What Do I Do With My Inheritance?

mike88

In financial terms London can be a great place to make money but it's a terrible place to live if you want to buy a property. Other parts of the UK have far cheaper housing and if the self employed business is not doing well in London you have little to lose by moving elsewhere and starting again.

The price of many things in London can be 50% more expensive than other parts of the country so your standard of living will probably be increased by moving elsewhere.

Greece is a basket case and will continue to be so; it is certainly not a place to invest your life savings.

atush

age 50, with no savings or pension it is clear.

Pay off the debt, put some into cash savings for emergencies, start a pension. Then if you can get a mtg for a flat, fine. If not, then invest the rest into the pension and S&S isas.

Forget BTL, and foreign property esp in areas that you would not be able to sell easily (such as Greece). Ideas like that are for those with more savings, and pensions, and income.

Galaxy1987

What about putting some cash into your business to develop it, and increase profit. Not sure the market you are in but that is what i would do.

jackyann

I am guessing that being in London is necessary for your employment and / or family life?
I certainly wouldn't look at property abroad, and I would be very careful about property here unless it is for you to live in.
I would pay your debts, invest in the best savings accounts you can find and not rush. Wander around here & other forums. Interest rates may be low - but better to "lose" a small amount than rush into something that may cost a lot more in the long run!
Could you buy with someone else (again, caution!). Could you buy "business premises", and if so, would that help?

malcol

I think the last thing I would think about is investing in a pension. If you put the whole sum in you would be lucky if you returned enough to keep you in knickers.

Aegis

malcol wrote: »

I think the last thing I would think about is investing in a pension. If you put the whole sum in you would be lucky if you returned enough to keep you in knickers.

With all due respect, this is simply wrong. A pension can invest into most things a normal investor would elect to hold in an ISA, so the potential return rates are the same inside a pension as outside. The pension has the advantage of tax relief on the way in and tax free cash on the way out, which offers net positive returns just on the tax relief.

Pensions aren't designed to be the sole tax wrapper used in someone's investment portfolio and there are a number of drawbacks/restrictions associated with them, but to dismiss them altogether is simply not a sensible strategy.

atush

malcol wrote: »

I think the last thing I would think about is investing in a pension. If you put the whole sum in you would be lucky if you returned enough to keep you in knickers.

This is quite frankly, Wrong in the extreme.

First of all, every 80 you out in is made up to 100 overnight. Where else can you get that sort of return?

Second, it grows until retirement (how much/fast will depend on what you or your IFA choose to invest it in). In your case, retirement will be at least 18 years as you have no savings or investments so can't afford to retire (maybe even then). You certainly won't have a good life living just on SP, and probably won't be able to afford new knickers or much of anything else. In 18 years, it will have grown faster and better than any cash acct.

In retirement you get a personal allowance that is greater than the SP. So it makes sense to have enough in a pension to give you an income to at least use up your PA and then you will pay nil tax.

So yes, a pension is the FIRST place after debt and an emergency fund for you to put your cash. It is also protected from debt collection, and from means tested benefits.

Nick_C

You need to be thinking about how and where you will be living in retirement. If you stay in rented accommodation in London and invest your £150K, you can probably generate an income of around £7K per annum. As a pensioner paying rent, you will not be entitled to housing benefit, and your investment income will effectively go towards rent.

If you would like to retire outside London, consider buying a second home now, rent it out until you retire, then move. You could but a nice 2 bed flat somewhere like Worthing or Hastings.

If you do buy a property, try to save some money from the income, as you may have to pay service charges or maintenance when you move to your own home.

Austin_Allegro

bowlhead99 wrote: »

That's definitely a question worth asking. If London hasn't been able to make you rich enough to keep up with the other Londoners, and your prospects at retirement are grim (low income goes to no income other than state pension), you could use this windfall to set yourself up in a new place.

It might be painful to wrench yourself away from friends to start afresh, and you still won't be able to live like a king, but it is a significant step to getting out of poverty and at your age you could easily have 45 years ahead of you in which to make new friends.

Obviously there's no point going to Burnley to have a house for only 30k and then burning through the other 120k over the coming years to retirement while unemployed.

But if you have some skills that could be deployed anywhere outside the South East, a move to a lower-cost town could be the smartest decision you ever made, and something you couldn't have practically considered over the last few years with zero cash in the bank. Now with some free cash, life-changing options open up, which are nothing to do with the secondary ideas of what types of savings and investments might be made once your life is on track.

I would agree with this. Buy to let etc is touted (usually by the financially semi-literate) as some sort of golden goose, but in reality it is not such a sure winner.

If the OP is self employed and can move anywhere, I would suggest buying (outright, or with a small mortgage) a small house (with a spare room, so that it can be rented out if necessary), somewhere far enough away from London for property prices to be realistic. If there's a garden as well, so much the better, as you can grow your own food.

Somewhere like the Isle of Wight would be my choice, as it's popular with holidaymakers and the spare room could be rented out via Airbnb if necessary.

As someone who moved abroad for a more cost-effective lifestyle than in Rip Off Britain, it IS hard, but if you are in the UK remember friends and family are never more than a few hours away by car/coach/train.

malcol

Magmaman, can I ask what did you decide to do with your inheritance.