What to do with a modest inheritance...?

galileangoatee

DigForVictory wrote: »

Modest is a lovely word - covers a range of possibilities.
As others have said, wipe debt as soon as it costs you (other than the student loan - that was lent to you for you to repay from *earnings*) then keep as much as you can handily invested.
Of course yes ISAs, and after that wherever is safe and you can get at it.

I was going to say 'small' but then it occurred to me that actually it's quite a lot of money, and that many other people have genuinely small inheritances. When my partner's grandmother died last year he received just £1,000.

I suppose it initially seemed small to me because I am working towards things that involve such big sums of money - such as buying a house, or saving for retirement. Also you hear of people who receive truly large inheritances - but then I realised that that's probably because they were one of just a few beneficiaries. My grandfather was a tremendously generous person and although he knew this money would help me a lot, he probably still felt it was only a small gift in the grand scheme of things and the very least he could do. So after reflecting upon all of this, modest seemed the most appropriate word

I do miss him enormously.

innovate

S&S - stocks and shares - ISAs are investments, whilst cash ISAs are savings. One of the main differences is the length of time you should commit yourself to. Savings are often instant access, investments should afford a 5-10 year horizon. The main MSE site is mainly about savings, so you will find very little useful information about S&S ISAs there. You can find people knowledgable about investments, incl ISAs, on the forums but you should get a good understanding about investments yourself by reading some books and independent websites on the subject. S&S ISAs are just investments in a tax-wrapper, similar to cash ISAs being just savings in a tax-wrapper.

You would definitely not want to hold your emergency funds, or money you need to spend in the next couple of years in a S&S ISA but you might consider a cash ISA for them. At the other extreme, you would not want to save in a cash ISA for your retirement needs - a S&S ISA, or a pension, is a much better vehicle for that.

galileangoatee

Thanks innovate, that's really helpful!

kidmugsy

galileangoatee wrote: »

I confess I've not heard of a Castle ISA. I checked out their website earlier, but I'm still not 100% sure I understand how they work - they track the Halifax House Price Index (currently around 6%?) and give you a guaranteed return of 25, 50 or 70% of that on top? Is it reasonably low risk? Any further reading (that's not their FAQs trying to sell it to me!) that you can direct me to would be great! Also, saving until my savings overtake local house prices is a pretty unachievable goal! I'll be in my 70s by then

Sorry, I know little more about Castle Trust than an article I read in the Telegraph months ago. It just struck me as an attractive notion for somebody saving specifically for a house. If I remember rightly, there was an income-oriented version and a capital-oriented one. They also offered a shared-equity mortgage scheme for those looking to borrow. I suppose one could use the ISA saving scheme while accumulating cash for a deposit, and then their mortgage scheme when buying.

As for house prices, all (!) you need is a deposit large enough to ensure that your LTV qualifies you for a low interest rate. But house prices do fall - a family member of mine was wiped out financially by the last big fall. It all went - life savings, inheritance, the lot. Poor sod.

atush

13% of your salary, gross, including your employer's contribution. Not 13K (unless you earn 100K gross)

atush

kidmugsy wrote: »

As for house prices, all (!) you need is a deposit large enough to ensure that your LTV qualifies you for a low interest rate. But house prices do fall - a family member of mine was wiped out financially by the last big fall. It all went - life savings, inheritance, the lot. Poor sod.

Sorry , it hasn't gone until they sell.

If you are buying a home you live and, and want to live in for a good number of years, you would not lose out over a 10+ year period. Many areas are already getting back to, or have exceeded the high point before the crash. Others will do so eventually.

atush

example, I haven't ruled out moving back to where my partner is based (Cambridgeshire) and either getting somewhere together or getting somewhere there myself (he's settled there and I wouldn't want to force him to move out just because I wanted us to get somewhere together), but I'd rather not have to do a long commute if I can help it.

Don't move in with a partner who isn't 100% committed. Certainly dont buy a place near him- MAD.

No point in moving to him, if he doesn't want to live with you. If he is so settled he doesn't want a place close to him, but near a fast rail link to your work, you need to reassess not just your finances. I left my country (which everyone else in the world seems to want to move to) for him. Would not have done so if he wasn't 110% committed. If this isn't the case, these are easier things to think of than children or leaving your own country so could be an indication to move on?

Anyway, if you were both committed, you could choose a place in between you both. Where your commute is less, and his is a wee bit longer. Compromise is what real relationships are built on.

galileangoatee

Ah no you misunderstand me! There is no issue over him being committed. Where he lives is where we both want to be based, but I moved away due to work. He then got a place simply to try to save money and be a bit more secure as he could afford to do so rather than continuing to rent, and because neither of us knew how long I may be working somewhere else it seemed like a good idea. The sooner you can get on the property ladder the better. I have no issue with him doing that. I'm simply saying that if/when I wanted to move back there I wouldn't have any expectation for him to just instantly sell his place and us move in together again. I'm sure that actually he would want to move in together he was really pleased for me but also quite gutted when I got the job and had to move away, but his place is definitely not big enough for me to move in to as well, so he'd have to sell it if we were going to live together.

Living somewhere halfway is a good idea to solve the long commute problem for me, but in practice I don't think either of us would want to do that because, to cut a long story short, we've lived halfway between two workplaces before and it was miserable being so far away from everyone we knew and the place we had called home.

Moving back there isn't really something I can consider for another 18 months or so anyway, but I haven't ruled it out. By that point he will have been a homeowner for nearly 3 years, so depending on house prices it may be financially viable for him to sell and us get a place together (with what's left of my inheritance and saved cash!). So it's definitely an option. Thanks for your concern though!

galileangoatee

kidmugsy wrote: »

Sorry, I know little more about Castle Trust than an article I read in the Telegraph months ago. It just struck me as an attractive notion for somebody saving specifically for a house. If I remember rightly, there was an income-oriented version and a capital-oriented one. They also offered a shared-equity mortgage scheme for those looking to borrow. I suppose one could use the ISA saving scheme while accumulating cash for a deposit, and then their mortgage scheme when buying.

As for house prices, all (!) you need is a deposit large enough to ensure that your LTV qualifies you for a low interest rate. But house prices do fall - a family member of mine was wiped out financially by the last big fall. It all went - life savings, inheritance, the lot. Poor sod.

I think I just read the exact same article It's still a bit confusing to me, but luckily I have some accountants in the family so I will pick their brains when I get a chance to sit them down!

What is a good LTV proportion to aim for in your opinion? Does it depend on which area you are looking to buy in? I think anything more than about 40% would start to feel unachievable, particularly if I am looking to buy here - that'd be around £120k of which I'd have a headstart of almost half, but the rest might take me 10 years to save up. And that's if the price doesn't go up!

atush wrote: »

13% of your salary, gross, including your employer's contribution. Not 13K (unless you earn 100K gross)

Ah ok Thanks for clarifying. Yes, that should be achievable in the not-too-distant future, though can I ask why specifically you mention 13%?

kidmugsy

atush wrote: »

Sorry , it hasn't gone until they sell.

He had to sell. Stuff happens.