How to invest £100K lump sum

[herbaceous]

Long story, but essentially I have about £100K I want to invest for the future. I don't have specific goals, other than not living in penury when old, having something for DS when I cark it or perhaps before, and basically to prevent it being frittered away.

I'm 60, work part-time in education, no plans to retire ever, have a high-earning partner, am not married. High-earning partner is worse with money than I am, and won't discuss it so I am looking after my own interests. Have a 17yo DS, who has a child trust fund from the good old days of Blair.

I am a money fuckwit, and the idea of an IFA gives me hives, as I don't know how to find one, won't understand what they're saying anyway, and feel hideously inadequate in the face of expertise.

I have various work pensions from the dark ages, mostly worth bugger all, but one has about £30K in it.

I'm thinking
Pay £20K into said pension
£20K into a cash ISA
£20K into easy-access savings
£35K into longer-term high-interest savings
£5K into Premium Bonds for the laffs.

Does that sound sensible?

I'm also due to inherit a flat (sitting tenant) and about another £100K in the next six months or so.

You can but it's still capped to what you earn.

So if you earn £120k pa and have been paying £10k per year into a pension then yes you can use carry forward to pay £100k into a pension this year rather than the £60k usual annual limit.
But if you earn £40k and have been paying £10k per year into a pension, then you can still only pay £40k in this year. Regardless of the carry forward.

Are you are basic rate or higher rate taxpayer?
The tax relief does magically appear into a SIPP once you put your money in. If you're a higher rate taxpayer there's an additional step to claim the higher rate relief.

I barely earn enough to pay tax. So, basic.

Thank you!

Another one recommending rebel finance school, they have the full course on YouTube, well worth it.

Any reason you're not married? And how do you own the house - JT or TIC?

We've never got round to getting married. I am also slightly loathe to, as DP is rubbish with money and I don't want him to get his hands on my inheritance!

We are JTs on the house. I am his beneficiary of his life insurance, death in service etc, and we have a will. So there doesn't seem much benefit in getting married! Wouldn't even make any difference to IHT, as wouldn't meet the threshold as it stands.

Wouldn't even make any difference to IHT, as wouldn't meet the threshold as it stands.

Are you sure about that? The threshold isn't that high compared with the value of a house. HMRC website says

"Joint tenants
You automatically inherit anything you owned as ‘joint tenants’.

You may have to pay Inheritance Tax if the whole of the deceased’s estate (all their money, property and possessions) is worth more than the Inheritance Tax threshold of £325,000 and the deceased’s estate does not pay."

I think you need to get over your fear of IFAs and get a general financial health check in addition to how best to invest your £100k. They're not scary and the good ones will explain so that a six year old can understand and without patronising. That's what they're there for, not just the ultra rich or financially savvy.

And unlike the (largely) mythical first free consultation with a solicitor, IFAs - at least in my experience - offer an initial free consultation where you can see if you gel.

PM me if you would like a personal recommendation

I’m might just do that.

IFAs occupy the same terrifying space as personal trainers in my mind. To be horrified by my inadequacy, and can tell me any old nonsense.

If you’re a basic rate taxpayer (so earn under £50k I think the limit is) the pension company automatically adds the tax relief for you.

In your shoes I’d put £90k in to your pension, spread over a couple of years, but I think you’re right - you can use three years worth of allowance in one go, so £60k. A quick Google will tell you.

Ring the pension provider and ask if it’s defined contribution and what the annual management charge is- you really don’t want to be paying more than 1% when it’s so small. 0.5% is better. The pension company will be v helpful and while they can’t advise you, they can help you transfer the money in. I’d suggest you put your other £100k that’s coming to you soon in there as well.

Put £10k in to your cash isa (make sure it’s fairly easy access) and check it has a good interest rate. Then change providers every few years to find the best interest rate. Don’t withdraw the money to do that- just transfer it across. The website and building society etc that you choose will tell you how.

I’d strongly recommend getting married too so you don’t lose your home and have a huge inheritance tax bill if your DP dies before you.

Wouldn't normally advise using an IFA but if you want advice without it then you either need to spend time learning yourself through the resources mentioned. Or you run the risk of being confused by randoms on the Internet telling you incorrect information as per the latest PP.

So an IFA could have some benefit.

@SnackaJacq is correct that you can only put in the amount you earn. The carry forward only really helps if you are a high earner and want to put in more than £60k.

The amount includes employer contribution and tax relief so you do need to be careful. For example you put in £1000, tax is added (relief at source) to make £1250. The £1250 is the amount that counts towards your allowance.

Even if you do see an IFA it's well worth doing some homework first. Try Money saving expert website or the Martin Lewis podcast.

For your lump sum.
Easy access cash emergency fund
Max out pension contributions
Max out ISA- £20k. Stocks and shares basic global tracker or balanced managed fund with low fees. Either drip feed monthly or as a lump sum.
Rest in a mix of easy access and fixed term bonds with a view to adding to the pension and ISA in the next tax years. If the interest is over £1000 you may have to pay tax on some of it.
Premium bonds will most likely earn less than you could get from normal savings but you can't lose your capital so it's only lost interest if you do buy a few.

You will need to invest via a platform. Barclays is now free but don't think they currently offer a SIPP. AJBell is reasonable and have a lower cost option called Dodl. There are lots of newer low cost or free options but sometimes it's worth paying for customer service support to start with. You can always transfer or just open another account when you are more confident.