What would you do with inheritance

[TwinklingPotato]

Hello.

In the next couple of weeks or so, I will receive some inheritance from my grandmother. It's not "life-changing", but it's not bad, either - £28k.

I have two credit cards and a loan that I will clear, which will leave me with around £23k.

It's been a crappy but positive year, I've left an awful relationship and am renting a lovely home. I don't want to splurge this money away, as I'm aware how quickly it could disappear, so was thinking of sticking £20k away somewhere and keeping what's left after I pay my creditors for a few treats for me.

I mean, I could do with a newer car, but mine still runs and gets through the MOT, so I think I'll stick with it for a while..!

What do you think?

You could put it in a 12-month cash ISA which will give you some breathing space whilst you consider your longer term plans (house, pension etc).
Nat West are currently offering 4.2% for 12-months (but you will have to be quick) which is about as good as you can get at the mo whilst being completely safe/risk free.

If you’re between 18-39 open a LISA and max that out (£4K) and put the balance in a S&S ISA (£16K).

I may be wrong but I think the stay/not stay comment was in relation to moving house and all the recommendations that she must save for a house deposit or become a home owner ASAP.

MN is generally quite obsessed with home ownership being absolutely essential and renting being terrible for your finances, in general it usually is a good idea to buy if you can as mortgages are such a good way to leverage your capital (and of course the practical benefits of a stable home and no worries about landlord selling up and kicking you out) but I wouldn't say it's the right choice for everyone. Not being certain you want to stay in the area in the medium/long term is quite a good reason to not invest in property now, since there are quite substantial fixed costs of buying a house (stamp duty being the main one but also legal fees, mortgage fees, surveys, moving costs etc), if you're planning on staying in the house a long time then you'll recoup these over time but if you are quite likely to need /want to move in the next 12-24 months I'd say better to stay in rental unless you are in a position where the purchased property will hugely increase in value in a very short period of time (this used to be the case in property boom times that it was worth moving around very frequently to realise increased value but in most of the country it's significantly slower growth now). And don't forget also for someone with very low liquid assets like OP (and will be even lower if she uses most of her £20k as a deposit and on moving costs) it's a significant advantage as a renter to not have to worry about maintenance of the property and unexpected bills - we just had to to pay out £13k for a new roof on our house, it was OK for us as we knew this was coming sometime and have been saving accordingly but OP would be pretty stuck if that was her house she'd just bought...

Tbf I was one of the posters who suggested putting it towards a house deposit, but did say if she doesn't want to own a property anytime soon and if she doesn't know where she wants to stay, then it makes sense to keep renting for now. But the original op didn't have that information

Don't go to any banks.They will just try to get you to deposit your money with them.

£28,000 is a good amount. You are wise to pay off any credit card debt and to keep a little for fun/emergencies. Make sure that is in an interest bearing account. Check to see what easy access savings options your bank has or shop around for a good interest rate.

Do read Martin Lewis' website and check it to find the best deals on cash ISAs. NatWest has a 4.2% 1 year fixed rate until 23 October, but other banks/institutions will have offers too. Deposit up to £20K and let it earn tax-free interest. Additionally, you could put less in to the cash ISA and put some into a stocks & shares ISA - the total limit is £20K so if you put £5K in one, you can only put £15K in the other each tax year. As PPs say, although the market fluctuates, long term the s&s ISAs give a better return.

Now that your finances are your own:
Join your workplace pension ASAP, especially if it's TPS!!! Contribute as much as you can from your salary each month. Since you are on the USS scale, this will make the most of the top end of your salary since anything past ca. £50K is taxed at a higher rate. (up to £12,570 - no tax, 12570 - 50,270 = 20%, after 50,270 = 40%!!). So if you're on £55,000, that final £4725 is only worth £2835 after taxes! But if you are putting it into the pension (which happens before taxes are taken out) you're saving the full £4725 for yourself.

Check if your employer has a salary sacrifice scheme. If so, join it! This will mean more money going into your pension b/c your employer will contribute too.
Check your NI/state pension years by logging into the .gov website (you'll need a govt. gateway ID). Buy any NI pension years you've missed if you can.

Pensions are not 'throwing money into pots' they are cultivating it for retirement.

You sound knowledgeable - I know with a LISA if you put 4k in it goes up to 5k. But is that all the interest you get while it stays there? Or does it increase each year?
TIA!

The government adds a 25% bonus to your savings. If you save the maximum £4,000 each year, you'll receive a £1,000 bonus.

Find out the opt in date and opt into that pension. Your employer will have to contribute too so free money going into your pot. It doesn't matter if you stay there or move jobs because you can transfer it into a new employment if you want too or you can leave it. Pay your credit cards off and put £20k into an ISA. Keep the remaining money in a deposit account so you will get a little interest but can access it if you need to. Going back to pension. Instead of paying £200 off your credit cards every month pay it into a pension. If you can't get your employer to open you one get a SIPP and the government will top up by 25 percent of whatever you pay into it. Just to show you what £28k can do that is the exact amount I and my 4 sisters each got from our Mum we hen she died. Sister 1 had a nice holiday because she hadn't had one for several years and saved the rest into an ISA. Sister 2 saved all of it and still 12 years later has not spent a penny of it. Sister 3 had her roof redone, 2 very nice holidays, and saved some but has since spent on another holiday. I'm sister 4. I put most of mine £26 plus legal fees of £2 on a deposit for a btl hpus costing £103k. I got a repayment mortgage. That hous has only been empty for about 6 weeks over 12 years. I have a mortgage of less than £37k left to pay on it. The mortgage payment is £465 pcm. I charge £950 pcm and could charge an additional £100 pcm as that is market value. So it brings in excess of £400 pcm after gas certificates and maintenance. I'll be leaving that house split between my 2 little dgs's. The house has been valued at over £200k 2 years ago so if I sold it I'd gain a lot of money. My youngest sister 5 paid a lot off her credit cards, has some trees cut down and spend some on improving her house. £28k is a nice amount so don't just fritter it away without having anything to show for it.

No probably not. £20,000 isn't in the needing professional advice category.
If you are able to leave it for 5 to 10 years minimum then stick it in S&S ISA and leave it to grow.
If you want you could do half in a cash and half in a S&S if you are very.risk adverse.

You will also get interest if a cash LISA. The bonus is seperate to that. If S&S then any growth uou get is also seperate from the bonus.

Oh my goodness, opt in NOW

USS is an excellent scheme so opt in immediately (don't wait) and then put some additional money into the investment builder element of the pension (additional contributions)

Agree with pp Opt in to your pension scheme. You are throwing away free money every year. Also make sure you check your government gateway to see if you are on track for state pension.