General Advice Needed

Ljubica

Hi - this is the first time I've posted here and I was just looking for some general advice. My Father died earlier this year and I inherited a sum of money, but I have absolutely no clue what to do with it for the best, as I've always been the world's most clueless person where money is concerned and have never had an investment or savings plan in my life.

To honour his memory I don't just want to fritter it away (I'm very good at that!), so I want to do something sensible and worthwhile with it. However, despite having a Uni degree I'm completely stupid where this sort of thing is concerned, - I'm definitely an arts and not an economics or finance type person, and whenever I try to read about ISAs/savings accounts/investments/stocks and shares etc it kind of drives me crazy and I lose concentration in an instant. So I guess what I'm looking for is a simple, idiot-guide to what I can do with this money now I've paid off my credit card and a small personal loan I had.

A few details about me - I'm female, in my 50's, legally separated, no kids, don't work because I gave up my job to look after my Dad when he got very sick, and no mortgage. I have a very small pension which I just started taking at 55 from a previous job, and very few outgoings. I am tempted by property buy to rent or something, but because I live in the South East, buying even a hovel would take the entirety of the money and leave me nothing else, so I am open to alternatives. I did contact a so-called independant local Financial Advisor, but I got the impression all he wanted was to sell me certain things to get his commission, and I prefer the impartial advice from normal people who have "been there, done that, got the T-shirt"

Any ideas would be appreciated. Thanks in advance.

Ifts

Ljubica wrote: »

So I guess what I'm looking for is a simple, idiot-guide to what I can do with this money

For starters you could take a look at these Popular Guides (Savings/Banking/ISAs & Pensions) here on MSE:

http://www.moneysavingexpert.com/savings/ (simple & easy to understand)

Caladan

What do you want to get out of the money?
Do you need an income from it or do you just want to put it away and watch it (hopefully) grow?
What's your attitude to risk? - This is a loaded question, but it's important.

There's all sorts of options available to you, all with their own upsides and downsides, to list a few:
*Buy property and rent it out - Benefit is a steady income stream as long as it's occupied and property prices may rise (or fall) giving long-term capital growth when you sell it.
Downside is this - You won't always have tenants, you're still liable for all the costs involved in owning property such as maintenance, repairs etc. Your tenants may prove to be absolute nightmares and there's a fair amount of administration involved, unless you source out the work to an estate agents.

A lot of first-time landlords have no idea what they're letting themselves in for.

*Invest in fixed assets such as gold - Others may disagree, but personally I'm not a fan unless you really know what you're doing. This one definitely isn't for the faint-hearted.

*Invest in company shares off your own back - Also risky unless you know what you're doing. Can result in good income and growth. Can also lose you the lot (of course, you wouldn't invest everything)

*Invest in an investment fund - You can select the fund yourself and type of investment you want and then leave it to the fund managers to buy and sell shares at their discretion. You can then choose to take an income from this or reinvest any income back into the fund, or a mixture of both.

*Hold it all in cash savings. The up-side to this is it's safe in that you can't lose capital, but inflation will slowly destroy the actual value. As a quick example:
£250k sat in a savings account earning 1.5% a year with inflation at 2.5% will only be worth the equivalent of £235718 in 5 years time - i.e. you've effectively lost £15 grand. (DISCLAIMER: These figures make a ton of random assumptions and are not reliable in any way shape or form). Based on the future inflation calculator at the following: http://www.hl.co.uk/news/calculators/future-inflation-calculator

---

A financial advisor will offer investment funds, the other options I'm not sure who you'd consult. Good advisors are worth it, bad ones aren't. They'll assess your attitude to risk and what your investment goals are and then provide a solution, which you can choose to either take or not. MSE is good for getting some ideas, but remember faceless people on the internet can say what they like without repercussion and may be just as clueless as you.

First thing to do is do nothing - Don't jump into any decisions the moment the money hits your account and then sit and think long and hard about it. I'd strongly suggest finding an advisor and doing a fact-find with them. It might cost you a few hundred pounds if they're the fixed cost charging type but at least you'll then have an idea of what they can do for you.

N.b. I'm not an advisor, I'm a faceless person on the internets who may or may not be telling you the right things.

Archergirl

How about putting 30K into ERNIE while you decide? You may even get lucky.
I think buy to let is loaded with problems if you get a bad tenant, maybe you would like to treat yourself to a nice holiday?

pip895

I am in a slightly similar situation - mid 50's and trying to live off my investments. The Government is conspiring to make this a far from easy task.

You say you have no mortgage - assuming you have a house then you probably have a high proportion of your assets in property already - I wouldn't go for another property - it would leave you far too reliant on the vagaries of a tenant.

I would probably look to split your investment with at least 1/3 in cash. Don't be too frightened of going the DIY investment rout - as you are retired/currently not working, you have time on your side and its not as scary as you think. Platforms like Hargreaves Lansdowne make it all very easy.

grizzly1911

pip895 wrote: »

Platforms like Hargreaves Lansdowne make it all very easy.

There are other platforms out there that are also worth comparing.

http://www.comparefundplatforms.com/

Monevator.com and DIY investor.co.uk may be worth a read.

Tim Hale - Smarter Investing is also informative but may sink you.

Wilkins

I think we need to know how much money we are talking about and a little more about your present financial situation before anyone can give you more specific ideas.

kidmugsy

BTLers will feel the pain if the next government introduces rent controls, and retrospectively imposes changes on lease agreements to give tenants more security of tenure.

It's such a stupid policy that it must be due to be adopted again.

Ljubica

Thanks to everyone who replied. Sorry I haven't got back here sooner but have been away for a few days.

In answer to Caladan - no I am not a risk taker at all - the idea of "throwing away" everything my Dad worked for on some investment that might lose rather than gain terrifies the life out of me to be honest. I would feel as if I was somehow betraying his memory if that makes sense. And no I don't really need an income from it as such -maybe a couple of hundred a month would be nice for the "extras" but it is not a necessity. Your reply was great and very informative btw - so thanks for taking the time and trouble with it.

To Archergirl - yes I had thought of ERNIE too

In answer to Wilkins - let's say in excess of £100,000 but less than £200,000. Present financial situation - no job, no benefits (bit of a non person in fact) - just a small pension that I took at 55. I own my house outright - it was originally owned jointly with my ex partner but I bought him out when we split and the mortgage I took for this was paid off when I was still working full time. I have no debts but no other savings either apart from the inheritance.

Thanks again to all.

paddytt

also try reading the Motley Fool - there's a book I think and also their website www.fool.co.uk.


It's basically written for those who don't have a clue!


cheers


TT

Ljubica

That sounds a lot like me for sure paddytt Will check it out.