Inheritance Saving

PatchHFX

Hello all,

I'm posting for another (Mum!) and would like your advice on where best to put an inheritance.

She is currently in debt and will be getting through an inheritance sometime this year, we don't know how much it will be yet but looking around the £5000 mark. Now, she has debts owing of around £18k and i was looking around at the best way to implement this inheritance to help her debt probs. I think that it would be best this way, to pay off her debt with the interest, even if it is slowly, because at the enmd of her debt there will be a nice lump sum waiting for her, and she can take us all on holiday, or, god willing, put a deposit on a house!

I will basically be the trustee for this money, i.e. im finding the best way to either invest it or if its not viable, tell her to pay off some of her debts with it!

But, i would prefer to put it in a savings account that pays monthly interest and either be able to pay her debt minimum repayments a month or at least help towards it. Her debt repayments a month are currently £272 but may change.

I have looked on moneysupermarket and i dont know if im reading too much into this (i think im missing something because the interest a month seems very high), but there is a savings account that citi bank do, the flexible saver account, which is currently paying 4.16% net per month, with a balance of £5000 i will be getting a total of £208 per month correct? (This seems a bit of a money sink for banks, because withing 6 months the balance will have gained a 1/5 of its original investment without any money being paid in) Granted this is only for 6 months, then it will drop to 3.61% (which is £180.50 a month). I have no qualms about moving the balance somewhere else after the bonus is up (i.e AKBANK's AK Savings Account which pays 3.87%). I don't know if it may be a good idea to only take half the interest out and start to get a bigger balance on the savings so after a time the interest will be in a better position to pay more of the debt repayments ! (I'm basically heading for a happy medium between paying off the debt slowly and still getting a bit savings wise)

What is needed is free and unlimited withdrawals and able to open by under 21 year olds (i'm 19). Then the interest will be transferred to my current account and i will give the money as cash to mum. Basically she doesn't want anyone to know how much shes getting, so its not going to be paid into her current account with the natwest as everyone will start demanding for something probably!

The only thing i'm a bit worried about is how we can work this, can she pass all of the inheritance over to me without having to deposit it anywhere?

Any advice is appreciated

Regards,

Patrick

cheerfulcat

Hi, Patrick,

Your mum's best bet is to use the money to pay off some of her debt. £5000 at 4.16 net pays £208 per year, not per month - interest rates as quoted are annual.

PatchHFX

I thought as much, don't know where that paying per month thing came from im at work so guess im a bit disorientated or something ^^

cheerfulcat

Just wishful thinking maybe...:)

oldfella

pay off as much of the debt as you can - its costing a lot more than any interest you can earn in a savings account

EdInvestor

Pay off the debts with the highest interest rate first.

Then the next highest interest rate, etc, etc.