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?

I wouldn't put it in your DC names now (so I'm ruling out adding to DDs JISA, work on DS property or paying down his mortgage)

You can always give them money later, at the time it's needed, but when the money is out of your hands, it's out of your control and they can choose to do anything at all. However sensible they are, people make mistakes. Let any mistakes made be your own.

You say you could cover 6 to 9 months of living costs if shit hits the fan. That's a very healthy emergency fund. I wouldn't want more than that in cash because even in a high interest rate savings account, it would barely keep it's value against inflation. It's never going to growth wealth as you said you want.

Use a compound interest calculator to work out what your pension pot will be when you want to retire. Play around with the numbers. For example I plugged in that you will retire in 20 years time, that your current pot is £205,000, and you pay in £550 pcm. Using an interest rate of 8% (to account for 10% growth, with 2% inflation) you'd have a pension pot of £1.3 million, in today's money, which would give you an annual income of around £40k.
Is that enough? Do you want to retire in less than 20 years? What would happen if you added 30k (plus tax relief) for example, to your pension today? Plug the numbers in.

But what you put in your pension you won't be able to access until you're 10 years from state pension age, so I would keep a chunk aside to invest in a S+S ISA so you have more flexibility and the ability to give some to your DC as needed. You say you're risk adverse, but you're already investing in the stock market with your pension. If you're financially planning with your DH, you have both of your ISA allowances that you can use. So that's 40k that you can lock away. If the idea of S+S ISAs make you nervous, I would suggest becoming more financially literate. They are a very good way to grow wealth. The rebel finance school is often recommended here, it is a good resource. There are others - books, podcasts. Take a few months to learn about money before you make any decisions.

@PruneJuiceAWarriorsDrink Qapla’! love Worf and all things trek. Huge fan. 🖖.I often wish we lived in a post scarcity society al la TNG etc.

I cannot imagine my pension being that big and that amount would be plenty!! Wow.

I think I’d like to retire in 12 - 15 years. In 12 years I’ll be 60. I know I have 18 years plus on mortgage but I hope to reduce that and have it paid off by the time I retire.

Once the mortgage is paid and the DC are “launched” into life, DH and I will be able to live quite frugally. All I need is a gym membership, a library card and WiFi and I’ll be happy.

With the DC I think if I can get them through Uni with low debt, both have a mortgage and a small pension to hand over to them when they start working…that’s probably a good enough start.

I do have a little bit of money invested with Plum and the things I’ve chose seem to be doing ok. Was pondering putting £1,000 in there! That feels huge 😂

I know I need to learn more. I will see about starting the rebel finance school thing in June.

Your kids. Definitely that would be my focus. Tough times for the gen. Your son is very young with a massive mortgage already hanging over him - I’d be reducing that sharpish.

I would put £20k x 2 into isas now and the rest into isas next year. And gradually pay in to the mortgage. You might find you can pay a bit chunk off when you next have to renegotiate.

to be fair most inheritances would gladly be swapped for more time with a dead person. Sorry to be blunt but that’s the way it is I reckon.

It’s a life changing amount of money you say. But you also seem to say you don’t want to change your life.

son and daughter don’t seem to want for anything either. I wouldn’t be doing building work in a student house. Maybe something he can do in 5 years as a young graduate.

to be honest as a starting point I’d stick £20k each for you and your husband in a S&S ISA, relatively high risk level - maybe 4, and forget about it for 5 years. It’ll probably increase massively during that time. Probably do that next tax year too. And just have the rest as savings ready to live a bit more frivolously for the next few years for you and spoil your kids more.