inheritance dilemma

marrioa

Within the next two weeks I will receive a £40k inheritance. I am 45 years old and will have a piddly pension due to being a mum rather than working. My attitude to financial risk on a scale of 1 - 10 is probably only a 3, as I've never had much money and have learned to be careful with what I do have.

In 10 years' time, my husband and I want to move to Wales. We will still work but hope to find less responsible/stressful jobs. Our joint monthly net income is £2k and we have no debt other than a mortgage which will be paid off within the next 6 years. We do not have a high maintenance lifestyle.

We will probably transfer our existing cash ISAs and want to explore equity ISAs. We had an IFA for over 20 years, but he's now retired. A recent interview with another IFA left me feeling depressed about the future, pathetic because of my unwillingness to take risks, and inadequately equipped intellectually to cope with the big bad financial world - which I'm not.

My own research has helped me, but I still feel in need of help and have one or two (well seven) questions I'd like answers to.

1 What's the difference between Investment Trusts/i-shares and Unit Trusts/OEICs?

2 Could we put some money into Child Trust Funds/Savings?

3 A product paying dividends is better than GEBs, but what are these divident paying products?

4 Are FTSE trackers the same as GEBs, and are they a really bad idea?

5 Can cash ISAs be transferred by 5th April and then another £3k added?

6 Can we benefit from our capital gains tax allowance?

7 The outstanding amount on our split mortgage is £28k at 5.25%. would it be more sensible to pay off the mortgage and invest the £600/month we are currently paying?

Is there anybody out there who could please steer me in the right general direction?

margaretclare

Hi

I'm not an expert, but can answer a couple of your questions:

5. We all have a £3000 allowance for cash ISA, so you're allowed to pay in, or transfer, this tax year then start on the next £3000 from 6th April, the new tax year.

6. You could find that you're a lot better off paying off the mortgage. I'm able to save a sizeable chunk every month now we've no loans and no mortgage.

Anything else is left to the experts!

Aunty Margaret

cheerfulcat

Hello, marrioa

1 What's the difference between Investment Trusts/i-shares and Unit Trusts/OEICs?

Everything you want to know right here. The courses are short ( twenty minutes or so ) and free

3 A product paying dividends is better than GEBs, but what are these divident paying products?

Many collective funds pay dividends, as do many shares. The collectives aimed at paying dividends frequently have " income " in the name.

4 Are FTSE trackers the same as GEBs, and are they a really bad idea?

Trackers ( they come in many flavours, not just FTSE )are funds which track an index. Most managed ( 80% ) funds track those same indices; that's why trackers were invented. Same performance but better returns because you're not paying for active management. Trackers are good for people who want exposure to the stock market but don't want to look under the bonnet. They work best with regular investments IMHO but I have used them for lump sums too. They are not a bad idea as such but there are managed funds which will outperform them by some margin; however investing in managed funds ( or of course shares ) involves more effort on the part of the investor.

GEBs are a different thing; they are simply deposit accounts with variable rates, the rate determined by a formula based on the performance of whatever index/indices the GEB is associated with

5 Can cash ISAs be transferred by 5th April and then another £3k added?

Yes.

6 Can we benefit from our capital gains tax allowance?

Yes, but it involves selling investments at a profit, which implies active portfolio management - fantastic if you are interested in that sort of thing

7 The outstanding amount on our split mortgage is £28k at 5.25%. would it be more sensible to pay off the mortgage and invest the £600/month we are currently paying?

Yes

HTH

Cheerfulcat

marrioa

Hi Cheerfulcat

Thank you so much for the link you suggested. I've already spent an hour reading and making notes. Once everything is fixed in my head, I will be able to use my money soundly.

What does "HTH" mean?

from marrioa

cheerfulcat

" Hope This ( or That ) Helps. "

If you are interested in investing you will like the Motley Fool. Some good articles on investing, but its main strength is the discussion boards. Ignore the Champion Shares ads

Good luck

Cheerfulcat