Advice on savings accounts for Inheritance

alexanderalexander

Schaffy wrote: »

We have spoken about investments in stocks and shares but she is not interested in this because she perceives this as risky and I don't want to push her down this route if she is not comfortable with it.

As others have pointed out, your partner's mum will still be choosing a very risky option if she keeps the money in cash -- she just doesn't realise it. The idea that cash is risk free is a serious misapprehension -- the inflation risk is as serious as any other risk to your money and, unlike equity investment risk, inflation is likely to permanently damage your wealth.

If you can gently educate her on this, you'll be doing her a big favour. As you've intimated you will, I would strongly suggest that you go ahead with your plan to persuade her to go to an IFA as this is a significant amount of money and it sounds like she will need a lot of hand-holding to get it into suitable investments. I would guess that IFAs are accustomed to helping nervous clients in these circumstances.

mgdavid wrote: »

an option for a part of it would be to max out on premium bonds.

Premium bonds pay an effective interest rate lower than most savings accounts. Only benefit is that prizes are tax-free so it may just be worth it for a 40%/45% taxpayer. Even then it'd be marginal.

ruinen wrote: »

Let's say she went with the investment option. Maybe she beat that 2% interest by a few percent. If the extra money gives her no noticeable benefit/value to her life and she gets stressed about the risk, then why bother?

A few percent will add up over the years. If she really doesn't want the extra money either for herself or her heirs, then fair enough. That'd be very rare though -- I've never known anyone say no to extra money. The only reason she's not tearing her hair out over the inflation risk she's currently exposed to, however, is because she doesn't realise it. A bit of guidance is the answer here.