What to do with inheritance money?

JuniorSherlock

qpop wrote: »

A bigger home is not necessarily the investment you think it is, for reasons I touched on in a previous post.

Along with a bigger home come higher heating costs, more council tax to pay, etc.etc.

It may be what you want to do with it, but it is a serious folly to consider it retirement planning.

People don't like downsizing at retirement, it's a huge hassle and an expensive thing to do. What I think is more common is people living in poverty to support the running of the house they've grown to love.

Whatever you decide to spend this £65k on (and from the type of language you use in your posts I would hazard a guess that you've already decided on what you want to do with it, and were hoping for some general support for your ideas) it has to be pointed out that if you continue to make no retirement plans you will spend your retirement in poverty.

It really is as simple as that.

If, in the back of your mind (and you won't be the only person in the world), you think "oh, no, it's ok as FIL/MIL will leave us a huge wad of inheritance" - retirement planning based on inheritance is not sensible. Families fall out, odd provisions are made in wills, wills are disputed, people end up spending all of their wealth on care/giving it away to a home for cats. You may think "but that'll never happen in our situation." - Do you think anybody who has experienced it thought it would happen to them?

Starting a pension isn't the only form of retirement planning. You gain some flexibility by using Stocks and Shares ISAs (although you have to fight the temptation to spend your retirement nest-egg) - particularly if you are bot basic rate tax payers, ISAs are arguably a better option if you have some self-restraint and will receive no company contributions.

If you *do* open a personal pension you will receive 20% tax relief on any contributions you make. If you have no interest in investments then you could do worse than open a stakeholder style product with any of the large insurance companies - they're expensive for what they provide but they're simple and easy to manage.

If you want to buy a bigger house and it really is a sensible thing to do, then do that - it's your (husbands) money to do with what you wish. But make some retirement plans as well - what's the point of living in a nice house in a nice area, and finding yourself unable to afford to live in it when you decide to retire?

We haven't decided what to do with it which is why we are just floating ideas around on here to see what others, who are much more financially savvy than we are, think.

I have said from my very first post, that forging some sort of pension plan is my main priority.

Posters seem to have latched onto us buying a new car and splurging money on a holiday. Can I just say again that we will set aside around £3k for a decent, not new, car as we do travel a lot and around £500 for a camping holiday in France.

We will not be using this money to fund any extravagant lifestyle. We do manage on the salaries we have and we don't have any debts. Yes we sometimes go without luxuries but that's no big deal to us and one small holiday a year is absolutely find. We don't feel any sort of entitlement to have what everyone else has - after all that sort of attitude led to the recession in the first place did it not?

I do take your point about not investing in bricks and mortar and we have decided that, for the foreseeable future at least, we will stay here. It would be nice to reduce the mortgage to 10 years, so once our fixed rate term is up in 2013 we might do that, but the rest of the money most certainly will be going into some kind of pension/investment or will stay where it is to provide us with some sort of secure future when we retire. If we get anything else on top of that, then that's a bonus but we won't rely on it.

It's certainly helped reading all the thoughts on this and has swayed us more towards investment for the future rather than upgrading to a larger house or paying too much off the mortgage.

Mojisola

JuniorSherlock wrote: »

What we have been doing instead is trying to top up our ISAs and give any spare into the children's savings acccounts.

If your monthly money is very tight, I would reconsider the children's savings. You are careful with money. How would you feel if your children withdrew all their savings and blew them in a mad spending spree as soon as they were 18?

I would keep the savings in my name.

JuniorSherlock

Mojisola wrote: »

If your monthly money is very tight, I would reconsider the children's savings. You are careful with money. How would you feel if your children withdrew all their savings and blew them in a mad spending spree as soon as they were 18?

I would keep the savings in my name.

That is a good point. At the moment they both have Nationwide accounts under their names and the interest is good as they are children's savings accounts. I would like however to open a trust fund for them both (my son already has one that I've moved over to the Nationwide) but my husband and I disagree about when to allow access. I would wait until they both reach 21 but my husband argues that they may need access sooner in case of pregnancy/marriage/travel/University. So ideally we'd like a flexible Trust Fund if they are available.

middlepuss

OP, you say "I don't know what bonds or shares the money is tied up in at the moment, but if they are well performing then we will leave them there - as far as I am aware the bonds will simply be transferred into our names. (Well my husband's) We will take some out to top up ISAs"

Taking money out of stocks & shares and shifting it into a cash ISA or cash savings account for the children would probably not be a good idea.

When you find out what the share and bond investments are, the folks on here will be happy to give an opinion on whether they comprise a sensible portfolio for your retirement savings. "Bonds" can mean many different things - some may be good investments, but some "bonds" offered by High Street banks are abysmal investments.

For your pension, and for children's long term savings, cash will lose its value - gradually but inexorably. For your pension pot you need a carefully constructed pot of money in SIPPs and ISAs which is invested in things that will do better than cash over the medium to long term.

relaxtwotribes

JS, I cannot see that you have mentioned the ages of your children, But if they are under 14 years old I would take the family to Disneyworld, Florida, at Easter 2013. Stay in a moderate-range Disneyworld hotel. Although such hotels might seem expensive, the benefits of staying on-site massively outweigh staying off-site. Get a car in the package.

Budget about £7,500 for 2 weeks. Take FIL with you.

You may think this suggestion expensive compared with a £500 camping holiday in France, but believe me there is no comparison between the two at all. Search online and look at travel forums to get a better idea, then get 'The Unofficial Guide to Disneyworld' from your local library. If you decide to go, buy a copy and study it intensely.

Out of £65k you will not miss £7.5k, but what you will experience is the most fantastic holiday that a young family can have.

All IMHO of course (knowing my suggestion will draw ridicule and howls).

jamesd

Your husband is right about possible earlier uses for the money but one of the most valuable things that you could do is provide the money for a deposit on their first property or part of it. University costs are loan funded and that's a fair deal but accumulating a lump sum for a deposit can be very tough. Getting them out of funding a property for a landlord and into one for themselves is often a very good move.

atush

relaxtwotribes wrote: »

JS, I cannot see that you have mentioned the ages of your children, But if they are under 14 years old I would take the family to Disneyworld, Florida, at Easter 2013. Stay in a moderate-range Disneyworld hotel. Although such hotels might seem expensive, the benefits of staying on-site massively outweigh staying off-site. Get a car in the package.

Budget about £7,500 for 2 weeks. Take FIL with you.

You may think this suggestion expensive compared with a £500 camping holiday in France, but believe me there is no comparison between the two at all. Search online and look at travel forums to get a better idea, then get 'The Unofficial Guide to Disneyworld' from your local library. If you decide to go, buy a copy and study it intensely.

Out of £65k you will not miss £7.5k, but what you will experience is the most fantastic holiday that a young family can have.

All IMHO of course (knowing my suggestion will draw ridicule and howls).

AS it probably should do. Advising someone to p*ss it away on an expensive package holiday is just irresponsible. And you can do a FL holiday a whole lot cheaper than 7500 quid if you know your stuff. you could spend just over 3000 on flights and a condo/villa anc car. Add in tickets and it will still be far less than stying in a Disney hotel for 2 weeks.:eek:

why not suggest a round the world cruise and blow the lot? No wonder if people think like you do that they have no savings, high debts and retire poor.

JuniorSherlock

FIL would rather poke his eyes out with a cattle prod than visit Disneyworld - as would we! Sorry, it's a lovely suggestion but just not our style and I'm not sure the kids would like it either as they don't watch Disney (no Sky see?). We've asked and they want a camping holiday in France with Huttopia - luxury camping. Cheap during Autumn half term

PIL - there are two of them, rarely travel. PIL will be 80 this year and they are more than happy going for long walks and visiting their children. The furthest they've travelled is Rome and apparently PIL hated it. We hope they will come to see us as they've only visited once when we first moved in and the house was a mess, but it's too much to ask them to drive 200 miles down here so we see them as often as we can.

I shall no doubt be asking for further advice once we know what the money is tied up in and won't do anything until then.

relaxtwotribes

OK, JS, but let me refer you back to the very first sentence of the original post. Now, ask yourself if FIL is giving the money so you can squirrel it away to use in 25 years time. After all, if he has it in bonds and investments now, he could simply keep it that way. Could it be that he would rather see you enjoy the money whilst he is alive? And, if I might be so bold, I doubt that he is giving you his last penny, so there is probably a fair bit coming your OH's way sometime in the future.

margaretclare

FIL would rather poke his eyes out with a cattle prod than visit Disneyworld - as would we! Sorry, it's a lovely suggestion but just not our style and I'm not sure the kids would like it either as they don't watch Disney (no Sky see?)

I had to smile at this one. I had the opportunity of visiting a relative who lives in Florida and many of the people there were amazed that in the week I was there I did NOT want to visit any of the Disney sites. It would have been easy to do so because she lives close by. What I really wanted to do while I was there was to visit the Space Centre at Cape Canaveral, and we did that. But I wouldn't have bothered to fly the Atlantic to do it.