am.

OP, that sounds like a sensible approach towards pt and ft work.

£400,000 is a nice sum to have but not a huge amount over your lifetime. With people working longer and retiring later, the hit you take going pt is not just the pro rata loss of salary but also slower promotions and less opportunity to gain valuable experience. The loss in income has a magnifying and compounding effect over the rest of your working life, especially if you are relatively young (I don't know your age). I know for me the loss will exceed $400,000 over my working life.

I am mid 30s. DC are 4 and 6.

Definitely pay off the loans. Next you could consider doing things that benefit your children like private schools, extravtutoroting/clubs, sending them on exchange, setting up a trust fund. If you still can't think of anything to spend it on then just invest in a combination of safe and medium risk stocks and leave alone to grow.

I would clear all regular debts but I wouldn’t pay student loan back in one go, carry on with the monthly repayments for that one. Lucky you, enjoy the ‘problem’.

Don’t say that @loobylou10, @AlternativeTentacle will explode !!

AlternativeTentacle will explode

Yawn.

Don't do anything until you have taken proper legal and financial advice. A really good advisor and lawyer can ensure your money works for you and that it is protected when you die, eg taking out insurance to offset IHT etc.

I use Shoesmiths and Grant Thornton - not the cheapest but bloody good at their jobs.

I would contact an IFA who can go through everything for you and help you to work out what is best for you.

It's a lot of money and you don't want to get it wrong x

Clear off your debts and then seriously think about investing a good bit of what's left abroad.

Bellbook - why does she need Legal advice? Financial advise maybe, but even then, using a company such as Grant Thornton will soon eat away at her money. Although she is close to IHT levels at present, as she is married there will be a dual allowance, and if some of money goes into a pension, it is not part of IHT.

I used an IFA years ago for pension advice, I would never use one again. The advise was appalling (opt out of new employers final salary scheme) but I was young and naive.

Op - we had an inheritance and other windfalls last year of about 250k. We already had investments, no mortgage or debt etc. Kids (19 & 17) also have a separate inheritance which is going into ISAs, so no need to invest for them at moment. A camper has been on our list for a while too, we are just weighing up whether to do that or get a holiday home. No point having both!

We are using the money to build on investments and pensions with the hope of retiring at 60 (almost mid 50s). We use an online investment company called Hargreaves Lansdown, but there are others similar. We have, over the years, learnt the tricks of investing, and make sure we diversify and drip feed the money monthly.

Don't forget that kids can have ISAs of 4k+ a year, so 344 a month, put into a couple of decent funds, will give them a decent nest egg at 18. They can also have pensions, mine both have a pension fund we started for them a few years ago.

As for student loan, only you know what you pay back and whether you should continue it. We could've paid DS fees upfront, but didn't for a few reasons, including that DD may not go to uni. We will probably add to their existing money when they are ready to buy a house.

Do have some nice holidays. We did a trip to W USA this summer, including a helicopter flight over G Canyon, which alone cost almost 1k for 4 of us, but you only live once.

Your DC are too young for trips like that, but you can still have decent UK/Europe trips and plan long haul when they are older. We have enjoyed a New Year cottage by the coast a couple of times when DC were early teens, which was lovely.

Pay off mortgage and all debts.
Pay the maximum you can into both your & DH’s pensions to make the most of your tax relief allowances - up to £40k per tax year per person x 3 years. This may be quite a large chunk but is a no brainer really.
Utilise your full ISA allowances for this year - £40k for you & DH. Another £40k next April. Same for your DCs’ JISAs which is £4128 per tax year each.
Start pensions for your DC if you still have quite a bit left otherwise house renovations, a good holiday and then, if you still have money left, consider a holiday home.

@sulasuka - you’d already said the loan would be paid off, it was simply a matter of instalments or lump sum. Take no notice of the posters trying to make you feel like you are doing something wrong.

Kath, the legal advice is around wills, trusts etc .....less complicated if married (DP and I aren't) but it goes hand in hand with the wealth management service..... Yep fees are taken but unless you are financially minded it can be a minefield out there.

Only speaking from my own experience, as I said before I have found the advice and service first class.