What would you do with this money?

[countrysidefields]

My father sadly passed away. I am set to inherit half the house along with some liquid assets.
It will be around £250k

I have a mortgage which will use some of this money, but there will be around £100k left

Would savings be good, rates arnt great right now or perhaps invest it in something?

Savings rates are better than they have been for many years

Do you have ISA's already?

Yes I do, has around £8k in it, not sure of the limit.

I'm not very good with these things.

Maybe I need to shop around as that Isa rate isn't great!

I think you should treat yourself eg a holiday or a new car and then invest the rest but please get advice on investments even if you just look at Martin Lewis’ website.

Do you need £100k or part of it in the next five years?

If not invest in the market - shares etc - with professional advice if you need it.

While you're deciding what to do with it:

A) £50K into premium bonds (assuming you dont already have maximum holdings)*

*If you already have premium bonds then top up to maximum holdings.

B) Invest the rest into the highest rate savings account you can find.

Then breathe, and take time to consider what to do. Maybe top up your pension?

Edit: I'm not a financial adviser. This is just what I would do whilst taking my time to consider what to do with the money. Both options above give easy access to the money if you need it fairly quickly.

To start with I would whack £50k in premium bonds whilst I was deciding. Open up a LISA if young enough and max it out to benefit from the £1000 government bonus each year.
Have a look at any other high interest bonds or similar to lock it away so not tempted to spend it immediately.

I won't need to access the money for a few years, if I do look at shares will definitely get advice as I no absolutely nothing about them.

I have a car that's only two years old, I could pay the rest of the finance on it I suppose.

Holiday are covered by other cash, I'd like to treat myself but I want to put the money to good use really.

Thank you, some great ideas.

I didn't think about topping up my pension, so thats definitely something to think about, mine is ok but not great and could always be better!

Thank you

What do you think your dad would like you to do with it?

You can get practically 5% on £100K, that's £5K a year, which is not peanuts for doing nothing. How I would look at it, if you are working, is it's like a £5K pay rise. Of course you'd have to pay tax on some of it, but you could move it to an ISA a bit each year?

Do you have a pension?

I do a bit of everything. Pay off mortgage, top up ISA to capacity this year and do the same again in April. Top up pension. Go on a shopping spree and spend £1000 on new clothes, beauty stuff, home bits. Go on a great holiday. Top up children’s ISAs if you have them. Save the rest.

Check the details only your car finance- if you can pay it off early that would be a good call.

make sure you have a rainy day fund of 3-6 months net salary somewhere accessible eg high interest rate savings account or premium bonds if you like.

Anything else- either S&S ISA with a cheap global tracker or put it into your pension. Check what you are getting on your cash isa as well.

I wouldn’t bother taking professional advice on this sort of sum- it will cost you and they won’t tell you anything very helpful.

Be sensible with it, he always wanted to leave my and my brother as financially secure as he could and although I would like to splash a bit out on myself I'm not very materialistic so really don't know what I would spend it on.

I think finding a good Isa or savings account, paying off my car finance and topping up my pension would be a good thing to do. I do have a junior Isa for my son so could also top that up too.

Yes but she'd do far better reinvesting that than just spending it. She'll be mortgage-free which is like a pay rise in itself.

OP, I'm so sorry you lost your dad. I know if my children inherited from me I'd want them to have a lovely holiday (which you say you've covered) and save some in a pension.

I'd invest some long-term and put some into shorter term savings.

5.8% interest ,fixed for a year so no access to the money .
But that's £5800 a year interest ,not a paltry amount .
This was just a quick search,I'm sure there are even higher rates out there.

@OhComeOnFFS

Yes but she'd do far better reinvesting that than just spending it. She'll be mortgage-free which is like a pay rise in itself.

That is a really good point, especially if the rate is above what you could get from a savings account.

Sounds like there are many good options so I will spend some time researching

Thanks again

What's the interest rates on your mortgage and car finance? Any plans to move house or do expensive home improvements in the next 5 years?

What's your marginal tax rate? How secure is your work?

How old are you?

With the potential to be earning over £5k pa in interest, it's worth understanding the benefit of ISAs, personal savings allowance for interest earned, possible advantages of Premium Bonds and advantages and disadvantages of putting the money into a pension.

The Financial Flowchart is a good illustration of what needs to be considered in what order, obviously you'll be quite a way along the timeline, but should help you get your thoughts in order.

The Flowchart - UKPersonalFinance Wiki

@OhComeOnFFS thank you, I am very grateful that my dad has left me this money and I want to do right by him

How much better off will you be without your mortgage and car payments?

You could pay off your car and save your car payments so that the next car you buy is paid for in advance.

Around £1200 if I paid mortgage and my car.
I could use that to top up my sons junior Isa and my pension I suppose

Don't invest in shares directly unless you know what you're doing - it's effectively like gambling.

I also don't get the love for premium bonds on here - I had mine invested for a year and didn't see a penny. I think the gains average out at about 3% but for some people it will be 0%.

Pay off any outstanding debts which are incurring interest first.

Then maximise all your tax free opportunities - pension and ISA. If you don't have a company pension, you'll need to make some decisions about a good private pension and the funds available - Vanguard is a good starting point.

Then with the rest of the money, decide if you need access or not - if you do, it's got to be an easy access savings account which for years paid hardly any tax, but now are offering pretty good rates of around 5%. If you don't need to access it, you can tie it up for a year or more and the rates will be higher.

I think parking a chunk in premium bonds as a short-term measure while working out what to do with the rest bit by bit isn't a bad option when you've got a lot of learning to do. Especially if it allows you to think "I don't need to put any other money into something that's a gamble".

But yes, with decent interest rates at the moment I'd put some of it away on a fixed rate for 1 or 2 years. Paying off mortgage and car finance likely to be the first priority (unless your mortgage is on a low fixed rate for a while longer in which case put that money in a higher interest savings account for an appropriate term). Fill up your ISA allowances as possible but you've still got to decide what you're doing with that money.

I would top up this years ISA to £20k. At the moment the amount of interest generated can trigger tax which an ISA avoids. Look each year at what returns you are getting and possibly do £10k cash ISA and £10k stocks & shares ISA. With Stocks and shares ISA you can get ones that you pay into monthly this evens out peaks and troughs in the markets.

I agree premium bonds to give you time to think.

Remember having paid off the mortgage you will have disposable cash each month as you no longer have mortgage payments. I would split this 40% into long term savings, 30% into short to medium term savings and 30% for fun e.g. holidays, Christmas, days out etc.

Think about the future e.g. university is an expensive time if you have DC, retirement - phasing by going part time etc. Not having a mortgage gives you more options. This can help you decide what to do with the cash.