UPDATE- large inheritance at young age.

Shodan6920

Hi all,

After seeking advice on here I have now met with an IFA who has provided me with an array of proposals to manage my cash windfall. However, I am also in the process of placing an offer on a property at 67k. At my age (22), what are your thoughts on this? Should I take the pressure of my shoulders and invest with an IFA (6-9% projection); or invest in a property which is ready to go with an existing tenant at £500 PCM?

As before any input is greatly appreciated as this sum of money is very alien to me.


Many thanks in advance,

Shodan6920

dzug1

Do you want the legal and financial responsibilities of being a landlord?

eskbanker

Based on the earlier thread you refer to, if the total inheritance is £500K then £67K is only a relatively small slice of that, i.e. you could buy the property and still have £433K left to invest in the other areas.

As dzug1 says, there's more to property ownership than just counting the revenue but diversifying your portfolio is rarely a bad thing, although most would start with owning a proerty to live in ahead of a BTL, is that already taken care of?

Shodan6920

Eskbanker,

Thanks for your post. I have roughly 100k that is liquid. The rest is tied up in land and my parents home (which I intend to live in), and due to so much emotional attachment to these it is unlikely that I will move or sell at this moment in time.

At the moment the fields currently have tenants on there with horses, and they are both outstanding. However I could see the BTL being completely the opposite.

I have always been told not to keep all my eggs in one basket.. Any ideas on what else I could do to grow the sum?

RickyC_IFSWP

Shodan6920 wrote: »

Hi all,

After seeking advice on here I have now met with an IFA who has provided me with an array of proposals to manage my cash windfall. However, I am also in the process of placing an offer on a property at 67k. At my age (22), what are your thoughts on this? Should I take the pressure of my shoulders and invest with an IFA (6-9% projection); or invest in a property which is ready to go with an existing tenant at £500 PCM?

As before any input is greatly appreciated as this sum of money is very alien to me.


Many thanks in advance,

Shodan6920

How much inheritance did you receive?

Both investing in a BTL and in retail investments through an IFA could be viable (rather than an either or situation).

Plus an IFA would take a holistic approach to your financial planning (i.e. taking a bigger picture view and not just focus on investments) and take into account your tax position and allowances.

I guess my real question is, what is your concern with the IFA's proposal?

innovate

Based on the numbers mentioned here and in the original thread, it looks as if some inheritance tax could be due. This would due regardless of how much of the inheritance is in liquid funds.

http://www.hmrc.gov.uk/inheritancetax/intro/basics.htm

ViolaLass

Do you want/need to keep some of it free to help with getting new qualifications/studying/improving yourself in some way? That could show a big return, both in income and life satisfaction.

Shodan6920

Innovate - fortunately there was none due, grant of probate was received in February.

Ricky - yes I have considered both which would be another option. I think maybe due to my age and the fact that I am a complete novice to investing and this amount of money available to me that I am very wary of making any decision just in case it goes wrong!

I am wary of the IFA as I don't have control over the cash and again I would hate to suffer a considerable loss in a market crash.

castle96

Commiserations for your loss. I understand the attachment to your parents home. As you have 'only' £100k to invest, I too would feel wary about launcing out into shares, etc. Agree with the thoughts about BTL. Could work out OK/reasonable return, could be a nightmare/property trashed. Your age is maybe a consideration as well. (Having said that, 'even' one of my sons has a BTL and I have only ever thought of doing it).
With £100k there are ideas/accounts on the boards to get 2-5 % for a large chunk of that money and get some experience shifting it about to do so. Surely an ISA is a good idea ?
Enjoy the money and responsibility of investing it.

Archi_Bald

castle96 wrote: »

Surely an ISA is a good idea ?

What sort of an ISA, and why? There is too much of "must have an ISA" mantra about. An ISA can be a good idea but it is by no means a no-brainer.

Shodan6920, you might be a bit overwhelmed with £100K in cash right now but in all honesty, you shouldn't rush into anything, and most definitely not into something like property which will tie you down for a substantial amount of time. Put the money into a safe place such as the NS&I Direct Saver for now, and then make a detailed plan.

• make sure you have an emergency cash fund that gives you 6-12 months living expenses
• put money to one side for any repairs / renovations that might be / become necessary to the house and its contents. Also, some costs might accrue for the fields (fencing etc)
• make a detailed budget (you could use this to start with: http://www.stoozing.com/calculator/soa.php)
• invest in your education / training / studies so you are able to support yourself financially
• start investing into a pension (https://www.moneyadviceservice.org.uk/en/articles/pension-investment-options-an-overview)
• read up about BTL - it isn't just a way to collect rent, you have a lot of responsibilities as well. I am not saying BTL is a bad idea but you need to go into it with your eyes wide open. There's a special Buying/Renting/Selling board on the forum, and again, MAS has a section on BTL: https://www.moneyadviceservice.org.uk/en/articles/buy-to-let-property-investments
• ignore anybody who offers you any "irresistible" deal
• ignore anybody who suggests there is just one single answer
• ignore anybody who PMs you with offers to help

I wouldn't, in your shoes, go to any IFA right now because they are likely to lean towards investments and insurances because that's how they make money. You should have a pretty good idea yourself about where you want to go before you engage a financial professional, and you absolutely definitely need to have your budget sorted before you can expect any useful advice. Talking to an IFA is, however, definitely preferable to talking to anyone from a bank or building society.