What would you do with £45k?

JuniorSherlock

My parents-in-law have generously decided to give us some inheritance money now as they want us to benefit from it now and not once they die. So I have a couple of questions if that's ok?

Firstly, who do we need to tell about this money? I realise it's not eligible for inheritance tax as the amount is too small, but we were claiming child tax credit and I presume this will mean that we will no longer be eligible for this? We are not claiming any other benefits but presumably we would need to declare this sum anyway?

Secondly, do we need the services of an independent financial advisor? We have bought an ex-council house and my husband wants to put a hefty sum into the mortgage and perhaps home improvements, however my argument is that there will always be a ceiling price on council houses so I don't want to spend too much on the place. We currently have no pension provision but would it wiser to use the money to pay off some of the mortgage rather than invest it in some kind of pension? Would we not need to pay into a pension scheme weekly/monthly? Is there any private scheme into which the government also pays some or is that now not the case?

I personally would like some provision for when (if) we retire as it's a huge worry to me. My husband wants to pay off some of the mortgage so could there be a compromise in paying off the mortgage and using the money we would have paid every month for the mortgage into a pension scheme? I am 40 and my husband is 46.

Any advice would be welcomed.

jennifernil

If your mortgage rate is higher than you can get on savings, then paying off the mortgage makes sense. But it is also sensible to have some instant access savings, do you have ISAs?

Pension provision is sensible, do your employers have a pension scheme?

cloud_dog

JuniorSherlock wrote: »

My parents-in-law have generously decided to give us some inheritance money now as they want us to benefit from it now and not once they die. So I have a couple of questions if that's ok?

Firstly, who do we need to tell about this money?

From what you've said here, no one.

JuniorSherlock wrote: »

I realise it's not eligible for inheritance tax as the amount is too small

Inheritance tax is based on your parent total assets at the time of death. You are allowed to gift as much as you want but if they (assuming both are still alive) were to die within 7 years of the gift the amount would be considered as part of the estate to calculate any inheritance tax (threshold I think is £325k per person). If both are alive and only one parent dies then a lot of the assets can pass directly to the surviving spouse being exempt from IHT.

JuniorSherlock wrote: »

....., but we were claiming child tax credit and I presume this will mean that we will no longer be eligible for this?

Child Tax Credit is income based.

JuniorSherlock wrote: »

We are not claiming any other benefits but presumably we would need to declare this sum anyway?

Correct, although if you just put this in a savings account the interest would count towards your total income for CTC purposes.

JuniorSherlock wrote: »

Secondly, do we need the services of an independent financial advisor?

Depends on what you want to do but with the amount in question and the info you have provided I would say no.

JuniorSherlock wrote: »

We have bought an ex-council house and my husband wants to put a hefty sum into the mortgage and perhaps home improvements, however my argument is that there will always be a ceiling price on council houses so I don't want to spend too much on the place.

Improving the council house would be a good idea but as you rightly point out there will be a limit where the additional expense will not be recouped when selling.

JuniorSherlock wrote: »

We currently have no pension provision but would it wiser to use the money to pay off some of the mortgage rather than invest it in some kind of pension?

Ouch! I think the pension experts will be along in a mo but this is a huge hole in your provisions. I think this is the area that needs to be looked at with most urgency based on provided ages.

Although reducing the mortgage is also a good idea.

Another thing to consider is if your parents had any particular thoughts on what you did with it. Because, putting it in a pension / paying of some mortgage is probably the most sensible thing to do but perhaps they were thinking you could use it to enjoy life, i.e. holiday of a lifetime etc.

JuniorSherlock wrote: »

Would we not need to pay into a pension scheme weekly/monthly? Is there any private scheme into which the government also pays some or is that now not the case?

You can pay lump sum, monthly, adhoc in to a pension scheme. Most people find it easier to pay monthly any that is why most providers do it this way but they will accept one off payments etc.

JuniorSherlock wrote: »

I personally would like some provision for when (if) we retire as it's a huge worry to me. My husband wants to pay off some of the mortgage so could there be a compromise in paying off the mortgage and using the money we would have paid every month for the mortgage into a pension scheme? I am 40 and my husband is 46.

I think the above two are sensible options.

grey_gym_sock

there's usually a limit to how much home improvements increase the property value, whether or not it's an ex-council house. i'd generally only go for improvements that you will enjoy while you're living there.

JuniorSherlock

Thanks for replies.
The inheritance is unlikely to top £325k upon the in-laws deaths so I think we are safe there.

My husband's first company did used to have a pension scheme that the government paid into as well but once the government stopped paying in, the company dropped the scheme. He hasn't paid into it since (he left the company and we've travelled a bit) but that amount is still there. I will make sure he makes enquiries about paying some amount into it still if it's prudent to do so, otherwise could we move the amount into another scheme?

I don't have a pension because I'm self employed. We have just enough money each month to pay the mortgage and bills and I guess the pension was one of those things we put to one side, thinking we'd look into it once we had enough money each month to be able to set some aside. I know now that was foolish and any amount no matter how small would have been better than nothing.

I think that we need to look into a good pension scheme (any recommendations?) and start paying a monthly amount into this. It does need to be secure however and worth doing considering our ages.

The home improvements we are looking at will affect the overall value of the house, i.e. a front porch, extending the garden and perhaps a small conservatory so I don't mind these and we are prepared to buy the raw materials and do the work ourselves (apart from the conservatory).

We do have ISAs and will top these up as well as put some money into our children's accounts (we pay £5pw into both of these).

A family holiday is on the cards (just a camping trip to France, nothing special) but we don't want to splash out. In this day and age £45k doesn't go far and we want to invest wisely for the future so that we can at least have some kind of retirement to look forward to.

So, in order to choose a suitable pension scheme, where should we start do you think?

adam67

Simple, clear your debts and buy gold. Sit on it for a few years then enjoy the returns.

grey_gym_sock

adam67 wrote: »

Simple, clear your debts and buy gold. Sit on it for a few years then enjoy the returns.

the returns: a stiff bottom?

atush

Generallyt speaking what i'd do with 45K (ie invest it) has nothing to do with what you should do. So some general thoughts that may or may not be pertinent to your situation but answer the Q:

1- pay off any non mtg debt. Save monthly the amt you used to pay serving this debt.
2-save some in easy access if you don't already have an emergency fund. Use a cash ISA if you pay tax.
3-look at your pension arrangements and open one if you haven't got one. 'If you do, consider an extra lump sum investment. Then look at equity investments incl S&S isas and investment trusts
4- pay off some of your mtg if you have one and are paying more than 3% interest. Do not pay off your mtg if you are on a cheap tracker paying 1%
5-consider a small holiday with some of it, unless you have had to use a lot of it to pay off debt. If so, use the money saved from servicing the now paid off debt to fund a holiday next and future years.

atush

adam67 wrote: »

Simple, clear your debts and buy gold. Sit on it for a few years then enjoy the returns.

Of course if you had bought gold near it's peak a few months back you be sitting on a sizeable loss. As amy rampers here were suggesting newbies to do (shame on you)

So don't ever invest more than 10% of your assets in gold unless you are sitting on a huge pile of money other asset classes.

atush

JuniorSherlock wrote: »

Thanks for replies.
The inheritance is unlikely to top £325k upon the in-laws deaths so I think we are safe there.

My husband's first company did used to have a pension scheme that the government paid into as well but once the government stopped paying in, the company dropped the scheme. He hasn't paid into it since (he left the company and we've travelled a bit) but that amount is still there. I will make sure he makes enquiries about paying some amount into it still if it's prudent to do so, otherwise could we move the amount into another scheme?

I don't have a pension because I'm self employed. We have just enough money each month to pay the mortgage and bills and I guess the pension was one of those things we put to one side, thinking we'd look into it once we had enough money each month to be able to set some aside. I know now that was foolish and any amount no matter how small would have been better than nothing.

I think that we need to look into a good pension scheme (any recommendations?) and start paying a monthly amount into this. It does need to be secure however and worth doing considering our ages.

The home improvements we are looking at will affect the overall value of the house, i.e. a front porch, extending the garden and perhaps a small conservatory so I don't mind these and we are prepared to buy the raw materials and do the work ourselves (apart from the conservatory).

We do have ISAs and will top these up as well as put some money into our children's accounts (we pay £5pw into both of these).

A family holiday is on the cards (just a camping trip to France, nothing special) but we don't want to splash out. In this day and age £45k doesn't go far and we want to invest wisely for the future so that we can at least have some kind of retirement to look forward to.

So, in order to choose a suitable pension scheme, where should we start do you think?

Can't say what to do with husbands old pension. Might be FS/DB pension so should be left alone to grow. If a Personal pension, charges should be looked at to see if it should be moved or not. And the investments it is in need looking at as well.

As for your pension it will depend on how involved you want to be. If not at all, you may need to go to an IFA (unbiased.co.uk). If you would like to pick your funds.sectors.countires then look at one of the online platforms such as Cavendish, hargreaves lansdown etc.

Ask this on the pensions forum.

JuniorSherlock

Thank you.

We have no debts as we don't tend to buy anything we can't afford. We're very much a make-do family, I suppose that's the way we were brought up!

Gold? Hmmm, not sure I want to risk this money. I know nothing about buying shares; gold or otherwise and would feel better if the money was securely tied up. It's always tempting to invest in something like gold and make a tidy profit, but that comes with risks and taking risks with gift money is not something that either of us are prepared to do.

I'll post in the pensions section and see what they say about possible pension options.

Cheers for the advice!