£800,000 lump sum - what to do

[Lovingthesunshinetoday]

Title says it all really!
money is from an inheritance.
me and DH both mid 40’s
2 kids at primary state school
mortgage Is £350,000 at 1% until end of 2026

Both happily work full time.
Combined salaries of around £150k so day to day we are comfortable.

I will use our ISA allowance and premium bonds for all 4 of us.

Still £600,000 and I don’t know what to do with it to make it work for me.

is property investment a good idea for some of it?

any suggestions very welcome!

I’m aware i might need advice but also don’t know where to start.

Start with a properly qualified financial advisor preferably from personal recommendation

You have far too much to rely on internet strangers about whim you know nothing

Have to say if you’re so financially comfortable you don’t know what to do with all your money it would be very appropriate to donate some. A family member maybe? The PTA? Even just a few k can make a huge difference to so many people.

What are your pensions looking like OP?

As the pp said, get specific advice. Although one thing I would suggest is that premium bonds aren't always the best place to park funds until you can feed them into an ISA.

Money Saving Expert has a good explanation here of why that is the case. At the moment you can probably expect a median return of up to 3.3%.

https://www.moneysavingexpert.com/savings/premium-bonds/

You can get better rates with ordinary savings accounts:

https://www.moneysavingexpert.com/savings/savings-accounts-best-interest/#easyaccess

Happy to report the PTA will indeed receive and nice sum

I thought premium bonds as any winnings are laid back as tax free? Obviously we are tax payers and expect to pay the appropriate tax on any interest paid on savings accounts too.

Agree with this.

Pensions is an obvious one I haven’t yet given much thought to. I will add that to the list, thank you.

Congrats :))
Depends on your life goals. I would consider financial advice to grow it the savings or invest, if tou have no plans to stop working then I might not pay off the mortgage but see how I can grow the pot.
Really depends on your life goals, do you have a retirement age in mind, do you want to leave work, do you want to do the house up, do you have a bucket list.
What do you value most in life.
I knew someone that purchased a woodland with their inheritence and enjoys maintaining it, some people might want a holiday home, some it might be early retirement.
Youve basically inherited a ljfe changing amount so what do you want to change if anything?

I’m not about to start investing in schemes recommended on here don’t worry 😂.

just looking for general ideas as starting points in what to consider as I’ve not had such a large lump sum before.

Keep your 1% mortgage until it increases, then consider paying it off.
Are you happy in your home or would you look to move? Do you have other savings as most financial advisors will tell you to keep 6 months living expenses as cash. Are you happy with your work or is this an opportunity to start your own business/ change role? What are your aims for retirement?

I'd consider first either a large home or investing in energy saving measures for your current home. Do you both drive, if so have you considered replacing your car(s) with something more reliable.

What is your attitude to risk? You could choose to be a landlord or invest in the stock market. There are low risk and higher risk options.

A financial advisor will need to know answers to these questions.

What I did:

put aside some for “mad money” - go on holiday spend on a whim type stuff.

completely pay off mortgage.

put some into instant access savings. Look at Martin Lewis for accounts with good savings rates. This is easy access “emergency” savings for when you need a new car/boiler goes etc.

general advice is a mix of easy access (short term) savings and longer term savings.

look at your pensions. Are you on company pensions, civil service type defined benefit? Putting money into your pension saves tax but you do need to be aware of the lifetime limit of how much you can put in.

property is controversial. Buying a second house to rent out comes with significant legal obligations to the tenants and is not something to be entered into without knowledge and advice. Most people think the property market is not likely to make the capital gains it has in past years and lots of landlords are selling now because there is expected to be a new tenants rights law which makes it hard for landlords to evict.

LOL Pretty sure they paid inheritance tax as the people who left the money also paid tax. Hopefully the government would use it accordingly.

I would seriously consider a SIPP. At least one if you will be higher rate tax payers so the tax relief on making contributions will be massive.

I would also think about savings/investments for your DC which will be a huge help for uni/house deposit.

Agree, definitely not on mumsnet

I would max out pension contributions (up to £60k each from earnings + any carry forward from last 3 years over time). And pay off mortgage.
Youll get the benefit of any employer matching plus tax relief at higher rates (if both >£50k salary)

Please, please speak to a Financial Advisor for that sum of money. They will go through your priorities and make recommendations on investments going forward, taking into account ISA allowances, capital gains tax and suitable investments for your risk appetite. They will model out uni fees and early retirement options, if that is important to you.

I wouldn't invest in another property for rental personally. I would allocate a set amount for fun - few incredible holidays with kids, artwork, clothes etc. Then future proof house with any necessary renovations. Same with car/s. Top up pensions. Pay some off the mortgage but not all. Rest in a mix of short term and long term savings accounts for you and children; depending on your attitude to risk would put some in S&S. What an incredible position to be in but I am sorry for your loss.

Until you decide what to do put the money in an NS&I account as it has uncapped protection rather than trying to divide it up and open accounts with different banking entities.

Don’t go into property, it can be a nightmare. The money needs to be sensibly invested. Get a financial advisor to guide you.

Similar to what others have said, in a similar situation (not as much £ as you ) I:

• paid off mortgage
• bought a property to rent out (plan is to sell in approx 10 years to enable house deposits/lump sums for kids )
• Did major house renovations
• put some in premium bonds
• bought new car
• did some nice holidays and fun stuff.

and anything you can do do make day to day life easier so you benefit every day as well as in the medium and long term.

What a lovely problem to have :)

Firstly have a nice family holiday that is special so everyone can remember it. Then:
Pay off mortgage ( after 1% has finished).
Check pensions
Save for your children ( university, weddings and house deposits).

Actually if you have a favourite holiday location you could consider buying a property there. Holiday lets can be lucrative - but the tax rules are changing see https://commonslibrary.parliament.uk/research-briefings/cbp-10121/#:~:text=The%20government%20has%20announced%20the,regime%20and%20proposals%20for%20change.

You could also consider starting pensions for your children - another option to consider. https://www.sjp.co.uk/individuals/news/should-you-start-a-pension-for-your-child

And if not too late to do so - a deed of variation so some went direct to children might be tax beneficial, I'm not sure about that.

I think you've made a good start with ISA and premium bonds - assuming you are both higher rate tax payers the most likely return on premium bonds is decent if you compare it with after-tax returns on other accounts.

Make sure you've got most of it in interest bearing accounts somewhere for the time being, perhaps put a chunk in a fixed interest account for 12 months (or 15 to 18 months if you can get it - look on moneysavingexpert). That money is then available to pay down some or all of your mortgage when the 1% rate ends (I agree with not paying it down till then). Then quietly take your time over decision making.

Extra pension payments is an extremely good idea as you ideally want to get most of it into tax-advantaged environments as soon as you can. But, you need to assume that you can't access that till you are 60 so don't overdo it either.

From my experience using a free initial consultation offer, a financial advisor will really get you to look at your longer term goals before considering how you invest. You may like to do some of that work yourselves first - what would you like to be able to achieve, financially, what might this money be asked to do for you?

I agree to be cautious regarding property. Though, having said that, we've just purchased a student property and will see how it goes. My siblings and I already had a property in a Ltd company that was transferred to us a few years back, so it made more sense. The decision to use part of our capital for this has come off the back of a couple of years investing and thinking about what we each want to do. And the returns are going into pensions (we're a little older than you).