What have you done / would you do with a £windfall?

[WindfallWonderings]

In about a month, I’m going to be hearing about an offer of compensation from a bank, and although I don’t know yet how much it will be, I am finding it difficult to think about much else.

I do know it will be a minimum of £200,000 - could be substantially more.

I’m mid-forties, never had financial security, and am starting to feel anxious about what will be the best way to protect my future with this money.

I’m married with one DC. DH is not expecting or keen for me to pay off the mortgage as then it would feel like my house rather than our house. I’m completely burnt out at work but I don’t actually want to quit - not just for financial reasons, I’ve been in the same organisation for 20 years and there’s genuinely nothing else I’d rather do.

This feels like my one and only chance to have some financial security (which I know is one more chance than a lot of people get) - there’s no inheritance coming my way and little prospect of substantial income uplift from my job.

if you’ve had a windfall, or you’ve dreamed of having one (haven’t we all, I suppose…) - how did you/would you get the balance right between enjoying it and improving your quality of life, and making sensible choices to protect your future?

Agree. We did this with a large inheritance plus gave son a deposit for his mortgage x

Very good idea!

Definitely pay off debts first. Always

I'm another who doubts you'll get £200k but I very much hope I'm wrong

Definitely agree with this!

Oh, how interesting, thank you for sharing the reason.

I wonder if the bank would then pursue the previous recipients in some way?
I also wonder how banks are supposed to know if anyone they hold the will for and are executor of are supposed to keep track?
What it does remind is to make sure our wills are readily available and their location is known to our family. It's a disgrace there is no central gov.uk repository IMO. It is not unheard of for people to find Wills in their family member's home, not like the contents and dispose of them and claim intestacy (or an older will).

Speak to a financial adviser. Ours was a free consultation and so helpful

There is a central government repository https://www.gov.uk/government/publications/store-a-will-with-the-probate-service/how-to-store-a-will-with-the-probate-service

but many people still think banks are safer, or they leave them with the solicitors who drew them up who are keen to keep a storage fee.

I know it’s none of my business but I’m curious about what it’s for

I don’t agree that your DH is wrong to say he doesn’t want you to pay off the mortgage. If he feels like that you certainly shouldn’t do it because he may resent feeling like an unequal partner in the relationship. I would put the money in a high interest account for the moment and take the interest every month to help with household expenses and maybe provide some little treats for you and DH.
I the long run it could be invested in stocks and shares. These will pay less interest but provide the possibility of capital growth in the long term. There are plenty of wealth management companies that would give you advice about this and look after your investments.
it would be unwise to think of this large sum simply as money to spend. With such a large amount you should be making it work for you while it retains its value.

Also bear in mind your ERC, you may be limited to what you can pay off the mortgage before the fix ends.

If it were me, I'd put away enough to pay off the fix at the end date. The rest split into savings, investing, pensions and fun spends.

Read the OP's posts and you will find out!

Rarely used IME! It should be a mandatory, norm.

You can generally pay off 10% off a fixed mortgage per year. I would do that first.

Then as others have said, have a nice holiday, put some in isas, some in flexible savings, some in premium bonds, some into a pension. Some cash and some sticks and shares. A good spread.

Having said all that when I got a recent inheritance, we paid off our small mortgage, and spent a load upgrading the house. That accounted for about half. The rest went into various pots. I still haven't bought anything for me, an oversight, I want some diamond earrings!

@WindfallWonderings I would look at initially putting the money in the highest interest rate NS&I account. NS&I provide full protection rather than up to £85k.

This gives you time to get proper advice,

As pp have said non-tax paying savings such as ISAs are one option as is paying money into a pension. You really need to research and get advice before committing the money.

I remember your thread and I’m so please you will be getting this windfall.

You need to work through your priorities with a Financial Advisor, then you’ll be in a good position to make a decision, rather than following any specific advice on Mumsnet. The FA will prepare you a plan for the rest of your life showing your income and the impact of any decisions you make about the money

But first I would have a very nice holiday!

It depends how secure your/DH’s job is, and whether you’ve got good pensions etc.

For your average person I’d say:

• Pay off all debts (credit cards etc.)
• Pay off mortgage if there’s no penalty, otherwise drip pay off
• £20k into both ISAs this year and next; consider JISA for dependent kids
• Top up your/DH’s pensions - you can go back 3 years in the allowances
• Look into inflation index savings in NS&I

That’s the no brainer/no regrets stuff. After that it gets a bit trickier and you might need help, but I’d do a Global Investment Acc (GIA).

I personally dislike premium bonds. My kids were given some at birth and have never won a thing. It’s been sitting there for years having no interest.

As someone who is now retired max out your retirement plan.Its great to not have money worries at this age. Also put some aside for your dcs education fund..that may not be relevant in the UK but l am in lreland.
Definitely plan some nice holidays for the next few years.
I agree with not paying off the mortgage as you will always pay your mortgage but it's nearly impossible to build up large savings with an average wage.
I have come into a windfall at my age due to downsizing and after helping my dc with house deposits l am just going to use it for little extras in my retirement like holidays and just not having to worry if things break down etc. Nothing major but adds to my peaceful life.
Also pay off any car loan or credit card debt so your regular income is better.

This video is over 10 years old, so max contribution amounts payable into ISA/Pension will be different but may be useful for the general principles:

I would allocate some to enjoying it - it is compensation. As it is connected with Wills, perhaps consider it as a gift from them rather than the bank, so what would they have liked you to do with it.

Emergency fund, bulk that up. I would have 12 months of expenditure but you can do what you like. £3k sounds too low.

Then think about short term and long term - savings for short term needs such as home repairs, replacement car etc. Long term - pension, S&S ISA.
Google: UK Personal Finance Flowchart
That fkowchart can be useful to work through.

Children - activity costs & future educational needs, Junior ISA.

Pay off the mortgage and any debts. There’s a freedom in not owing anything to anyone.

How’s your pension looking?

Thank you so much everyone, lots of great advice and signposting - I really appreciate it. I think a Financial Advisor will definitely be a good idea, once I know the amount. It’s very hard not to keep thinking about it, wondering, dreaming in the meantime - and although the bank’s solicitors have indicated the end of November for the next ‘news’ I doubt that will be the end of the process, I’ll want to get some legal advise to interrogate their offer…So who knows how long this will all take. I’m sure this painful limbo will be worth it in the end…!

Flexible work request for a year and reduce to 60% ? time to think and recover without giving up work?

I would pay off whatever you can of mortgage without penalty.
ISA for you and DH (assuming happy marriage) 20k per year each.
consider extra pension contributions.
consider junior ISA for your child (which would be theirs to do as they liked with at 18) if you’d rather they didn’t have cash available to them at a young age start a pension for them!

We have full holdings premium bonds, they’re great to keep ready cash reserves with a bit of safe gambling involved, but we use Isa and pension allowances first, they’re not a great investment on their own unless you’re a higher rate tax payer.

As pps have suggested, wait until you have received the compensation payment before making any final decisions. Your comment on burnout stood out to me, is there any possibility in reducing your working hours (apologies if you've already answered this question)? It might be worth looking into this to see if this is a viable option, once you've received the payment.

You could max out your ISAs and Premium Bonds limits (and DH's limits, if comfortable with this) and use the remaining funds to supplement income if you reduce your working hours. However, I just noticed your mortgage rate of 5.9% and would be inclined to try to pay it off or at least make a sizeable payment to reduce the balance as this would reduce the monthly payments, which would assist with your finances if you reduce your hours.

Not sure if this was at all helpful...

Please go and see a fully Independent Financial Advisor, make sure they are non-tied and whole of market.