WWYD with £100k

[Howtoworkandplay]

NC for this.

I am really interested to know WWYD if you came into £100k. Far from weathly and still very much working hard. Have been lucky to have some inheritance from my uncle who had no children of his own. Me and my 2 brothers were beneficiaries of his estate,

Absolutely need to make the most of this and invest it if I can. Also looking at potential business ideas.

Interested to hear how you would deal with this. For context I am married, 3 children in their teens, work full time with no child care needs. Husband also works full time.

Clear unsecured debts (means more disposable income on a monthly basis)
Lump sum off small mortgage (would mean mortgage free in 3 ish years instead of 6)
Top up pensions (I am self employed)
New 2nd hand car for me (current car is a money pit)
Top up daughter's junior ISA
Do small but big effect house job (adding porch and toilet)
5k into Emergency savings

Leaves 25k to invest in longer term things (would go to IFA)

Do you have a mortgage? A lot of people would use it to bring down the mortgage, others would say use it as a deposit on another property, buy to let as mortgages are currently a cheap form of borrowing. This wouldn't be an option if you are renting SH. For the time being put it into Premium Bonds. The maximum holding is 50k per person. If you can possibly do so I would view it as capital rather than spending money. Business wise, it's advisable to speak to an accountant before using your own money to start a business. What a lovely dilemma!

What I would do isn't necessarily the best for you in your situation, so you need to keep this in mind when deciding.

For you an obvious consideration would be whether it is likely you will be expected to help your DC with university costs, which you will if they go and you're on an average to high income - I believe that the loans they can receive start to be reduced when their parents income exceeds £25k. Whether they're 13-15 vs 16-18 gives a little variation in when this will be and whether it's best to save or invest, considering all the uncertainty in the world right now, it might not be a good time to invest for the short to medium term. But anyway, that all could be a consideration for you. Maybe save some and invest some so it might be a few years before you need the invested part back.

Don't rush to overpay the mortgage if it's on a standard interest rate of 1-2% as you should be able to beat that with investment income over time.

Keep back money for the business idea, but also any expected large purchases like cars or home improvements.

A S&S ISA is probably all you need for investment, have a look at Vanguard for low cost products. If you're thinking of investing, you can put a lot of it away by getting some in this tax year and some more the rest - you have a £20k per tax year allowance.

In your situation it doesn't sound like a BTL property is worth the effort

I could live comfortable for 5 or 6 years on that so I'd add it to my retirement plan.

The first thing to ask is, is your relationship strong??? In my case, I’m about to inherit from my mum and the money will just go into the family’s finances. When my MIL died, the money my dh received- which was only £10k - he split between us. But for some, if they think a relationship split is on the cards, keeping it separate might be a better idea for them.
Assuming that’s not going to happen, I’d pay 50K off my mortgage, give £5k to each of my children (if they were adults) or put same into ISAs for them, put 30K into a stocks and shares ISA and use the rest to have a massive holiday!

I would use 1/3 to pay off the mortgage, 1/3 to boost my pension and 1/3 to invest in the S&P500

Right now I'd go and buy a doer upper at auction, do up, sell. Then rinse and repeat a few times.

I received £100k a couple of years ago via an inheritance.

£50k went to premium bonds, with a view to knocking a chunk off the mortgage in 5 years (we'd just that month remortgaged, paying that much off early was a huge fee)

£20k went into maternity savings - I'm self employed and want a year off stress free, although absolutely don't intend to spend it all. Probably only half. 33 weeks pregnant now!

£15k paid off my car (£11k), overdraft (£1k) and loan for WFH office (£2k)

Then had new carpets/Amtico, sofas, redecorated the whole house, bought the exact baby gear that I wanted without concern for coat, etc. Spent about £7k.

The rest is in an ISA. Will move it to PB in my daughters name when she arrives.

Thank you all so much. Great to hear your ideas. I had not even thought of premium bonds, for now will definitely invest £50k as suggested. Time to think about the remaining

do you have an ISA? Max out your ISA allowance with Nutmeg or another tracker.

I wouldn't bother with premium bonds - if inflation goes up (as it is at the moment), then the value of your bonds doesn't keep pace.

I would pay off some of the mortgage, buy a car and finish the DIY.

I would max out my stocks and shares isa and put the rest into a low cost tracker fund, moving money into the isa each year if not using full annual allowance.

I’m expecting to hit lifetime and annual allowance issues with my pension in the current system so wouldn’t put any into my pension. Your mileage may vary.

I wouldn’t touch premium bonds with a barge pole as the return is so far below inflation.

I also have no debts on above inflation interest to consider.

Check out Dave Ramsey's 7 baby steps. Many people have followed his steps and retired with financial peace and some millionaires.

Pete Matthews meaningful money stuff is also worth looking at, he is U.K. based (not sure if you are?)

Yes @isthatanotherbastardgrey I really would think carefully about premium bonds. Especially for anything long term eg for your child isthat. It will just be destroyed by inflation. Go back through this board to see the people who invested their Child Trust Fund vs those who kept it in cash. I can see the value in leeping the 50k in premium bonds because you may want greater equity in order to move in a few years. I would look to see if you can overpay a little every year. Often you can pay 10%, even if you can't pay the whole 50k at once. Then you roll up, gaining more and more overpayment advantage every year.

@Howtoworkandplay
You don't say what your pension provision is. I would look at that first.

Then I would look to an ISA for the reasons BarbaraofSeville suggests. But I also agree that you need to think about your intention for this money? How will it improve your life? When do you need it? These are the key questions you need to answer, then you can figure out much better what you should do in order to achieve that.

Is the business just for investment purposes or is it fulfilling a long term dream? If its just in order to do something, I wouldn't bother. Ditto BTL. It's not very sexy or cool, but low cost investing via Vanguard is the way forward for short to medium term investment.

Do you have a house? I would try to get on the property ladder as a first priority if you don't. Secondly do you have a decent pension? If not you could drip feed some of the money into that.
Paying off debts is sensible too.

If you have a mortgage I'd pay it off, interest rates will most likely rise substantially in the next 5 years.

Had this ourselves
We moved house, cleared debts then invested the rest if you happy with long term investment you can still get a high return.
Please get proper financial advice OP
Dont do a buy to let not worth the risk, effort or returns.
My husband works for an IFA he says bonds are junk. Max your ISA allowance

I'd clear debts (car, small loan) and use the rest for loft conversion or extension. But our house is too small. If in an adequate sized house I'd invest in pension.

Nothing exciting here. Pay off our debts (3K). Some work on the house (7K), reduce our mortgage (£35). The rest would be saved in some form, including some in my pension.