Inherited a large sum of money, what do I do next?

king_walnut

This is my first post so if I've got it in the wrong section then apologies.

I have recently inherited a fair bit of money, I have £130,000 sitting in my current account right now and I'm due to get about £160,000 more at the end of April.


My question is, what the hell do I do with it? As in, where's the best place to put it? I know it's totally wrong to have that sort of money just sitting dormant in a bank account and not gaining interest but I know basically nothing about money.

Can someone who knows what's what tell me what the best options for me would be? Thanks in advance.

xylophone

If you haven't already used your cash ISA allowance for this tax year then do so and put the rest of the £130000 into a couple of instant access accounts with the best interest you can find while you think about what to do?
http://www.moneysavingexpert.com/savings/safe-savings
http://moneyfacts.co.uk/compare/savings/accounts/search/

More information on your circumstances, aims, pension provision, etc would be needed before anyone could make any informed suggestions.

king_walnut

I'm 22 years old and a student due to finish uni in June. My aims are to go into property development eventually but I don't want to be rushing into anything until I'm fully informed on what I'm doing. I've not thought about a pension either ..

jamesd

To start, fund investments could generate perhaps 6% of the capital as income, so you potentially have over £17,000 a year of income available to you.

king_walnut

I haven't got a clue what to do in the way of fund investments. I am a serious novice here when it comes to money .. treat me like I'm completely stupid

opinions4u

Okay.

1) Read up about Financial Services Compensation Scheme (FSCS).

2) Spread the money around a range of easy access savings accounts paying at least 2.75% while you think about your longer term options. Birmingham Midshires, ING, Tesco etc would all be good starting points.

3) Think about your short term needs: What would make life easier or cheaper for you now (e.g. car) and what have you always wanted to do (e.g. special holiday)?

4) Equally, think about how you're not going to waste this fantastic opportunity to set yourself up for life. Where are you going to live in the future? How much do you want to set aside for your home (as opposed to invest in a business or investments).

5) Find an IFA via www.unbiased.co.uk and talk to them / listen to what they have to say. If you want to use it all to set yourself up in business, you might not end up investing with them, but it will be educational at the very least.

Come back here when you've had a bit more thinking time and let us know what direction you're intending to take.

blossomhill_2

:rotfl:Are you single? You are obviously very attractive ...! :rotfl:

jamesd

OK, with no clue about fund investments, start by working out what sort of thing you want to do with the money. I've given you some idea of the potential income. You could say decide what income you need then consider using the remaining capital beyond the amount required for that as part of your possible property business.

Once you've done that you may find it useful to use unbiased.co.uk or better personal recommendation to find an IFA who can advise you about fund investments for income, growth or both. As you go along you could then learn more about investing if you want to and perhaps ultimately take over it yourself.

Flibbertygibbet

Before you do anything else, I would open a Santander esaver at 3.1% and get all of it earning interest while you think, but you have instant access. (Nationwide do a similar account at 3.12 but you can only access once) that will take the pressure off and buy some thinking time.Do this NOW.Dont keep it in a current account earning diddly squat.

psychic_teabag

Flibbertygibbet wrote: »

Before you do anything else, I would open a Santander esaver at 3.1% and get all of it earning interest while you think, but you have instant access. .. Do this NOW.

Better to split the money across at least two different institutions, to stay within the compensation limits. (And in case Santander screw up.)

It may take time to get accounts opened and the money transferred : you might be able to open a savings account with your existing bank quickly (esp. if you have online banking), which would at least be better than your current account.

Just to focus you : 3% interest on £130k is about £10 per day. Don't rush into anything, but don't waste too much time either...

middlepuss

If you manage your fortune wisely you should end up very well off. In which case putting the max you can into a Stocks and Shares ISA each year is worth doing. That money should more than keep up with inflation and the income from ISAs is tax free. Very useful if your income in the future gets into the 40% bracket.

You can put almost £11,000 into ISAs every year. So in 10 years time that's well over £100K from which the income is tax free.

A SIPP is also worth considering and if and when you become a 40% taxpayer is something that you really should do. Disadvantage of SIPP vs ISA is you can't get your money out of a SIPP. You can take the whole lot out of an ISA without tax penalty, eg to buy property at some future date.

It takes about 5 minutes to set up a S&S ISA or SIPP online, so there's nothing difficult or complicated about the process. Deciding what to invest in within the ISA and SIPP is what requires the thought.