Inheritance, what to do with it?

SilverSix

Hi guys,

New to the forum so appologies as I'm aware this has probaly been asked a million times! I'm currently not upto date with the financial climate and am in a bit of bother about what to do.

Background:

I'm 20 years old and in my final year of univeristy. I'll be moving back home in June and looking for full time employment. Whilst I'll have a degree in Furniture a career amongst the fitness industry is better suited to me as it's something I've become deeply passionate about over the last 3 years. I've obtained a Level 2 (Basic) gym instructor qualifcation and will be starting a Level 3 (Advanced) on the 6th of March. So hopefully come June I can begin work at a fitness centre whilst obtaining Personal Training and Nutritional qualifications. Tried to hit the ground running in this aspect.

I'll be living at home paying not a great deal for house keeping. Once I've a steady job and some prospects in around 2 years time (hopefully) I'll be moving out and buying my first house with a small-ish mortgage.

Unfortunatley my father died of cancer last August and has left me circa £150-170,000. Possibly more depending on the sale of the house and a few other valuable items. I've around £100,000 (need to confirm) of that coming at the end of this month. Infact we have it now but my uncle is holding onto it until a few other aspects are sorted into regards with probate.

Right enough about me.

I've decided that it's sensible to tie 90-95% of this money up into a bond for 2 years as I won't be needing it until around this time realistically.

I've been told to wait until the start of the new tax year before doing anything as new deals will probaly be released. I've seen interest rates on fixed 2 year bonds rise from 3.9% to 4.25% over the last week or two.

I just discovered Collins & Bone, but have never heard of them, nor do I really understand what they're about? Property investment with a secured captial guarenteed return of 8%?

I can't afford nor would I want to loose any of this money so am looking for zero risk, if there is such a thing.

If people would be so kind as to use laymans terms for the meanwhile to save me from confusement!:)

Any help would be greatly appreciated,

BennyC

Newbie2saving

BennyC, I'm really sorry for your loss.

I've never heard of Collins & Bone, but surely if a company was offering 8-10% guaranteed capital over 1-3yrs investment everyone would be doing it so there must be some risk. I wouldn't be touching it with my money (and I am in a similar position to you after the recent loss of my husband). The advice on the board is good, take your time with your decisions, it could be a costly mistake.

I've sought advice from an IFA, with the kind of money you are taking about it maybe wise to consider.

Good luck!

SilverSix

Newbie2saving wrote: »

BennyC, I'm really sorry for your loss.

I've never heard of Collins & Bone, but surely if a company was offering 8-10% guaranteed capital over 1-3yrs investment everyone would be doing it so there must be some risk. I wouldn't be touching it with my money (and I am in a similar position to you after the recent loss of my husband). The advice on the board is good, take your time with your decisions, it could be a costly mistake.

I've sought advice from an IFA, with the kind of money you are taking about it maybe wise to consider.

Good luck!

Sorry to hear about your loss

Thanks for the advice. I do plan on speaking to my mothers IFA in the near future.

DiggerUK

Benny C,
It will be a bitter sweet time for you, my sympathies.
Completing your training should be prioritised, it will give you a good focus and keep you grounded.

As to your inheritance, I would suggest you put it somewhere safe and secure for 2/3 years, complete your studies, and read up here and elsewhere so you get clued up on finance. It ain't rocket science, and you will find out that you have more academic qualifications than an IFA, who, in my opinion, would be an expensive waste of your inheritance.

Cash ISA should be your first port of call, and then top up in April when new tax year starts. (See ISA boards on this forum)
NSI Index Linked for 3 years.
You may also want to go with S&S ISA's now and in April. I would recommend you concentrate on paper gold, gold miners and associated companies in your portfolio. Others here will go with a wider spread of commodities.
Premium Bonds for rainy day funds and a bit of fun.
You won't get many round here recommending more than a one year bond, things turn on a sixpence these days. Just pick the best paying instant access A/C's while you look around for now. Stay under 50K per provider.
Anything else should be put in good products as they appear, these boards are notorious for being first of the mark with new savings products.

Best of fortune.

JA1000

This may not be on your radar as something to do, but I think you will be hard pushed to find anyone on this forum who doesn't believe house prices are low. Have you thought of this, I am not talking about blowing the whole lot as you will need to run it and live if you don't run it out.

Sounds to me like you will be going down the personal trainer route, you may look at having a set up in which to run your own business, this is more risky and you will need to look at this carefully.

To have a property at your age with not mortgage will set you up for life, no mortgage interest running into £100,000's and what every happens with work you will always have a roof over your head.

Newbie2saving

BennyC wrote: »

Sorry to hear about your loss

Thanks for the advice. I do plan on speaking to my mothers IFA in the near future.

PS. If you are thinking about reading up on investments etc for the long run rather than just tying money up for 2-3yrs a couple of good books I bought (suggested by another MSE member) are Financial Times guide to investing and smarter investing by Tim Hale. Before I was in this situation my knowledge was rather limited, it still is, but when I get any free time I try and do as much research as possible. No one cares about your 'pot' as much as you do!

This site has recommendations re the best options for a fixed rate and you can have a look on money comparison sites to see where the best deals are once you receive the money (or ask on here at that time). You may want to consider the access issues and what you would be prepared to fix your money for before deciding to allow you to move onto the property ladder as and when.

welshmoneylover

Sorry to hear about your loss,

As for your inheritance please please do not take the advice of the nearest financial adviser you have found. There are some dodgy ones out there who may take advantage of your youth.

Just take a few minutes to come back to this board to ask for people's opinions on whatever you wish to do.

Please be sensible with this amount of money, it's an opportunity to give yourself some financial security.

Also, please be wary of any future partner who may see £ in front of their eyes rather than love x

Rollinghome

Sorry to here of your loss Benny, that's a terrible thing to be hit with when you're still getting through your education.

At your age you need to be very careful not to tie yourself into anything that closes down your future options. Lots of opportunities will come your way in the next few years and you may want that money to buy a house, set up your own business, or whatever. Be sure to keep flexible and avoid any long-term investment until you are sure of the years ahead. That would certainly include that property investment. Anything that pays above the return on cash involves risk. Fixed rate savings for a year or two should be fine.

You could also look at www.candidmoney.com which is run by Justin Modray (an investment expert who often comments in the FT and quality newspapers) and who will personally answer questions. There are also tutorials and quizzes there to see how much you know.

G_M

1) Don't wait till April - take advantage of this year's tax-free allowance via an ISA. Then either top it up in April or if there's a better one available, open a 2nd.
2) 'Bonds' can be confusing. The same word can describe a fixed rate savings account at a bank (sounds like what you're describing: around 4%) AND a form of long-term investment in the stock markets. This latter has risk of course.
3) To minimise risk, stick with savings account (including cash ISA) and max £50K with any one institution ('institution' can be confusing as they all keep merging - see here)
4) Don't tie up too long (one year? Two?) as rates will rise sometime, but not if you've fixed for 5 years!
5) Consider some of it in the stock market perhaps but a) yes there's risk and b) for this you need to think 4 years plus. Maybe not for you...
6) property - big step, it's long-term & ties you to a location. But it IS a pretty good time to buy as prices are low and will rise...... sometime.

7) Collins and Bone. Beware. At best it is a risky investment. At worst it is a scam. I do not know. However there have been horror stories on here recently about property firms similar to this using your 'investment' to buy 'assets' (property) for rental income, but the price paid was way over the real value of the property. I am not saying this is true of C&B but even if not it clearly does not align with your stated aim: "so am looking for zero risk"

Primrose

One thing to bear in mind. If you're starting off working at a fitness centre, salaries can be quite low and if you're planning to buy a house, you will not know for some time what your overall outgoings are likely to be.

Don't be too tempted to tie up all your inheritance in longer term savings. If you end up being self employed in the fitness industry you could have periods of very low and erratic income so make sure that you keep a minimum of 6 months expenditure somewhere in an easy access account.

A property investment company doesn't sound like the right sort of financial advisor you need. If you decide to go down the independent financial advisor route, meet with at least a couple of them and compare their suggestions. Don't be in a hurry to to do anything hasty. Remember, this is your Dad's last legacy to you. He would want it to last you for a lifetime, so take things steady and don't get tied up with anything you don't understand.

SilverSix

Thanks for all the replies & advice. Really helpful.

I've got my Personal Trainer modules & a few other qualifications booked which will all be finished by August.

I'm hoping/expecting to begin on a salary of around £15-16K which would be the higher end for a 'Gym Instructor'. Personal Training has alot more money but alot of the PT positions tend to be 'self employed' paying rent to an establishment for facility use per month. Theres reasonable money in it, but for a year or two I want some guarenteed income & to build some experience.

I recieve the inheritance on my 21st birthday (5th of May), I had forgotten about this, but it's fine as it gives me more time to plan what I intend to do. The sale of the house will be sooner than we expected as the mortgage company want it repayed which is forcing my dads ex to sell the house. Something she was going to have to do anyway as she can't afford to live there on a single income.

I'll steer clear of C&B!

I think I can afford to tie 90% of it away for 18-24 months and keep the other 10% in a high interest easily accesible account for emergencies if there are any. Living at home will be the best option while I get my feet on the ground and career rolling and it saves me ****ing away money renting a 'not so nice' flat or room somewhere.

I'll be sure to let you all know what I intend to do/have done as and when I know.

Thanks again,

BennyC