What would you do with 100k inheritance

[Savannahview]

Ok, so I've named changed and I'm reluctant to ask people in real life! I will be shortly inheriting approx 100k. We have a mortgage of approx 98k with 12 years left. We are comfortable but not high earners. About 5k on a credit card. 2 teenager kids. What would you do?? Spend, save or abit of both! I do want to enjoy some of it, my parents both died young so I am a firm believer in living life whilst you can!

I’m in pretty much the same situation. We are putting 10% aside for fun. The rest is going into savings we wished we’d been more diligent with. So college funds for the kids, house maintenance/improvement fund and increasing pension contributions.

Definitely pay off any high interest debt like credit cards if you have any. If you would struggle with your mortgage if one of you lost your job, I would consider having savings that were easily accessible so you could pay it off if you needed to.

How old are you and what is your pension provision like? The closer you are to the age you can access your pension, the more tempted id be to put some into a sipp for the tax relief.

if your mortgage is manageable I’d do what you’re doing and overpay a bit but I think you can make that money work harder for you especially if you’re on a fixed rate with penalties. yes your interest rate is not a tiny one but don’t ignore the potential for tax relief from a SIPP. Paying off the credit card sounds sensible. Given what you’ve said about wanting to enjoy life now I think you could earmark £10-15k for something fun.

I got 100k inheritance. We were thinking of moving anyway so we put it into a new mortgage. Don't regret it at all, as the house we bought ended up going up in value by about £100k after we bought it and the house we moved from went down in value by about £50k.

So our £100k turned into £200k (sort of), which was really nice!

It depends so much on your personal situation. I'd pay off cc debt, then pay off max amount of mortgage before incurring charges.

Invest the remainder until you can pay off the mortgage with no ERC.

Then use what would have been monthly mortgage payments to save for yourselves and the kids.

Retire

@MounjaroOnMyMind

Plenty of medium risk long term investments over 5% at the moment.

This way you don't lose the capital.

I love this thread. I love the way the OP says they want to enjoy the money and make the most of it. Also, how others emphasise that you can use money as a tool for experiences like holidays.

I’m quite shocked by the number of people saying they would pay off their mortgage. I understand that lots of people aspire to this and the feelings of security it brings. It does depend on individual circumstances, But, the financially best option is nearly always to leave the mortgage and invest. It’s understandable to prioritise feelings of security (over more money), but it's worth knowing the alternatives first - investing via a pension would be highly likely to make you significantly wealthier over the long term.

Your best bet would be invest in the stock market with vanguard and other bond things and don’t touch it. Pretend you have it and watch it grow. It will, but you have to put your mind off of what to do with it bc realistically it’s not much money. Use it to grow your wealth instead of getting rid of immediately. Sleep on for a while and talk to financial planners.

I mean pretend you don’t have it.

Clear the mortgage - you will save THOUSANDS in interest over the 12 years.

Then throw everything you've got at that CC - that'll be gone quickly.

Now you're debt free.

Save what you were previously sending to the mortgage lender and CC in a low-cost stocks and shares ISA in a globally diversified fund.

Now you're debt-free AND building wealth.

Re ISAs, check out interest rates on a 2 year ISA, the rates are generally a lot better than instant access, then when it matures you can transfer it to another ISA, as it keeps the ISA status.

We’ve a similar amount and in final year of 10 year fix. Penalty is less than interest so probably going to pay it off. We’re 57/58, both working FT in physical jobs and would like to not have to worry about a mortgage plus free up some monthly money so we can work less hours.

Global stocks have dived in the last 2 weeks. I've decided to sell some tech stock a few weeks ago and bought into defence which has mitigated the fall from 10% to 3%... Am considering buying in a falling market despite being naturally cautious.

I agree about not rushing to pay off the mortgage, I'm surprised this is so high up on so many people's priorities. The secured mortgage loan will probably be the cheapest rate payable and investment rates may well be higher even after paying any tax due on the interest. If the mortgage is 4.7% and you have ISAs / savings of 5% then you gain that 0.3% for free and the cash is still available should you need it. I'd look to make Additional Voluntary Contributions AVCs on your pension as the tax benefits will out perform most other investment, and I'd pay off unsecured debts before touching the mortgage

I think it's probably true that a lot of people are not financially literate and don't realise that investing is almost certainly the more lucrative option, due to the woefully inadequate financial education that we receive in the UK. However I would (and do) still make overpayments on my mortgage in addition to investing, because I value the security and the peace of mind that will come with owning my home outright. That cannot be quantified.

DP is set to get about 180k give or take, inheritance We are set in terms of mortgages, he is buying a new car outright. Some is going in savings and a small portion to pay off debts. He then wants to go to Iceland for a holiday to see the northern lights, and taking us ( us, 2dc and my sister) to Florida. Trip of a lifetime. swimming with dolphins, the lot….Whatever’s left will be put away for repairs or emergencies.
his money is his, he’s never been tight, will try pay for most things. but has decided he wants to pay 15k for flights alone as he’s a nervous flier and hasn’t flown since he was about 15, he wants to go in comfort. DS is a big lad and will require extra leg room but I’m really struggling with this as I think it’s a hella lot of money. We agreed premium but he’s going full upper class….

i know it’s his money and we won’t be in a position like this again. So he wants to do it right.

Do the rebel finance school course. That amount correctly invested will set you and your children up for life.
What's more is it's easy.

rebeldonegans.com

@Savannahview , I don’t think you’re asking what I would do but what it would make sense for you to do but since you asked and if my husband had no input I would give it to my two sons equally because I don’t need it.
If I were you I would find the highest return savings account for it and feed it as soon as I could into a stocks and shares ISA.