Inheritance decision

[QuotetheRaven]

Grandparents have died, I've come into about 160k.
Married, 3 kids under 7.
Mortgage cleared, pension contributions more or less maxed every year.
All the advice I read is about investing, saving, growing wealth. But you have to live also - what's the point in having cash if you don't enjoy special experiences... so I'm thinking - maybe we should spend say 10k/ year of this windfall on holidays or experiences we wouldn't have otherwise done?

What would you do with it?
If you had 10k a year with young kids - what special, memorable experience would you do? Keen for ideas as I think this makes sense in this surreal circumstance, but I think my gramps would approve....

Thanks.

Yes. Absolutely spend it on fun experiences. We've had several family bereavements this year & whilst we have inherited it also makes you think what's the point in having money in the bank & no fun.

£10K out of £160k when you are in a strong financial position is nothing. How much do you keep 'just in case' 🤷‍♀️

3 children are more expensive anyway so good holidays / day trips / swimming lessons / music lessons / clubs etc. would be more easily afforded.
I don’t see that you need to set an annual figure; you could find you have them all at university at similar times - I would save for then too.

Sounds very sensible. I’d do a trip to California, which has everything- some of the most beautiful places I’ve ever been in Yosemite and Sequoia, amazing cities (and Disney if your kids would enjoy that).

I would be putting it aside for them to help them buy their first properties if you don’t need it. It will accrue a lot in 20 years.

How much of a £10k experience would under-7s appreciate?

You should be able to return £10k/year on £160k and have memorable experiences every year without depreciating the capital. Enjoy yourselves!

I think I'd hold off on the extravaganza holidays until they were a bit older and in the meantime I'd start a pension fund (SIPP) for each of them. You can put in up to £2880 p.a and the government makes it up to £3600 for non-workers (no minimum age). Invested in a world tracker it wouldn't cost much to run and would have a long time to get some decent growth.
Also look at Junior Isas - I believe you can invest up to £9000 p.a. and they can access at 18 - the cash ones can pay less than a "normal" child savings account though, so probably only worth going the Junior ISA route if you're doing the stocks & shares one - if you want to keep it in cash compare interest rates on different child savings accounts.

I’d sock it away in Junior ISAs (£9k max every year per child) and ear mark that as their Uni tuition fund.

You may be set up well, but your children will struggle the way things are going, this is a perfect opportunity to pass down intergenerational wealth.

Where would you invest £160k to get £10k a year return?!

I am wondering that too, esp since they wrote it as a net cash out figure, after any tax on interest or capital gains.

i’d enjoy it, but think to the future, as university loans are means tested against parents income so if your DC go to uni, you’d be expected to help. House deposits for DC, its pretty impossible for young people doing entry level jobs to get on the housing ladder. I’d enjoy some holidays, but i’d keep it aside to help my DC.

I would do some save, not blow the lot on holidays. But also have some really nice holidays!

Junior isa's are a good idea, but remember that you are giving away the money and the child gets the lot on their 18th birthday. You can't make them put it towards uni fees or a house deposit. Receiving a lot of money that young can result in it all beispent down the pub, or on trainers.

I would try and buy a better house if there is enough money. I wouldn't fritter it away on holidays.

If you spend 10K per year, unless you have it invested properly then it will be gone in 16 years. I'd rethink this OP. Yes you should live but 10K a year is a lot, and little kids don't care about expensive holidays. Given that you must be fairly young and therefore have the power of compound interest on your side, you'd be far better off investing the vast majority of this money and growing it for your family. They will thank you one day.

My inheritance is mainly going on my kids and their futures but I’d I had nothing else to do is probably go travelling loads to be honest

We had some great holidays with our children with special memories, so I would at least do a holiday each year with the balance put in ISA’s and savings bonds, you should earn a fair bit of interest.

Definitely keep some back for fun, for us it would be long haul holidays.
Spread it around? ¶
Invest in stock snd shares isa, children jisa and I'd set up a sip for the children as well.

@SprigatitoYouAndIKnow perhaps but less likely in a fairly well to do family and less likely with finance education from a young age5

@JellyTotsAreYum or do both, cash and stocks

Interesting how different people take such different views on money.

Some are 'spend spend, YOLO'. Others are 'set up savings plans and create future stability'

Neither are wrong or right and in my mind it totally depends on each person's situation.

I wouldn't put any money in children's names I wasn't willing for them to waste at 18.
Nor any money I may conceivably want to access and use myself/on their behalf.

I'd do one 10k holiday (not one every year) and invest the rest.

Maybe seek independent financial advice. This is about making the money you have work for you to achieve the goals you set. That could be investing to build up a nest egg for children to buy a home, ensuring you have enough for future proofing your home as you get older, some for essential home repairs and upkeep when you retire and some fun stuff.

That is a return of 6.25%. Any decent S&P 500 Index tracker fund, for example, has done better than that over the last 15 years. These can also be placed in an ISA.

The S&P Index is up around 95% compared to five years ago (Oct 2019) or 14.29% per year.

In the five years before that (2014-2019), it grew around 50% or around 8.45% per year.

In the five years before that (2009-2014), it grew around 82% or 12.72% per year.

In the five years before that (2004-2009), it did fall by around 4% but this period included all the upheaval in the 2007 and 2008 financial crisis. So it lost around 0.81% per year

So, over the last ten years, it has averaged 11.34% per year.

Over the last 15 years it has averaged 11.80% per year

Over the last 20 years it has averaged 8.51% per year

Memorable holidays and experiences for under-7s come much cheaper than £10K.

I would spend less on these now and more when they are older.

Yes please please please please tell me