Large inheritance and savings

neuvilla · 11 December 2017 at 11:01AM

I wondered if somebody had time to give me a quick bit of advice as I'm quite lost.

With a large amount of inheritance and some savings, my wife and I have currently got around £300K sitting in various different bank accounts, which is earning very little interest.

We don't have any property, and at the moment we're not ready to buy a house. We think we might be in a situation to buy in 2-3 years time, so would like to keep our money available until then. Our main ambition with the money is to offset the rate of inflation. I am also considering whether it would be a good idea to invest in a private pension or whether it's best to keep all the money for a house so avoiding a mortgage.

I don't mind doing my own research, but what I'd really like is to get an IFA or an accountant who can help guide me through the process and even manage our money to some extent. We did see an IFA a few years ago, on a free consultation, who just told us to go and buy a house. We ignored the advice, as we felt it was unwise considering we weren't expecting to stay living in the area for much longer AND with house prices looking like they were inflated. I'd also heard that IFAs were only really useful if you wanted to put the money away for 5-7 years, and we don't want to do that. We're basically looking for someone to help us manage our money over the next 2-3 years, so we don't lose too much of it.

My question is what is the best next course of action? Would an IFA be able to help us? Would it better for me to do the research myself?

Also, a bit more context for why we don't think its a good idea to buy a house now:

We're moving to Tanzania for 12-14 months early next year for my job, although I will be paid in the UK. My work is in academia and I've been pretty much unemployed for the last year, until I got this new job. This job is a 16 month contract, but we're hoping I'll be able to get something longer term on a return to the UK. My wife works for the NHS and earns around £60K. She's quitting that job, and with her experience, CV and contacts etc, she is confident she'll be able to get another job when we return to the UK.

DiggerUK · 11 December 2017 at 11:33AM

Your in between a rock and a hard place. Little option, with your current plans, other than saving, even though you can only limit damage from inflation.
I would go with NSI products..._

Dorian1958 · 11 December 2017 at 12:00PM

Personally believe you will struggle to offset all of the effects of inflation without taking more risk than saving accounts have. How about putting some of it into S&S ISA, at least that way you will have some possibility of matching inflation? Also, be aware of the Financial Compensation limits of £85K per firm, per person, so spreading it around makes sense.

enjoyyourshoes · 11 December 2017 at 12:10PM

Why not review your position regarding potential house purchase and see if that could be a viable option now?

Review why you think you are not in the 'situation' now to purchase but will be in a few years time.

xylophone · 11 December 2017 at 12:21PM

Three year timescale?

You might each open a Flexdirect current account with Nationwide and a joint account which would give you access to the Flexclusive regular monthly saver.

You could earn 5% interest for a year on £2500 in each of the current accounts ( cycle in/out the required £1000 from an external account).

Put the rest of the money into NS&I Guaranteed Income Bonds and pay the monthly interest into the Flexclusive monthly savers (5% on up to £250 each month).

neuvilla · 11 December 2017 at 12:30PM

Thanks so much for your replies. To start with, yes, all our money is spread around so we are under the £85K limit.

I'll look into both the NSI products and S&S ISAs.

And it's a fair question about buying a house. A few things make us reluctant. 1. Considering we're moving to Tanzania, we don't know where we'd buy it. 2. Theoretically, we'd be prepared to buy a house and rent it out but a. we wouldn't want to be stuck doing that when we want to buy a house to live in, and b. I'm not particularly confident in the housing market at the moment, and would worry we'd lose money on it if we wanted to sell it in 2 years time.

Malthusian · 11 December 2017 at 12:30PM

neuvilla wrote: »

We did see an IFA a few years ago, on a free consultation, who just told us to go and buy a house. We ignored the advice, as we felt it was unwise considering we weren't expecting to stay living in the area for much longer AND with house prices looking like they were inflated.

And yet you are still there, and I assume prices haven't collapsed. There is no point timing the housing market - when you want a house and can afford a house you buy one.

You say your investment timeframe is 2-3 years but in reality if "a few years ago" was say three, it was actually 5-6 years and you've already lost money by doing nothing for half of it.

But that is water under the bridge and we have to look at your present position. In your position I would stay in cash until I was back from Tanzania, then review the position once we were both settled and employed back in the UK. Investing in the stockmarket could be a bad idea because of the risk you might want to buy a house on your return and can't because of a market crash. Buying a house now might be a bad idea because you might not return to your former home in which case it would have been a waste of effort. Then there is the risk you don't find a job as soon as you expect and need to live off savings for a while.

Too many unknowns which means I would stay in cash and swallow the inflation risk.

neuvilla · 11 December 2017 at 12:45PM

Malthusian wrote: »

And yet you are still there, and I assume prices haven't collapsed. There is no point timing the housing market - when you want a house and can afford a house you buy one.

You say your investment timeframe is 2-3 years but in reality if "a few years ago" was say three, it was actually 5-6 years and you've already lost money by doing nothing for half of it.

But that is water under the bridge and we have to look at your present position. In your position I would stay in cash until I was back from Tanzania, then review the position once we were both settled and employed back in the UK. Investing in the stockmarket could be a bad idea because of the risk you might want to buy a house on your return and can't because of a market crash. Buying a house now might be a bad idea because you might not return to your former home in which case it would have been a waste of effort. Then there is the risk you don't find a job as soon as you expect and need to live off savings for a while.

Too many unknowns which means I would stay in cash and swallow the inflation risk.

House prices where we are have actually reduced, since we were advised to buy two years ago. At the time, it was a sellers market and property was going for huge amounts over the asking price. Shortly after, the market has changed. The land registry stats show about a 5% reduction in house prices where we were going to buy. Plus, we knew that we would not be staying for long although we have probably stayed a year longer (3 years in total) than we thought we would.

But you are right that we have lost time on our investment. We did put some in a high interest current account (although the interest rate has now gone down on that), plus in a cash ISA, and a few other bits in savings accounts. But we haven't kept on top of it all and realise that we need a better strategy.

But as you say, with our employment situation and Tanzania, we might just have to accept the inflation risk.

enjoyyourshoes · 11 December 2017 at 3:30PM

When is taz on the cards?

Why not use to buy in Taz ?

getmore4less · 11 December 2017 at 3:48PM

Review the wife's options with the NHS, they may be able to take a sabbatical and retain NHS status/pension etc.

badger09 · 11 December 2017 at 4:12PM

enjoyyourshoes wrote: »

When is taz on the cards?

Why not use to buy in Taz ?

Did you actually read OP's post?:cool:

neuvilla wrote: »

We're moving to Tanzania for 12-14 months early next year for my job, although I will be paid in the UK. My work is in academia and I've been pretty much unemployed for the last year, until I got this new job. This job is a 16 month contract, but we're hoping I'll be able to get something longer term on a return to the UK.

Why would you suggest he buy a property abroad when he is only going to be there for a short time?

Large inheritance and savings

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