Advice needed for inherited money investment please

BLB53

If it was me, I would certainly pay off the mortgage and CCs.
With part of the remaining inheritance, open a stocks & shares ISA (with e.g. Interactive Investor) and purchase a basket of higher yield FTSE 100 blue chip shares such as Glaxo, Br. American Tobacco, Centrica, M&S etc etc. These will provide a yield of around 5% and the dividends should be reinvested within the ISA.
From next April you can add another £10.6K to the ISA either with the remaining inheritance or from the money being saved on the mortgage. Build up a nice spread of shares from different sectors.
Over the years the effect of reinvesting all the dividends with see the ISA grow to a substantial amount.
At some point in the future you can start to withdraw the dividends as a sort of secondary 'pension' and of course, as its in the ISA, all the income is tax free (whereas your NHS and state pension will be taxable income)
Shares offer the best returns over the longer periods and will provide protection from inflation.
Good luck!

BLB

middlepuss

Pay off the CCs certainly - and in future always pay off your CC each month before interest is due.

Maybe pay off the mortgage, but it depends on its interest rate. High, pay it off. Low and fixed for many years, you could keep the mortgage until its rate rises and in the meantime invest the money if you can get a better rate than your mortgage rate. But is that likely? If not, pay off the mortgage and put what you're now paying monthly on the mortgage into a Personal Pension (PP) and/or an ISA. Inside the PP or ISA invest in a dull unit trust like an index tracker (HSBC has low charges) - this is much simpler than picking your own stocks and shares.

blue_cat_4

Sorry it's taken me so long to get back. You've all certainly given me a lot to think about. I was very surprised yesterday to return to work after some time off and my boss asked me if I wanted to increase my hours which after the advice on here I snapped her hand off! This will hopefully start me on my way to increasing my superannuation.
I've decided to try to save as much as possible using ISAs and I'm intrigued by the idea of buying shares but really wouldn't know how to go about it. Is it possible to have "ethical" shares,as I'm an old hippy at heart and my conscience wouldn't let me buy shares in British American Tobacco and the like? Also, this may be a stupid question, is there any history of blue chip companies going bust?
Thanks again for al your helpful advice

atush

There are 'ethical' funds out there, and green ones too. But they tend to lag behind and some have performed poorly.

Apart from RBS (and ENRON in the usa) I can't think of other high value companies that have gone bust (or nearly bust in RBSs case).

You could choose some funds then you go on their website and see who they hold and you can reject ones that hold BAT.

BLB53

Is it possible to have "ethical" shares,as I'm an old hippy at heart and my conscience wouldn't let me buy shares in British American Tobacco and the like? Also, this may be a stupid question, is there any history of blue chip companies going bust?

How about Vodafone, Tesco, Centrica (British Gas), Morrisons, M&S, Aviva, Prudential, Unilever. All top quality FTSE 100 companies with an average yield of around 5% and likely to rise faster than inflation over the years. If you don't need the dividends you can reinvest them to buy shares in other companies from time to time. I hope you'll agree none of these are likely to 'go bust' as long as we all need mobiles, food, gas etc
If you don't fancy buying the shares direct, buy 2 or 3 investment trusts in the UK income & Growth sector - they will hold a selection of quality higher dividend paying shares (but will include some you may regard as unethical)
Buy them within a stocks and shares ISA and all the income in years to come will be tax free.
All sounds a bit daunting at first but when you do your research online its all really very straight forward.
If you (or anyone else) want further info on how to do this, theres a guy called Stephen Bland who wrote an article about 10 years ago so google the name and perhaps high yield porfolio. He writes regularly for Motley Fool.
Good luck with whatever road you choose.

BLB

gadgetmind

I run a High Yield Portfolio myself *but* this is definitely an approach for a sophisticated investor who understands dividend yields, dividend cover, p/e ratios, etc., and (for investments that aren't yet in an ISA) how a combination of income from work, interest, savings, dividends and capital gains will interact, and for those who can digest and respond to any future corporate actions.

However, I do agree with your recommendation for Investment Trusts and they tend to outperforms funds (OEICs and UTs) despite the latter being in vogue and trendy.

BLB53

*but* this is definitely an approach for a sophisticated investor who understands dividend yields, dividend cover, p/e ratios, etc.,

I must say I don't regard myself as particularly 'sofisticated'. Most of the return on sharesover many years come from dividends and the growth of dividends. Therefore, if you're going to invest in stocks and shares, it makes sense to go for the higher yielding, solid blue chip shares - maybe a little boring to some. If you want a dependable income stream that is going to do better than cash deposits and bonds then this is the area to focus on.
Look at the FTSE 100 tables on Digital Look and select a range of companies with a dividend yield of over, say 4%.
Open your stock and shares isa account with an online broker like Interactive Investor, transfer you money and buy the shares - basically job done. As the dividends are credited to you a/c (usually every 6 months) leave to accumulate and when you have enough buy another share from your reserve list.
Another check in addition is to look up 2 or 3 of the better performing ITs on Trustnet e.g City of London, Edinburgh etc and make a note of their top 10 shares in the IT. If they match with the ones you have selected you won't go far wrong.
Obviously timing the purchase when prices are lower (like now) will give a better return but over 10 or more years the most important factor is to reinvest the dividends.
Buying Investment Trusts instead of shares is an alternative but the returns will be slightly lower due to the IT management charges of around 1%.
Personally, I do a combination of both - but as I say, I'm just an average Joe with a healthy scepticism of 'experts' and an ability to find information on the internet.
Who knows, if theres enough interest, I might start a regular 'diary' on the boards?

BLB

gadgetmind

BLB, your approach sounds much like mine, and I suspect we hold many of the same stocks, and that there is perhaps a lot of overlap between out IT holdings. However, many refuse to put more than 0.5% of their free time and 0.5% of their brain cells into managing their investments, hence the many layers of fat cats who lurk between investors and investments.