what to do with substantial inheritance?

destiny43

Hi

I am just about to inherit a few hundred thousand and am after some advice please.

In brief, my personal circumstances are :
Mortgage paid off, so no debts
Cash (inc ISA) savings of > £100k
Teenage children, who are receiving their own inheritances - to cover university and house deposit - so not worried about them
43 years old

Of the inheritance, I would like about half to be available in 4 years time to move to a larger house; and the rest I want to invest for the long term, so am looking for capital growth.

I have already taken advice from 2 advisers, one from a bank, the other from a stockbroker, but, having read up on this forum, now realise that I might be better to consult someone who is not tied into any particular products and pay them on a fixed fee basis. The trouble is that I don't know anyone and am wary of just picking someone off the internet, though I think that it is what I shall have to do.

I have little knowledge of unit trusts etc, and have been surfing the net, but find it all a bit of a maze. I am willing to learn though. I am looking for some ideas on strategy, asset allocation etc before I speak to an IFA, so that I can see if what they say makes sense!

Apologies for the long post, and grateful for any suggestions.

lisyloo

What's you tax rate? 20% 40% 0%?
Do you have a legla spouse? What's their tax rate?
Is your pension fully funded.
For tax reasons it coul make sense to put some in there.

NSI linked savings certificates are worth consideration and might not get mentioned by advisors as they won't get commission.
They are totally safe, tax free and pay RPI+1%.
RPI is currently 5.3% but you would get future rate which are unknown.
There are 3 and 5 years versions but you can access money without penalty after 12 months.
Each person can invest £15K per issue (I think there are about 4 issues per year). But I think that £15K for 3 year AND £15K for 5 year.
This might be a good home for your property money as really 4 years may be too short for stocks & shares.

Capital growth I'd go for stocks and shares.

I don't know your tax rates and I am not a financial advisor, but I would go for a combination of pension, Stock & shares and NSI.

zzzLazyDaisy

You need to seek advice from an independent financial advisor.

bike2work

From personal experiance I'd stick to gut instinct and do all the paper-work. The financial advisors will advise you down to the last pound - and you are the one who carries the can. They appear to be able to always use the 'double edged sword' of heads they win and tails you loose!
Good luck.

JamesU

destiny43 wrote: »

Hi

I have already taken advice from 2 advisers, one from a bank, the other from a stockbroker, but, having read up on this forum, now realise that I might be better to consult someone who is not tied into any particular products and pay them on a fixed fee basis. The trouble is that I don't know anyone and am wary of just picking someone off the internet, though I think that it is what I shall have to do.

I have little knowledge of unit trusts etc, and have been surfing the net, but find it all a bit of a maze. I am willing to learn though. I am looking for some ideas on strategy, asset allocation etc before I speak to an IFA, so that I can see if what they say makes sense!

Agree regarding banks (especially private client at Lloyds and Barclays) and your comments on independent IFA, non-tied, fixed fee. If not known already, have a look at unbiased in link below to find local IFAs (untick box in question 2 to get full range).

The book in link below gives an excellent overview, including initial asset allocation which is important. Section on investment costs also crucial and a good IFA should be able to justify reasoning behind these costs and the choices made. It also has a detailed chapter on decisions on when to use IFAs for implimentation and includes a detailed checklist on criteria to consider when choosing a suitable IFA.

http://www.unbiased.co.uk/find-an-independent-financial-adviser/

http://www.amazon.co.uk/Smarter-Investing-Simpler-Decisions-Results/dp/0273722077/ref=sr_1_1?ie=UTF8&s=books&qid=1275126707&sr=8-1


Hope this helps and good luck with this.


JamesU

amcluesent

Certainly don't to anything until after the Budget when CGT changes will become clearer. If the rumours are true, then 'business angel' investing will be encouraged.

As you need to protect capital for a house purchase, then NS&I index linked for 3 years. I'd also take a spread-bed/contract for difference on house prices jumping up in that time frame.

As for the other half, given that you're already loaded (relatively speaking) at 43, then a moderate risk investing approach would be a SIPP containing low cost ETFs for BRIC, 'green' energy, oil, food/agribusiness then 5% of portfolio in gold bullion, Zopa etc.

destiny43

Thanks everyone for your advice.

Just to pick up on a few responses :

Lisyloo - I am a higher rate taxpayer, my wife basic rate. I had already decided that most, if not all, of the inheritance will need to be in her name. Also aware of SIPPs - but a little reluctant, as I already have quite a good company pension (and also contribute 10% of my salary into that). But will consider further.

Good idea about NSI - not mentioned by either of the advisers I have spoken to so far!

James, thanks. Have already had a look on the unbiased website - but still reluctant to choose an IFA over the internet - so I want to build up my own ideas first. Thanks for the advice re the book - looks very useful - will go on Amazon and buy it.

Amcluesent - definitely waiting for the budget. Not getting the money until mid-June anyway.

Any other ideas gratefully received - just off to Amazon to buy that book. When I've read it, I might be able to understand Amclusent's last sentence!