As username suggests. Decision Paralysis

[DecisionParalysisInheritance]

Sadly I have inherited some money. I only have it because my Mum died 40 years ago. I’d give every single penny to have relative or Mum back.

I’ve inherited £115,000.

I plan to pay the allowed 10% into my mortgage each year for the next 3 (this year and 2 more). I plan to do this because I’m in my late 40s with 18 years 7 months left on mortgage and I’d like to reduce that if at all possible. We have a good LTV on the mortgage.

We (DH and I) have very little other debt (less than £200) and some savings. I’ve been working on a sinking fund for annual costs and we now pay £100 pcm into that. We also save for Christmas every year. This is the only regular saving we do as a couple. DH saves monthly. I don’t really. I top up as and when.

DH and I run a right ship in terms of budget and finances. With our current savings we could probably last 6 months at current expenditure and 9 months if we tightened our belts.

We both have pension funds of circa £205,000 (each). We pay into these every month. DH pays more than me because of the employer contribution. I pay around £550 pcm into my pension (this includes employer contribution!)

DS is at Uni and he’s set up with a flat (mortgaged). He should hopefully graduate Uni having only taken one loan out. No fees, Scotland.

DD is at home and plans to “live with us forever”! However I want her to have equity with her brother.

Other than saving £20 each per month into a pension for the DC we don’t save for them.

What on earth do I do with about £80,000? I will top up ISA but I’m quite risk averse YET I want to try and create “wealth”. (Feels like an arrogant statement)

I’m not motivated by holidays. I plan to use a tiny bit of the money to have my Mum’s engagement ring remodelled into something I can wear every day.

It’s not a huge sum of money, but I think it has the potential to be life changing if I use it wisely.

Any advice for a risk averse person paralysed by making decisions around this?

You have had the money for 40 years? Where has it been?

Other than saving £20 each per month into a pension for the DC we don’t save for them.
I would have my kids firmly in mind re planning. It’s a different world now, much harder. So I’d have it for my kids

No. I haven’t got it yet. I’m only getting it because the person who should have (my Mum) died 40 years ago. Relative that is honouring me instead of my Mum died recently.

We’ve supported our DS to get the mortgage and pay him a monthly allowance. With any luck he’ll graduate with only £11,000 of debt and an asset!

I think we’ve done well for him, it’s something equitable for my DD that concerns me now.

That’s a rather big detail to have included I. Your op!

you uni student son has a mortgage? You presumably are paying it?

how much are you channelling to him every month?

How old is your daughter? Any difficulties that mean she is likely to depend on you as an adult?

@Taxeffectivelyit is in the OP.

No reason why DD should depend upon us as an adult. Likely some ND (it runs strong in this family! Several confirmed diagnoses and several suspected.) but it hasn’t stopped the rest of us!

DS gets £250 a month (his income from his job and lodgers covers everything else).

DD does have a JISA that started life as a CTF. I’m aiming for it to be about £10,000 so we could also get her a mortgage (in about 5 years time). We’ll match whatever she puts down.

how much equity does he have in his property? I’d be paying up to the max additional payment on that mortgage as well!

How old is DD?

DS has 10% equity. Up and coming area. Also there’s a way we could upgrade his flat probably cost about £30,000 but would (and I’ve checked) add about £100,000 of value!

I don’t think I want to overpay his mortgage. Money is “lost” to me then. He’s the sole proprietor (it’s a joint borrower, sole proprietor mortgage)

DD is 16 and has 2 years left at secondary.

How is she going to have save £10k in 5 years?

personally - I’d focus squarely on my kids. I’d pay max I could off DS mortgage and for a few years… and ensure equal amount will be available for dd

Definitely do the flat upgrades - makes total sense

DD already has almost £8,000 in the JISA. In fact it might be over that by now. Need to check.

In order to be equitable with DS (ie get a mortgage) she might need a bigger lump sum from us. I’ll be 5 years older, so less time to allow for us to be on a JBSP mortgage together.

It might actually only be 4 years though. 2 years left of school, gap year (her plan) then first year in halls. If she goes. Uni is not necessarily in her future.

I’d rather do this than pay into his mortgage! I just need to convince DS it’s a good idea…

Well he’s 18/19 and you put the deposit down and you are offering to fully fund - so would be very odd if he didn’t ahrrr

Anyway my short answer to your thread question is…

your kids

The other thing to consider is if I pulled together every single bit of savings and the inheritance I could clear our mortgage.

I’n not sure I want to do that though. Then we’d be cash poor but own the house.

And also early redemption penalty

Reduce term?

Stocks and Shares ISA? Likely a better return long-term than paying off your mortgage.

https://ukpersonal.finance/flowchart/

Have a look at this to help prioritise. Treat your children equally. Pay off mortgage as much as possible without early redemption charges. Keep your 6 months expenditure in easy access accounts and consider fixed term savings for the money earmarked for paying down the mortgage. Look at Moneyfacts comparison site for the best rates.

Channel money saved by paying off or reducing mortgage into S&S ISA either Global tracker or a Multi asset fund like Vanguard Lifestrategy to supplement your pension or pay more into your pension. It's great to help your adult children but do prioritise your financial security as you head towards retirement too.

I'd find yourself a financial advisor. As you say, it's a lot of money but in some ways it's not. For your age you've got a fairly long time left on your mortgage and you need to do for your DD what you've been able to do for your DS in terms of property whether she plans to live with you forever or not! They'll be able to play around with scenarios in terms of how to split it up and the impact it could have longer term e.g. by paying mortgage off earlier, you'd save a huge amount of interest on an 18yr or even 15yr mortgage

Cash ISA and the rest in savings accounts as high a rate as you can find, put more of it into ISAs each year to save tax. S&S can take a long time to come good and the way the world is at the moment I would be cautious about that. Or put into pensions, but I like the idea of having access to it if I want to. If your mortgage is at a low rate you may get more interest saving it than you are paying on the mortgage.

But you may be getting more interest than that by investing it if the mortgage rate is low. It's all very simple options and personal choice I wouldn't pay a financial advisor for that.

I would be looking to add more to your pensions. The tax claimed back is essentially free money.

As long as you then continue to "pay the mortgage" into a savings account you will be quids in.

Personally I would clear the mortgage and then "save" the payments.