What to do with lump sum?

stars_bright

My OH and I are both 50. We both work although I might be out of work soon. We just about manage financially at the moment but with nothing to spare. We have just inherited some money and we are not sure what best to do with it. We plan to pay off a loan and give some to our children, we are thinking of replacing our car which is 10 years old. This will leave us with about £55,000. Originally we were going to put this into an ISA each and savings accounts. However, having read on here about interest rates not keeping up with inflation we are not sure now. There are a number of things we would like to do to our house which wouldn't really save us money but would make it nicer, e.g. new drive, replacement doors, bannisters etc, redecorating (I would rather have this done by a professional as we are not very good at DIY) and carpets throughout which would probably cost £15K - £20K. This seems a lot to spend but then we would enjoy the benefits for the rest if our lives as we don't plan to move house. We are also thinking of buying prepaid funeral plans. We are not sure what to do with the rest of the money apart from the best interest savins account we can find. Has anyone any advice?

zygurat789

stars_bright wrote: »

My OH and I are both 50. We both work although I might be out of work soon. We just about manage financially at the moment but with nothing to spare. We have just inherited some money and we are not sure what best to do with it. We plan to pay off a loan and give some to our children, we are thinking of replacing our car which is 10 years old. This will leave us with about £55,000. Originally we were going to put this into an ISA each and savings accounts. However, having read on here about interest rates not keeping up with inflation we are not sure now. There are a number of things we would like to do to our house which wouldn't really save us money but would make it nicer, e.g. new drive, replacement doors, bannisters etc, redecorating (I would rather have this done by a professional as we are not very good at DIY) and carpets throughout which would probably cost £15K - £20K. This seems a lot to spend but then we would enjoy the benefits for the rest if our lives as we don't plan to move house. We are also thinking of buying prepaid funeral plans. We are not sure what to do with the rest of the money apart from the best interest savins account we can find. Has anyone any advice?

If you are in pension schemes at work you can now afford to forgo the lump sum payment on retirement for a larger pension. This could make your retirement less of a financial worry.

See also the savings section on here and always remnember the old agage "You can't have your cake and eat it"

lilac_lady

I'd divide the money into three lots. One for a long term safety net, one for work on the house and one to enjoy. Life's too short to save everything.

chesky369

What kind of pensions do you both have?

stars_bright

Not particularly good ones but I feel that anything we put in at this stage would probably not make much difference

Savvy_Sue

If you don't plan to move, personally I'd put as much as you need to into making the house future proof. When you NEED such things done, you may not be up to it.

So, comfort and CONVENIENCE!

Couple of friends I know moved, and in their major changes they had doorways made wide enough to take wheelchairs, for example. They weren't and aren't at that stage, but they don't want the hassle later.

NAR

Definitely pay the loan off. Do you have any mortgage left, if so I would pay that off too, especially if you might lose your jobs.

stars_bright

Yes the loan is definitely to be paid off. Fortunately our mortgage is paid off already so thats good. I am liking the idea of using half to do up the house/pay off loans etc and keeping half for a rainy day

daffydukky

stars_bright wrote: »

Yes the loan is definitely to be paid off. Fortunately our mortgage is paid off already so thats good. I am liking the idea of using half to do up the house/pay off loans etc and keeping half for a rainy day

The part you keep for a rainy day then it may be worth putting some into a cash ISA for each of you and your partner at least then the miserly interest it does earn is tax free and you can withdraw it any time

Sewsosew

Money spent on improving your house is always a good thing. Maybe have an account for replacing household essentials when they break down. If you're not sure what to do with the rest then consider seeing an independant financial advisor.

hethmar

Enjoy the money now. You never know what is round the corner - not being a doom monger but things change in the twinkling of an eye - have fun with the money and get the improvements done to the house. Good luck