Inheritance thoughts

Comfortablechair · 2023-12-15T21:35:13+00:00

Hi - we have inherited some money and wanted to figure out how to make the most of it. Either…invest in property (modest flat), invest in stock market or put in high interest savings (6%)? We will need to start taking out in next 5 yrs to supplement income. All pensions and isas sorted.

UsingChangeofName · 15/12/2023 23:38

By 'invest in property' - do you mean, to let out to someone ? As in, you have your own home, which you own already, and you are thinking about becoming landlords ? If so, then I wouldn't.
But if you mean you are renting / you don't own property, then I would.

We will need to start taking out in next 5 yrs to supplement income

?? Because you are expecting to lose your jobs? Stop work to re-train ?? Retire ??

It is quite tricky for people to offer their opinions without knowing pretty key things about your current stage in life

furtivetussling · 15/12/2023 23:45

Speak to an IFA and ask their advice. You'll need to find the most tax-efficient way of doing this. Or depending on your income and existing investments, property etc, a tax accountant might be better.

WithIcePlease · 16/12/2023 00:11

Personally I wouldn't touch property with a barge poll.

Honestly even fully managed flats are a PITA. Speaking from experience.

howdoesyourgardengrowinmay · 16/12/2023 00:44

UsingChangeofName · 15/12/2023 23:38

By 'invest in property' - do you mean, to let out to someone ? As in, you have your own home, which you own already, and you are thinking about becoming landlords ? If so, then I wouldn't.
But if you mean you are renting / you don't own property, then I would.

We will need to start taking out in next 5 yrs to supplement income

?? Because you are expecting to lose your jobs? Stop work to re-train ?? Retire ??

It is quite tricky for people to offer their opinions without knowing pretty key things about your current stage in life

You advise against becoming landlords without saying why.

UsingChangeofName · 16/12/2023 00:51

You advise against becoming landlords without saying why.

Cost. Work involved. Risk. Hassle.

mondaytosunday · 16/12/2023 01:16

If you don't have a mortgage or other debts I'd invest in property. Stock I don't get and never made money when I had a so called FA looking after it. But property I have - buy somewhere like a university town and let to students. Make it nice first and be a decent landlord.

caringcarer · 16/12/2023 02:40

mondaytosunday · 16/12/2023 01:16

If you don't have a mortgage or other debts I'd invest in property. Stock I don't get and never made money when I had a so called FA looking after it. But property I have - buy somewhere like a university town and let to students. Make it nice first and be a decent landlord.

If you do this start a limited company and make a directors loan to the company. Buy through the limited company and you can offset mortgage interest against your tax bill. If you buy it yourself you can't.

Angrymum22 · 16/12/2023 02:57

Short term there are a number of fixed rate savings accounts for one or two years with plenty of banks. I use a flexible savings account which is lower rate. I also have a fixed rate and ISAs. I like to have easy access to some money but also earning higher interest on locked in money.
Buy to let is becoming harder and with so many regulations a real headache, unless you are experienced. In addition, with the cost of living crisis you don’t want to be saddled with a defaulting tenant.

TeenagersAngst · 16/12/2023 02:58

@caringcarer if you're a lower rate tax payer then the 20% credit offsets the loss of deductible interest. A limited company for one property is not necessarily the most tax efficient route.

TeenagersAngst · 16/12/2023 03:01

Angrymum22 · 16/12/2023 02:57

Short term there are a number of fixed rate savings accounts for one or two years with plenty of banks. I use a flexible savings account which is lower rate. I also have a fixed rate and ISAs. I like to have easy access to some money but also earning higher interest on locked in money.
Buy to let is becoming harder and with so many regulations a real headache, unless you are experienced. In addition, with the cost of living crisis you don’t want to be saddled with a defaulting tenant.

I would agree with this. BTL is no longer the get rich quick scheme that it maybe once was. You can easily get caught out if you're not fully aware of all the regulations and evicting problematic tenants, even non-paying ones, is currently taking several months.

Lily0719 · 16/12/2023 04:30

I wouldn’t invest in property but I would invest in stocks, but ‘safe’ stocks like Apple, google, Microsoft etc. it’s amazing how much they go up in 5 years.

nannynick · 16/12/2023 05:58

Property is not liquid. Prices are dropping and may continue to do so through 2024. I would avoid property.

Stocks & Shares 5 year timeline is a bit short. However maybe the timeline is longer and 5 years is when starting to take from it, so it is an option. GIA, and filling ISA each year. Depending on how close to retirement, and earned income, perhaps also moving some to pension (£2880 to pension if no earned income each year, under age 75).

Cash savings... some in that given the current interest rates, but keep an eye on it as rates we have now may not last more than a year or so.

Maximise tax efficient things... ISA and pension you say are already done, so look at maxing those each year over the coming years.

NoSquirrels · 16/12/2023 09:58

UsingChangeofName · 16/12/2023 00:51

You advise against becoming landlords without saying why.

Cost. Work involved. Risk. Hassle.

I’d add: illiquid asset

Christmassss · 16/12/2023 14:24

How’s your pension?

Christmassss · 16/12/2023 14:25

Sorry I just read you are sorted with your pension.

OlderGlaswegianLivingInDevon · 16/12/2023 14:50

Please be very careful re the Stock Market - my late father was very heavily hit during a stock market crash.

He claimed to have never heard of the one in 1929 - ok so he was only at Primary school then, but denied all knowledge of the 1987 one.

and that was someone who watched both the BBC news at 9, then sat through the 10 o'clock news on ITV ! incase he ' missed ' anything in the other news.

Famous stock market crashes were in 1929, 1987, 1997, 2000, 2008, 2015, and 2018 and 2020. ( found on Google )

I don't recall which one affected him, it wouldn't have been 1987 as he had no knowledge of it either :(

He was someone that should have invested in property then as he would have been able to ' see ' it, he had little understanding of the stock market except that he received dividends - some were higher than others, and sometimes they were less or more than previously.