How would you invest £70k

[Equimum]

So I've inherited some money and want to try to make it grow a bit. For context, I'm not currently working, but am supported by DH, and will be complete my training later this year and start to get an income. I have minimal pension at present, due to historic long term sickness, but have NI contributions. I have Some savings wrapped in a LISA and am continuing to add to that yearly, although I'm now over 40.

I know to many people this is not a huge amount of money, but it's likely to be the only inheritance I receive, and I want to use it wisely.

Thanks for any advice.

do you want to invest in shares and get dividend?
Do you want to play safe and put into bonds or a building society account and get interest?

What is your risk taking like?

If you put £70k into 4 building society account, one being an ISA for tax free interest - then you could have monthly interest of £425 at average 5.5 % which you could then put into regular savers ( Lloyds is doing a decent regular saver - well 2 different types and so is first direct and TSB) or into another easy access account until April and then look at stocks and shares ISA

at an average of 5.5% interest in building society/bonds over 5 years you could see an additional £22000, so £92000

when you go back to the workplace you'd be wise to then look at the workplace pension and add extra in if you can to save tax.

Thanks MikeRafone, that's really helpful. I'm not sure I'm brave enough to put it all into shares. Do you think it might be worth splitting, though, and putting some into building society accounts and some into shares?

my plan is absolutely to pay extra into a workplace pension when I return. DH pays the max he can into his now, and I'll do the same when I can.

I've had a similar/higher amount recently and did the following (I am an accountant and a personal finance obsessive)

• paid off DH's student loan £16k at 6.25% interest
• paid off a 0% credit card that was carrying a £6k balance (I had a plan to pay it back but I didn't need to invoke it!)
• made a major purchase £4K
• maxed out my and DH's S&S ISAs for the tax year in vanguard index funds £30k
• put £20k in premium bonds for an accessible emergency fund (I self-insure my horses) and future longer term purchases like a car and big holiday
• paid £2.5k off my mortgage to make it a nice round number
• started pensions for my small kids, more for the older one to start with as she's missed out on two years that I'll be paying for the younger one, now doing £50pm each until they're 18
• made a will

Thanks Wrapunzel. Sounds like you did a lot of planning. There are some great ideas in there which I will consider.

You can do ok with Stocks and Shares isas, but there is a risk that they may fall in value, especially with the uncertainty of Russia and Israel at the moment. If you put £20k in a fixed rate cash isa, you should get over 5% at the moment. That is the maximum you can put in at the moment, so I would consider putting the rest into Premium Bonds. The prize pot has recently increased. Both me and DH have the max we can in premium bonds, thus month we picked uo over £800 in prizes, and they are tax free. That is high, but the previous months we have received over £400. I reckon we should get around 6% return over a full year.

Whatever you decide to do depends on your risk level, but I would suggest that you treat yourself to something you would not normally buy but want. Does not have to be very expensive but just a treat.

My Mum died in May and I intend to buy something I will love that I can use/wear often and enjoy. I just know she would love that.

I would put some in a stocks and shares Isa (vanguard, for example) if you are looking for a longer term investment.

The most important thing you can do is go on your bank’s website and read about how to avoid losing money to an investment scam. No-one thinks it’ll happen to them until it does.

Take advice from a financial advisor registered on the Financial Conduct Authority website. They’re qualified and regulated which is so important.

Whatever you do, please don’t put any money into cryptocurrency.

Pension would put in £2880 as you aren't working and government will make up to £3600, somewhere like Vanguard and then you chose how to invest it. This though will be locked up until around aged 58 so if you might need it before then ignore this.

Then I would put in bank accounts, fixed term bonds I have just open one at 5.95% for a year but only put in what you don't need access to in that year, otherwise instant somewhere like Charter Savings Bank is paying 5.07% but keep an eye on rates and move when needed.

If you are starting work soon, personally I would pay off any debt, that isn't mortgage and put it in savings accounts and then max out pension contributions when I started work and gradually reduce savings. I would probably put a small amount in a stocks and shares ISA so you are taking a risk with some of it but a longer term one.

Problem with bonds is that you may be liable for tax, depending on your circumstances. Problem with stocks n shares, the world is uncertain at the moment, and you could lose a % before it starts to stabalise. I would stick to safer options. 5% + on cash isas at the moment, Premium Bonds at over 4% return. Once the new tax year starts in April, start a new cash isa for your premium bond winnings. When the markets settle, then move to sns isa. If this is your only savings I think stocks and shares have too much risk.

If you don’t need the money soon then I’d invest 20k into a stock and shares ISA. Yes they can down as well as up, but that’s why I wouldn’t put the whole amount into shares.

However if you aren’t comfortable with that then I’d do a fixed rate cash ISA for the 20K. You can get easily over 5% currently

Then I’d split the remaining 50K and put half into premium bonds and half into a fixed rate bond. Once the new tax year rolls round in April you can decide whether to move a further 20k from the premium bonds or the fixed rate bonds into the ISA so it’s tax free.

Of course first I’d make sure all debt was paid off and would possibly treat myself and my family to a holiday or something. That part depends entirely on your circumstances!

Before you start thinking about your risk level

Have you got any debt other than your mortgage such as personal loan/credit cards? If the interest rate is above 5% a year then pay that off as a priority.

Do you have an emergency fund of 3-6 months expenses? If not that put this aside either I the best paying savings account you can find or some people use premium bonds.

Sounds like you have a plan to start your pension back up when you return to work which is good. Make sure you maximise your employer contribution as that is free money for you.

I would personally also allocate some of the money for fun. Maybe a holiday?

Whether or not you want to invest in a stocks and shares ISA depends on your timeframe for needing the money. If you don't plan to spend it for 10+ years I'd consider at least utilising your annual 20k allowance in a diversified global index fund. Historically on average the stock market always beats cash returns and usually bond returns as well. I wouldn't worry myself too much about work events, there is always a reason not to invest. Think about all the major global events that have happened and over time all we see are new all times highs.

If you have a mortgage you might want to think about overpaying that if the interest rates warrant it, if not but you expect them to increase in the future then keep some extra cash back in savings you could use when it comes to remortgage.