Savings advice for newbie

coiner73

Hi


This is my first post and I am needing some advice which would be greatly appreciated.


I recently have been left £70K in an inheritance. I have no debts, no mortgage, no wife or kids and no job. I have been a professional poker player for 4 years and therefore have not paid tax and basically I have a standard account with no money in it which I have had for a few years. (Prior to this change of job I have paid tax since my first job when I was 18 for over 22 years so please do not think I am trying to swindle the system etc, its just I had been playing abroad etc for a couple of years so therefore didn't have to pay tax as A0 it was considered gambing which has no tax on it and b) I didn't live here.


Anyway I am wondering what is the best way for me to use this money in terms of savings. I have read so many articles on its a waste leaving it in a bank etc and don't know enough about shares or bonds etc.


I pretty much have no clue with what I consider a lot of money in my hand.


Any thoughts would be appreciated,


(I have since given up poker and am looking at training in something else as I want a more established less stressful existence.


Thanks again

bigadaj

Most people would split the money up.

You say you have no mortgage, is this because you own a house outrighth to currently rent, and if the latter are you looking to buy?

First thing in any case is to have an emergency fund which might typically be £5000-£10000. Historically you'd often keep this in a cash isa but now rates are poor, many people are using current accounts such as Santander, nationwide or lloyds which give a better rate.

Back to the property issue then if you're looking to buy in the next couple of years you need to keep the deposit in cash. If not or for the remainder then look at investing in funds, normally in a shares isa.

Have a read around this site and others, such as monevator, motley fool and candid money which contain some good general advice. Also reading up, there are many investing books the most commonly quoted on here is tim hales smarter investing.

You might be open to higher risk investments given your background but for most people widely based general funds makes sense as the basis for a portfolio, and then add more risky funds or even shares on teh side.

If you are looking at retraining or a career change then some of the money could obviously be used for this.

Wise_Investor_2

Max out your stocks and shares ISA allowance for this year, as well as in April - that should leave you with £50,000 left to invest/save/fixed bonds depending on your risk profile.

coiner73

Thanks for your quick response. I really do appreciate people who take the time to offer advice to strangers so thanks again for that. The one thing I had decided to do was put 20k in an account not to be touched at all unless in total emergencies. Regards property I do not own a house but I have been thinking about purchasing something but quite fancy of doing so abroad where I could perhaps maybe rent it out as a holiday home. Seems the property is so expensive in the UK that 70K would be far too small to get anything worthwhile in terms of a deposit or even if I were to rent it out as I would not be able to live there myself as I wouldn't get a mortgage I wouldn't have thought given my financial background and regular income etc and type of job I do/did.##So perhaps maybe open a couple of accounts and bang maybe 15k in each and then have a little flutter on shares after getting some advice off someone more clued up than myself cos this is really not my field.


My main point is this is a little get out of jail card and the last thing I want to do is squander it away on general living which is very much the type of thing that I usually end up doing when I have had decent money in my hands before (just being truthful) and I am determined not to do so again.


I also have thought that I would put some into re-training. So I guess to sum it up probably ISA's and shares is the way forward or buy something abroad to rent out.


Decisions decisions. So wish I knew more about cash issues. Really is not me.


Anyway thanks again for your help. It is, as I say, hugely appreciated.

Wise_Investor_2

You can always learn about stocks and shares, there are probably like 1 million UK investors who make their own decisions! If you don't have the energy/time to research, maybe look at just putting in a fixed bond for a year or two until you figure out what it is you want to do.

yatinsardana

I won't have much useful advice for you as I'm new to the savings and investment world myself. But what I will say is up until may 2013, I had no idea about stocks and investment. I'm a medical student so my life is taken up entirely by that at the moment. Nevertheless for one reason or the other I started learning about investment just to get myself ready for the future when I do start earning.

What I will say is it's very much possible! All you have to do is read and find sources to understand investment basics including what are the options that are out there for you in the first place. There are so many depending on the kind of risk you want to take.

Even if you end up not using those options, I think it's worthwhile to spend a few weeks to understand them. I'm addicted to just learning more and More about this and it's so fascinating.

It took me about 4 weeks to learn the basics and then since then I've been learning as I invest. I've made mistakes but I've learnt from them. I would also personally recommend using a virtual portfolio to invest with fake money once you understand the basics so you can learn from the mistakes. I certainly found that useful.

Also maybe don't put all your eggs in one basket. It would be useful to have a diversified portfolio.

I did warn you this post wasn't going to be very useful to you. I'll leave the specific suggestions to all the experienced people on the forum but from me all I can say is if you know nothing about the stock market, it doesn't take a long time to learn the basics at least.

coiner73

That's exactly what have been thinking of doing! Decided to give myself a little plan. 3 months of learning the basics, 6 months of a trial period with fake or very small investments and see how I get on. The more I read about it I actually feel a little buzz about it. Love new challenges and the fact it is educated gambling suits me down to the ground. I am aware of the risk etc so I don't think its a case of buying and watching the money roll in (if only) and why I am only going to dip my toes in so to speak but still looking forward to it even if only as a hobby. In the mean time I am sticking the inheritance in ISA's and forgetting about them. Thanks for your reply

innovate

coiner73 wrote: »

In the mean time I am sticking the inheritance in ISA's and forgetting about them. )

Errrrm...no you won't.

Even if you could exploit S&S ISAs, which you can't since they are investments and you don't know anything about investments, you cannot put more than around £11K into an ISA per financial year. If you had cash ISAs in mind, it's half that amount.

You are right to put your cash somewhere where it earns interest whilst you decide what to do longer term - but ISAs are really a bad place for this, and it would take you years to put all of it into ISAs.

Investigate current accounts. As you are not working, you might qualify for gross tax - google R85. For a non-tax payer, it is possible to make 3% net for about £90K in various current accounts. Over double of what you can get in instant access cash ISAs.

If you can't get all the required current accounts, you will be limited to a bit in cash ISAs and the rest in savings accounts, both paying miserable interest. All the more incentive to get yourself educated about investments fast.

ViolaLass

There are few places in the UK where £70k would be insufficient as a deposit on a house.

You're right that you'd struggle to get a mortgage but since you say you want a less stressful existence and therefore presumably a more 'normal' job, you could solve that.

atush

I agree you would have enough for a deposit many places- you don't say where you want to live. but you can't get a mtg until you get a job after retraining.


So you will need some money to live on while you retrain (unless you support yourself thru gambling) so set that aside as cash, and fill your S&S isas this year and next. With a range of global/uk trackers or a lifestyling product such as one of the Vanguard series until you have time to read up on investing.


You could also consider paying voluntary Nics (but you do seem to have at least 20 years worth so if you might enod up working for 15 years plus don't bother) and you could set up a PP putting in 2880 a year which will be grossed up with tax relief to 3600. This is the max you can put in until you are working. It is handy to have both S&S isas and pension as ISAs are tax free, and pensions can use up your Personal allowance.

coiner73

That's an excellent response Innovate and totally what I was looking for. Like I said in my original thread I had heard that putting money in accounts was a waste of time (or words to that effect) but I thought that was a current account but having been looking for the past couple of hours I have learnt that's not the case!


Sorry for the lack of knowledge but this is something I really started reading about today so am pretty clueless but I am a fast learner and will get myself sorted. Just don't want to make mistakes and for once try and be responsible.


One question I would like to know is, is it pointless asking a bank (Natwest) for advice? Surely they are just gonna try and get me to do something they maybe get commission on etc type thing or benefit them in some way? but then I would also get a little paranoid an independent finance advisor would only be in it for themselves in some way and they could fill me with a load of jargon that would fly over my head. (this is the reason why I actually thought joining a forum would be better to start with and see what the general consensus was)


Anyway, I am aware I am wittering


Just wanted to know where to keep it before I start getting clued up on all this