How to invest inheritance

[Overfortiessocialclub]

i have a dilemma that I need help with - a relative died a while back and left me some inheritance. Roughly about what a 1 bed flat in London would cost in zone 2/3. All the obvious ways to invest I have thought of - overpay mortgage, Isa, pension etc.. Should I invest in stocks/shares (and commit to 5 yrs) or buy property or just keep in fixed bond account? All investors say stock will always go up long term but im not sure and property market looks shakey. Keen to do the right thing by them and future family. I do not trust advisors who charge stupid fees for basically just putting into tracker fund. I’m a low risk person If that helps.

No idea what a flat in London costs but you should see an IFA.

Oh and they charge fees because they are providing you with a service rather than free advice from internet randoms.....

Personally I would split it between s&s, pension and mortgage overpayment

It’s a very personal question and will very much depend on what you want to get out of it; plus your specific circumstances such as whether you’re happy with the size of your pension, what your goals are etc.

Investing (in either property or stocks) is for the long term; you need to get comfortable with “shakey” markets as that’s just how it goes - overall you should come out on top but you need a strong nerve.

For that amount of money personally I think you could afford to do a bit of everything - so top up your pension to the max allowed this year; whack £20K in a S&S ISA (in something like the Vanguard Global all-cap); and then with the rest either buy property (not my choice) or open up a GIA and drip feed across into your ISA; maybe setting aside enough to get you down to the next LTV band for next time you remortgage as the rates are going to suck for a while.

You should definitely set aside enough cash/premium bonds for a decent emergency fund; and you could also Chuck some in a JISA for your DC to make the most of tax efficiencies.

You say you don’t like financial advisors but you can get ones that you pay for one-off advice rather than paying for an ongoing service. Just steer away from the likes of SJP.

I do not trust advisors who charge stupid fees for basically just putting into tracker fund. I’m a low risk person If that helps.

Then find one who charges fees you are happy with. Its a much better option than trusting randomers who may or may not know what they are talking about.

Personally though I'd suggest remortgaging if you can and as you are low risk just keep it in NS&I bonds (tax free) and make no interest on it unless you win. Perhaps also buy a gold bar.

6 months worth of living expenses into a high interest account
top up your pension the maximum allowed and put aside enough to do the same next financial year
overpay your mortgage the maximum that you can without penalty
these are all the low risk options.

if you want to do shares then I recommend vanguard. They buy a range of shares so spread your risk and are low fee.
I would only buy property if you are happy to be a hands on investor ie landlord. Also bear in mind that if you need cash you can sell a few shares and keep the rest whereas with property you need to see the whole thing. Also one property is a higher risk than several shares

Assuming that a '1 bed flat in Zone 2/3' is a significant six figure sum, you're probably one of the few where it's worth talking to an IFA. Under around £100k or so, most people can just pay off (mortgage) debt, keep some in cash in various types (instant access, fixed, premium bonds etc) and fill up their S&S ISA allowance - you can deal with £40k of this by early April assuming you haven't already used this year's allowance.

For you, if you have a mortgage, then overpaying/paying off when any fix ends is likely to be a good low risk strategy. Likewise putting money you don't need before pension age into a SIPP, again within the allowances is likely to be worthwhile. Also, using up your S&S ISA allowance with Vanguard tracker funds as already mentioned. Obviously keep some cash for an emergency fund and any expected large purchases like new car, home improvements etc. Perhaps spend some of it on a treat like a big holiday to remember the relative by?

This financial flow chart will help you tick off possible actions

ukpersonal.finance/flowchart/

Also the Meaningful Money podcast. This is by an IFA who spends a lot of time telling people they don't need an IFA. He's also written a book and there's a lot of information on the website.

But if, after paying off your mortgage, using up your pension and ISA allowances, and keeping money for the short term, if you have money left, then you might want to talk to an IFA about what to do with the rest. Or you might want to just spend it, or give some to charity. Or start a business, or travel the world. It depends on your age and starting position.