Planning for Uni - What to do with inheritance??

a.gardner01

Hi,
I have recently inherited a fair amount of money (around £250,000), and I am not sure what to do with it. In effect this is the money that will have to keep me alive in the best manner possible until I start on a full time job. I have been investigating Bonds such as the Birmingham Midshires 1 Year Fixed Rate bond, which give a good rate of interest. However I have noticed that these have made several fair interest rate rises. For me, this would make a fairly large difference in what I am able to spend week on week!

I would be happy to get a bond, tying up the money, because I dont need it living in halls and actually can't spend the capital of the inheritance until i'm 21 anyway... Problem is I don't know whether to do this now, and potentially watch the interest rate rise while it is tied up in a bond (very annoying!). Can someone give me advice of what to do and wether to just go ahead.. or do something completely different?!

Thanks,
Andrew

amcluesent

With a quarter of million sloshing about, you really need to be speaking to an IFA on what is best.

IMHO bank interest rates will go up again, but there is a large overhang of inflation so you need a savings strategy which is index-linked to preserve your capital. House prices are due to slump, so when you graduate that £250K will set you up with a des. res. If you don't go down that route, your IFA should be thinking about minimising the income tax on the interest when you are waged.

CLAPTON

what do you mean ..you can't spend the capital until you're 21... is there a trustee? How come you have the ability to make the investment decisions if you aren't able to 'spend' the capital?

Lavendyr

Hi Andrew, I would echoe amcluesent - see an IFA if you can, because that is an awful lot of money to risk on the advice of an internet forum It may seem expensive initially but could end up saving (and hopefully making) you a decent amount of money on top.

I would agree that it shouldn't go into property at the moment, especially if you're living in halls, as the housing situation is not yet clear. Prices may continue to rise, but they are really stalling right now and while I'm not sure the market will crash, it may start to even out or decline, so it would probably be worth waiting a few years to see what happens there.

And a final tip as a fairly recent graduate myself - if you can help it, don't touch it while you're at uni, it's far too easy to fritter money away

a.gardner01

Hi,
Thanks for that... Usually you can get decent advice for free...

To answer your question, yes, there is a trustee, but it's my father...
Therefore he will move it around for me (and as its my money he says' its mine to do what I will with it!), but the will states that i'm not allowed to actually spend the captial; only spend the interest (it was provisioned for this money to help me through uni).

Can anyone offer any idea of what the hell an IFA would say (... a financal advisor I assume..?)? Would you say not using a BM bond then?! Thanks again!!
Andrew

EdInvestor

It would seem fairly obvious that the OP should use the income from this money to live on while at uni, and then invest most of the capital in a home when he gets access to it (or finishes studying and chooses the location where he will be working).

Hence a selection of high interest cash accounts should be opened.No real need to look into investment at this stage - if that is appropriate likely it will be the trustees who must do the job.

isofa

Totally agree with Ed, a selection of high interest cash accounts, and probably a few high interested fixed term bonds too (6.7% is easy to find on 1-year bonds), after all you're not going to need to get your hands on it straight away, that way you can maximise the return (without risk) and get some higher rates which aren't all instant access.

However I'd seriously look at property too. If you are going to be a student living away from home, buying a small property near the Uni will zero rent, and you can rent the other rooms out to friends, therefore, technically you could just put a decent deposit down and use a mortgage to cover the rest, with the rental covering the payments. You could then keep the rest of the lumpsome in high-interest/bond accounts. (Don't dump all the money into property.)

If in doubt take some professional advice, as unbiased as possible.

a.gardner01

isofa wrote: »

Totally agree with Ed, a selection of high interest cash accounts, and probably a few high interested fixed term bonds too (6.7% is easy to find on 1-year bonds)

You say a selection?? Why not just lump it all into one account??
Which would you reccomend?
& Would you think it were worth it even though there may be more baserate rises, meaning the fixed interest bonds would go up, without me...?

As a point, by the way, from the way I think I should work it, I need a monthly rate of interest to continually fund me throughout..

Thanks for the further help!