What to do with large inheritance

[LotsOfMoneyLittleClue]

So, due to the relatively early deaths of my parents and my prudent father, myself and my siblings have inherited a lot in our (late) 30s. I think in total around £500k each. It's still trickling in although we've had the major payout from the house sale.

Now, MN jury, how to use this wisely? Obviously I've paid off the mortgage and am currently spreading the risk around various easy access savings accounts, premium bonds and the like.

We're (DH and I) also going to enjoy it a bit and have a few nicer holidays but neither of us have a hankering for designer goods or flash cars. We're spending on and extending the house but it won't need a massive amount of money.

We have 3 young children and we both work. I am considering giving up work and retraining. Our youngest will be at school in 2 years. We live in a good school area and I don't intend to send them private unless disaster strikes. We have always lived fairly frugally (1 car, shop in Aldi, second hand stuff etc.). We live in a nice suburb of Birmingham.

I need advice on being sensible with this money and whether an IFA would help. I'm considering whether to buy a buy to let but not sure I want the hassle. Also would like to put aside/ invest approx £30k each for the children for their future. They already have small pots of savings which I could add to. Will top up pension to max. Will also inherit dad's pension (divided by 3).

WWYD? Any thoughts gratefully received. Fairly low risk tolerance.

I would definitely consult an IFA in your position.
It is just outside the realms of experience of most ordinary folk.
I'm sorry for your loss

Sorry for your loss. If you've paid off your mortgage I'd just have some fun, and retire

I would by a buy to let and get an agent to deal with it.

That way you have money coming in and can spend or save the income. The income will keep coming, supporting your kids while at Uni, if needs be. Whilst keeping the capital value to hand in to your children.

But, yes an IFA would seem sensible.

My dh is in a similar situation although a lot less than you but still significant. We paid off the mortgage and are trying to improve the house which needs a lot of work. We certainly havent gone mad with holidays or anything as have always lived frugally. We have ruled out a buy to let we just dont want the hassle. The main thing that has improved our quality of life has been that I was able to give up a very stressful job that I hated and do something that I like but is less well paid. It means I can now have weekends off and no shift work. Like you my dh lost both his parents quickly. He doesnt really like spending anh of the money. I think he feels like its not his to spend. Sorry fof your loss.

I definitely feel like I need to be sensible with the money! I would hate for my dad to be looking down and shaking his head!! I wish he'd had more fun when alive rather than squirrelling it away (although we expected he would live until his 90s like his dad )

I guess I just wondered what an IFA could tell me that some research wouldn't? Does anyone have experience of them or is one? I guess they will just be helpful in laying out all my options more clearly.

Anyway, thanks for the replies

Sadly We're in a similar situation, though not quite as much money.
I'm anti IFA's as one set of very good friends have been ripped off by a supposedly reputable company. It is too late for them to make an official complaint.
Another friend uses one and is happy with it but the charges are very high and they are invested in all the usual unit trusts/bonds that are recommended by the financial press. All stuff you would choose yourselves, if setting up a balanced portfolio. But you need to read up about it.
However I'd love to read of what a good IFA can bring to the table and how to find a good one at reasonable cost.

But we're also considering a buy to let or holiday let, but I'm not sure if we've missed the boat with this and also wonder whether morally its bad.

Depending on how financially savvy or willing to learn you are, you can do a lot yourself.
This amount doesn't put you into high net worth territory (although it's worth having obviously! and there are few IFAs around who actually do much investment management, most of them make their money selling insurance-nothing wrong in that. But you need to have some understanding of the subject to know whether the IFA really knows what they are talking about or whether you could go it alone. You need to consider your whole financial picture not just the inheritance.
There are some good self help books around, Which publish one IIRC which will take you through the basics.
You need to start off deciding what your objectives are and then work out what the best strategy is to achieve them.
I'd be thinking about an investment plan which will:
-provide income for your retirement
-help children with costs of higher education and to get on the property ladder
-protect capital against inflation.
But your priorities might be different.

A second property does have ethical and hassle issues and are less profitable than they once were.
You have three children, you might want to set some money aside in three pots for their future study or house deposits.
We bought a one bedroom flat with a windfall. We were fortunate to let it without problems. However, our daughter was 19 at the time and she lives there now 5 years later, we will pass ownership to her soon.

How much have you got left after paying off the mortgage? You’re in a good position to be making choices that enhance your life. I’m due an inheritance (but not as large as yours) and it will all go into mortgage. However, my children will also inherit and I will be investing on their behalf. I won’t be using an IFA as I have been investing with small sums over the past few years and have learnt some hard lessons. I now know a hell of a lot more about investing and feel comfortable knowing my level of risk. If I’d have been starting out with a large lump sum, I’d have felt far happier taking advice. It is very different psychologically preserving and growing existing wealth versus accumulating it from scratch. I think this is particularly true when there is emotion attached to money received via an inheritance and a feeling of responsibility to use it wisely.

On one of my funds I lost 28% (on paper, I didn’t sell and the loss is now not as big). However I only had £300 invested. If I’d have had thousands, I’d have been devastated. Generating losses at a low level of investment has been a valuable lesson in assessing my level of risk and understanding how I’d feel if the amounts were larger.

I would be wanting to know how to make the money 'work' for me.

Whether buying a property in my Dc's names would be a tax efficient thing to do, to make them an income to invest in their future, how to be tax efficient, etc. Re-training sounds good - how much would that cost and how much would you earn afterwards?

I definitely wouldn't just spend it.

My go to is Moneysavingexpert.com - there is loads of advice on the savings and investments board.
My DH inherited a similar amount - we paid off our mortgage and since then have maxed out our pensions and ISAs each year. Our plan is to retire early.
Our children have some money in JISAs (but not loads as they will be entitled to it at 18), savings accounts and premium bonds.
We also have a year's worth of expenses in an easy access cash account, just in case.

I’d buy 12 gold sovereigns, do some research but purchase them now for the children when they are older, so they can keep or cash in

Two small buy to let apartments/ flats or small houses in b/ham would give you a decent return and better than a larger property

We had a similar situation and bought an investment property. It's worked really successfully and we have a good agent so it is minimal trouble.

It cost use nealy 200,000 to put 3 dc through university so l would be putting that money safe somewhere.

If you look at the 'ukfire' forum on reddit (should come up on google) on a desktop there is a sidebar with a really useful 1 page flowchart on sensible way to do this in the UK (you won't see the sidebar if you look on your phone). For your kids, you can put cash into a Junior Stocks & Shares ISA for each of them, the allowance is about £4k per tax year, so potentially you could fill them up for this year and put in another chunk for each of them in the new tax year next Spring. Junior ISAs they will be able to access age 18, so useful university costs pot. All gains are tax free. I would recommend an S&S ISA rather than cash as inflation will erode a cash ISA. The ukfire subreddit is very helpful on how to do this (I have my kids in S&S ISAs with Vanguard, which was v easy to open up online). Obviously max both yours and your husband's ISA and pensions allowances for the year. For me, I wouldn't go for a BTL because as well as being poorly diversified (i.e. putting all your eggs in one basket) it can be such a stress - maintenance, void periods between renting etc. But if you feel a real draw to 'bricks & mortar' type stability, if that's what would actually feel the unstressful option to you, then that's different.

Sorry for your loss In your shoes once everything was paid off and you've invested for your children, I'd buy a holiday home (not necessarily abroad and probably not eu at the moment) but somewhere that's easy to keep and run, get it fully managed but keep enough weeks/weekends per year for you all to get away as a family and invest any surplus rental income using your annual tax allowances. It's the sort of thing you'd never normally have or do so why not potentially make some money but primarily get some enjoyment for years to come.

Pay off your mortgage. Put the maximum you can in both your pensions using your carry forward rule.(up to £120k each) Utilise full ISA allowances for this year and next. (£80k) Same for JISAs and Junior Sipps for your DC. (£28k). Go on a nice holiday and review any funds left. Do your house renovations. Hold off from buying another property - prices are going down.

Again, thanks for the suggestions.

Your going to hate me for this one, but tie it up in the children's names, my friend inherited her husband divorced her and got £300k....

Rather than a financial advisor (which is largely about selling stuff) try looking for a certified financial planner. The planner looks at where you are now versus future goals and plans. Can be very useful to see if there is a gap in plans and advise on best way to safeguard children’s futures whilst minimising tax bills too!

Actually, that amount may not be as life changing as people think. Say you pay off a mortgage of £100k, leaving you with £400k
Stop work. If your salary is £25k, over 4 years that leaves £300k.
Invest £30k for each child, £210k. New car, nice holiday, new furniture, £175k
That might buy you a smallish buy to let property.
If it were me, I'd stop work, pay off my mortgage, buy a big life savings policy for me and husband, lock away some for the children then just put the rest in Isas.
I'd use some for deposits for a couple of buy to lets, as I know I'd have time to manage them myself. That would probably be my new career!

Soontobe60

A rather arrogant interpretation, I have to say, to suggest what you would do isn't 'life changing'.

I earn a great wage. Doing a mediocre job, with people I at best like ok, at worst cause me horrendous stress. Being able to wipe my mortgage, invest, secure my pension and move to a worthwhile lower income job would very much change my life.