Investment - inheritance

emma000

I have inherited some money. I am mortgage and debt free. I am 43 and have no pension although my husband does. What is the best way to invest £50.000. ???

atush

Well a pension would be a good place to start. What rate tax do you pay? Using a pension to build a fund to provide income that will use up your personal allowance is a good idea.

What other cash and investments do you both have?

It is wise to have a cash emergency fund of 6 months+ living costs, in ISAs. Once you have a cash fund, then use your S&S isa allowances as well. these 3 things could take care of your whole 50K.

emma000

Thank you for your reply. My husband and I are both 20% tax payers. My husband has a private and company pension, I just have the basic government one. I work part time. We do not have any investments or savings currently

Linton

Agree with Atush. More specifically as an example...

1) before end of this tax year full Cash ISAs for yourself and your husband - £11280. This is for emergency funds so should not be fixed term.

2) After start of next tax year: S&S ISAs for yourself and your husband - £23040. You will need to buy a number of funds, suggest you research this now.

3) Pension for yourself this year, though there could be too little time. You can put in £3600 or your total earned income, whichever is the higher. In both cases you will only pay 80% of this, the money being made up by the government.

4) Pension for yourself next year

5) A good holiday, or similar expenditure for yourselves.

mania112

To truly benefit from a pension with 20 years until retirement, you will need to commit to regular contributions AFTER the inheritance has gone.

To put in £3,600 (or anywhere up to your salary) now and next year will be pretty worthless at age 60-65 unless you continue to pay into it.

Linton

mania112 wrote: »

To truly benefit from a pension with 20 years until retirement, you will need to commit to regular contributions AFTER the inheritance has gone.

To put in £3,600 (or anywhere up to your salary) now and next year will be pretty worthless at age 60-65 unless you continue to pay into it.

There's always triviality.

(if your pension pots amount to less than £18K at 60 you can withdraw all the money as taxed income).

atush

Well, it will be less worthless if this is your only taxible income.

Putting enough into pensions over ISAs to cover your Personal allowance means a pension pot pretty much tax free. But may not mean Mainia's assumptions here.

Given the current UK taxation rules where married or other couples cannot combine allowances and income equally does mean you need to spread more of future income into pensions so to save on income tax.