£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.

Just be aware that any ISAs you take out in the kids' names are theirs when they turn 18. You will have no control over that money and you can't withdraw it. No money can be withdrawn until the child turns 18, and only they can do that. You can 'manage' the account etc up until they are 18 but can't withdraw any money.

(Ask me how I know this! 🙄)

Pensions, pay off mortgage when deal expires, plan to grow the rest for kids education/house deposits. Set aside some for ‘fun’ money - travelling etc. An IFA will help you to plan all of this effectively, obviously use a reputable firm. Make sure you get advice re; a Will if you don’t have one.

We are higher rate tax payers and have the max amount. Love the excitement of risk free gambling, however we’ve not got kids any as what if one won a big prize and the other nothing? It has the potential to be very unfair if one is lucky and the other not!

I would consult an IFA
But - I would consider starting pensions for the kids. Max out ISA’s for all of you. Your own pensions look healthy? ISA’s for the kids earmarked for uni/house deposits/sensible stuff.
Are you in your forever house? I’d probably pay off the mortgage as I hate having debt!
I”d maybe update cars if they’re getting old.
Decent holiday.
Invest the rest but not BTL - its no longer a sure thing with ever increasing legislation.

See an IFA. Get it properly invested to minimise tax and maximise gains, particularly focussing on long term planning if you are comfortable with your existing income.
They will look at your risk appetite, financial goals (eg are you aiming for early retirement) etc. Do you need income from the assets or can you lock away the capital for growth. All these things will dictate the type of portfolio you need.

Personally I'd pay off the mortgage for starters (I've never liked debt)
You do also have an opportunity to move / buy somewhere bigger.
Ir's a nice problem you have 😁

Fill ISA allowance, fill premium bonds, consider if you want to put some in SIPP pension. Keep the remainder in single gilts held to maturation as you might get around 4% tax free. Pay off mortgage in full at end of 2026 and slowly trickle remainder into ISAs, Junior ISAs for children, SIPPs, possibly junior SIPPs until all is wrapped up in tax free wrappers. I'd avoid general investment account (GIAs) as you're taking on all the risk but still have to pay tax on any earnings.

I'd speak to a financial planner rather than a financial advisor who charges fixed cost for advice, rather than finding someone who will put your money in funds that will give them the biggest percentage payments.

That's what I'd do. A lot of people are getting out of property as returns fairly low historically compared to stock market and regulations are (appropriately) increasing.

Thank you everyone, some food for thought in there and great to hear differing and similar approaches

I would look at your long term goals and see how having such an amount would help you and your family. What do you love to do? What about your children’s education? Do you love their school and would it create advantages to be educated privately? Their future housing? Funds if one of them wanted to train on a career where the fees are eye watering-like a pilot? You are obviously very comfortable anyway, so long term investments plus some to enhance your life now really.

Yes, see an IFA.

Pay off mortgage = £150k
Max out premium bonds = £200k
Max ISAs = £58k
Have a lovely holiday
Rest in fixed term savings / capital investment bonds to be drip-fed into ISAs every year, along with other savings from income.

Increase pension contributions with the amount you have saved from mortgage plus any more you don't need to put into savings.

Sounds like you will be in a fortunate position to retire early and support your children through university.

Have the people saying “go see an IFA” actually used one?

You’ve generally got good advice already there is no “magic” (or if someone is suggesting there is it usually actually isn’t)

I’d put £350,000 in high interest savings accounts and then pay off the mortgage once your 1% deal expires (don’t put more than the FOS limit with one provider). Redirect mortgage payments to pensions.

Full holdings of premium bonds and ISAs for the four of you as you’ve already said.

Then look at either pensions or some kind of investment fund, topping up your ISAs every year.

I would also spend a bit on holidays / home improvements / something the person who inherited has always wanted.

Be very careful about putting money into your children’s names.

in many cases when they are 18 it becomes legally theirs.

my son burnt through 14k as an 18 year old, mostly on guitars and music equipment.

@seasonspuzzling Our independent financial advisor was rubbish, we might have done better asking mumsnet (and discarding some of the sillier ones).

Putting the money in an NS&I account is convenient and will earn money until they decide whether to move/ pay the mortgage off. Higher interest rates are available elsewhere but it is convenient. An alternative is to use one of the savings platforms where you can move money easily www.thetimes.com/money-mentor/banking-saving/savings-accounts/what-is-a-savings-platform-and-should-i-use-one

Yes - agree with everyone (and therefore disagree with my own advice!) to be careful of what is in your children's names...

My DD17 has a small inheritance but she is super cautious. My main concern is that wealthy young people can become targets for financial leeches posing as friends.

Definitely DO NOT DO THIS, your tap will run dry..They will be back for more. Terrible advice, truly awful. Stick it in many separate accounts (£85,000) and live off the interest. Even at 4% you will gross around £24,000 a year. Or just pay off your mortgage the day the 1% deal ends and save the rest. Don't buy a 2nd property to be a landlord and be subjected to criminal banking and taxation. But a 2nd property outright and use rent as passive income. You will have to pay tax on this but your asset will grow.

That's very bad advice - her mortgage is 1% and any savings would bring in much more interest than that.

My plan would be

1. pay off mortgage
2. a family trip to our dream destination
3. put the rest in savings to earn money every months for life (like a pension fund but that will start straightaway and with no rules on how much you can take etc)

Yes. Ours has been - to use a cliche - absolutely worth his weight in gold. He's made a huge difference to us, has modelled out pretty much every scenario in the most cautious possible way, diversified what we own, calculated the spread between low, moderate and high risk holdings, and given us very good advice on questions exactly like paying off our mortgage vs investing that money.

Definitely look for a local financial advisor, you may want a tax advisor too.

set aside 350,000 in NS&I which are guaranteed beyond the 85K for most account you have already put 200,000 in premium bonds and ISA's
get aside another 40,000 ready to add to ISA's next April
this now leaves 210,000
assuming no other debts, put 50,000 as accessible savings /emergency funds in case you lose a job or need to take 6 months off for illnesses etc,
leaves 160,000
set aside enough to buy your next car(s) for cash ( 30,000)
leaves 130,000

does your house need any maintenance or refurbishment?
do you have missing years of national insurance could you put more in your pension? would you want to access pension before 67/68 in which case leaving the money so you can retire early or go part time after 60 might be good

if your kids already have 20,000 saved in their name I really really would not add to it, they have full access at 18 and 20,000 is plenty at that age if you want to save more for them just keep it in your own names

once you stop paying mortgage at end of 2026 that money will easily pay for holidays and more pension top ups, savings for kids at university etc

Yes.
and I received excellent advice on a sum bigger than this - but it’s important that you find the right person (I spoke to three different ones before I made my choice)
There's some really poor, uninformed advice on this thread

Let’s not forget that this money has come from an inheritance not a lottery win.

Not guaranteed thsy paid any inheritance tax so lets not assume that.

@Cottagecheeseisnotcheese Children ISAs are only 9k and there is no guarantee that new ISAs will be possible next year, the government is considering that.

Leave the UK during this tax year.

No question.