what to do with my inheritance

thrifty_sue

I have just inherited $30,000 (about £20K) from an aunt in America. I am not sure how I should invest this money. Can anyone advise me please?

ed123_2

......I would buy a secondhand Bentley....

thrifty_sue

sadly I don't have a garage to keep it in!

jem16

Do you want to invest - i.e lock it away for at least 5 years, preferably 10. Or do you want to save?

thrifty_sue

I would prefer to save it. I don't want to lock it away for more than 2 years at the moment.

LucyTheDwarf

Or perhaps a combination of the two?

My Favourite: Are you a taxpayer (or will you become one in the foreseeable future) and have you used your ISA allowance for this year?

thrifty_sue

I am not a tax payer at the moment, as I am a SAHM. Does it make a difference? Don't think I have used all my ISA allowance for this year.

LucyTheDwarf

If you're not a tax payer, you wont be paying tax on interest from any account. The key benefit of an ISA to taxpayers is that they receive the interest tax free, and so would have to find an account with a much higher rate to beat this.

If I were in your position, I'd be looking at a few thousand (perhaps £3-5,000) in an instant access savings account - there are still some around the 6% mark, although rates will probably continue to fall in line with the base rate cut.

The rest I would tie up in 2-4 fixed rate accounts for 1 to 3 years, which would give you some flexibility, but a guaranteed interest rate, so you know that your money is doing okay.

http://www.money.co.uk/savings-accounts/fixed-term-savings.htm?o=1074&d=DESC
http://www.money.co.uk/savings-accounts/instant-access-savings.htm

If it's likely that you might return to work in the next few years, it probably wont be a bad idea to keep your cash ISA going - as you may have a nice little nest egg by the time you're a tax payer

worrypants

use it to leave the basket case UK!! emigrate as fast as you can

that amount will go along way indeed

you could live comfortably on £20,000 for 3 or 4 years where I live
you onyl get one life enjoy every minute!!

[Deleted User]

Hi,

I'd suggest the following:

1. Generally ISA's are a good place to start:

http://www.moneysavingexpert.com/sav...gs-without-tax
and http://forums.moneysavingexpert.com/....html?t=401374

2. Regular savings accounts are good too:

http://www.moneysavingexpert.com/savings/best-regular-savings-accounts#best
and http://forums.moneysavingexpert.com/....html?t=608697

Regular savings accounts are generally a good place for new money e.g. monthly pay cheques, however if for example you have £3k in a 6% high-interest bank account drip-feeding into a 10% regular savings account then you're essentially getting 8% interest on average for your £3k which beats most fixed rate products - albeit with a bit more work.

3. If you want something with a little less work then fixed rate savings accounts are a good option:

http://www.moneysavingexpert.com/savings/savings-accounts-best-interest#fixed
and http://www.thisismoney.co.uk/saving-...&in_page_id=50

4. One other thing you might like to consider is getting a decent instant access savings account:

http://www.moneysavingexpert.com/savings/savings-accounts-best-interest#instant
and http://www.thisismoney.co.uk/saving-...&in_page_id=50

5. Finally if you're a higher rate tax payer then NS&I's 3 and 5 year Index Linked Savings (http://www.nsandi.com/products/ilsc/index.jsp) look good, paying 1% above the RPI inflation rate. Currently this is 4.2% so that’s a rate of 5.2% overall.

The attractiveness of these is that the savings are tax-free meaning it's better for higher-rate taxpayers. Basic rate taxpayers would need to earn 6.5% in a normal savings account to match this, while higher rate taxpayers would need 8.67%.

One thing to note is if inflation drops then so does the rate for these savings. It'll always be higher than inflation and tax free though. It's also best to leave the cash in there for at least three years though and at least £100 must be deposited (maximum is £15,000), so it's not for those who want a short term place to save