£140,000 inheritance

loulou207

Hi

I would be really grateful for some advice.

I am 63 and my husband 69 we are both non tax payers and retired.

I have inherited £140,000 and do not have a clue where to invest it. We have paid off our mortgage and have no debts.

Would it be best to split the money between us and invest it individually so we will not be liable for tax on the interest. Any advice would be gratefully received.

thank you.

dunstonh

There are tens of thousands of options available to you. You have given us very little to go on to reduce those options.

Your interpretation of taxation may not be applicable to many investments and its quite possible that going with a deposit based investment at your husbands age could result in an increased tax liaiblity due to potential age allowance reductions.

It would help to know why you want to invest the money. What is the purpose of it? What is going to be used for in future? What degree of risk are you willing to take with investing?

loulou207

Hi,

thank you for your very quick reply.

I would like to keep some of it in an account with no notice period to use for spending, perhaps £30,000. I would be happy to tie up a large amount for a few years for furture use.

I do not want to invest in stocks and shares or anything risky. Been there in the past! Could you advise me on isa's, savings accounts, bonds perhaps. As you can tell I am new to all this so I apologise if I sound a bit ignorant.

thank you

dunstonh

I do not want to invest in stocks and shares or anything risky. Been there in the past!

Risk is not an on or off situation. Its a sliding scale. Leaving it all in a savings account has a risk. Inflation can eat into that and "real" inflation is almost certainly above the rate of return on a savings account.

Its a shame you have lost money in the past on the stockmarket. Must have been a bad portfolio. If you had been following recent threads you would have seen most portfolios would be up around 10-15% a year if you had invested before the recent stockmarket crash. I'm not sure how you could have lost money if done correctly. If you had picked the worst possible time to invest you would still be in profit (By more than most savings accounts too).

Anyway, as i said, risk is a sliding scale. Its not an on/off position and there are lots of investment options in between deposit accounts and stockmarket investments. To put that sort of money totally on savings accounts would be wasteful and could cost you more in the long run. £80k 10 years ago has the spending power of around £56-£59k now. So, if you dont make enough money, your spending power is going down in real terms even if the statement says its staying the same. This means some risk is present with every option. Its just a case of making sure the right amount of risk is taken that you are happy with.

Could you advise me on isa's, savings accounts, bonds perhaps. As you can tell I am new to all this so I apologise if I sound a bit ignorant.

Whilst savings accounts are unregulated and we can post all sorts of interest rates possible. Investments are regulated and we cannot give investment advice on the forums as its in breach of board rules (which are based on FSA rules on protecting people who may act on advice posted and would have no consumer protection).

We can discuss things generically and give opinions or help guide you but we cannot advise you.

you have the right idea of putting some away and keeping some with easier access. ISAs would make sense to use as they are tax free. Where you would invest the ISAs would again depend on what degree of risk you are willing take. Low risk funds like corporate bonds, gilts, fixed interest, commericial property or cautious investment portfolios (these would include a small portion of stockmarket investments) could be considered. These same areas are also avaible in collective investments such as unit trusts and investment bonds.

I think you really need to consider risk in more detail and what sort of events you would need capital guarantees on (for example, you can get capital security on a number of investments on death - they pay the higher of the value or the investment. This may allow a proportion to be invested above your risk profile if you know it may be there until the end. Some even lock in growth periodically so you get the higher of the locked in value or real value).

Its hard not to go too technical in a simple forum post. I dont want to blow your mind with the possibilties but equally I dont want to say stick it in an account and earn interest on it which may or may not just about keep up with the cost of living. Sticking it all in the stockmarket wouldnt be right for you but sticking it all in a savings account wouldnt be right either. Its finding the balance in between and where you are.

EdInvestor

You could consider putting a part of the money in property funds - these are lower risk than the stockmarket and tend to pay a good dividend income. Corporate bond funds are in the same risk band, paying higher than cash.In both cases your capital can increase in value.

You could also consider lower risk share investing for a some of the money - using equity income funds which also pay out a good (tax free) income.

The secret to reducing risk is to split the money up so you don't have all your eggs in one basket.