What to do with a small inheritance?

welshartist

My Dad died earlier this year, leaving me and my two siblings a house and a very small amount of money (less than £7,000). We expect the house to sell for around £90,000 which would leave us with around £30,000 each. I currently rent a property with my husband, so no mortgage to consider and at nearly 50 little point in using this as a deposit on a house. We have no savings and no pension (though we are tax payers) so my first thought was to put at least some of it in an ISA for our future. I'm a novice where finance is concerned so any advice would be very welcome.

jimjames

If you're looking to put it by for the future then pension or S&S ISA would make most sense.

If you are renting would buying a house make sense? Long term it means you have security of somewhere to live and no rent once mortgage cleared.

xylophone

Re new state pension

https://www.gov.uk/new-state-pension/overview

You say that you have no pensions - are you employed?

Presumably you will wish to keep some of the money as an emergency fund as you have no savings.

Interest paying current accounts will be best for this.

welshartist

We're self-employed Xylophone and make about £15,000 each a year before tax. Having brought up two children and currently putting them through University there's never been enough left to save (!)

I'm not sure we'd get a mortgage jimjames - both 48, self-employed with a variable income (roughly £15,000 each a year)?

I'll have a look at both your suggestions, thank you - perhaps splitting the money would be best?

bowlhead99

welshartist wrote: »

I'll have a look at both your suggestions, thank you - perhaps splitting the money would be best?

I expect so.

If you've already made it to 50, you will on average make it to 89. A 1 in 4 chance of making it to 98. Husband a little less if he is also 50.
http://visual.ons.gov.uk/how-long-will-my-pension-need-to-last/

So, over the next 50 years of your life, you will need an income, you will need a roof over your head, you will need cash savings for emergencies and to cover the years when income is low or expenses are relatively high.

At the moment, you don't have a pension, you don't own a roof over your head, you don't have cash savings. Somehow you need to build up provision for all those things over the next 10-20 years, depending on how late your health or type of work allows you to continue in your chosen line of business, and how generous your two children are towards you after you put them through university and they hopefully build successful careers.

So there are at least three things to look at with your windfall. It would be shortsighted to focus on just one of them.

xylophone

You might each start a pension? A simple stakeholder might suit?

You could begin with a lump sum from the windfall and contribute regularly thereafter?

http://www.cavendishonline.co.uk/pensions/stakeholder-and-personal-pensions/aviva/

https://www.gov.uk/tax-on-your-private-pension/pension-tax-relief

Are you using the best current account for your needs?

You could each open a sole TSB Classic Vantage and a joint -they can cross fund each other by standing order.

You could each open a Lloyds sole Club account and a joint - if short of DDs, open one Tesco Everyday Saver and one Tesco Internet Saver and set them up as required - they can cross fund each other with the required monthly deposit.

Have you thought of using a Santander 123 for your regular bills?

anoncol

You should really start a pension.

J_B

Ought you to consider moving into the house instead of selling it?

Thus reducing (perhaps?) your rent and giving you a more secure (perhaps?) roof over your head ad infinitum.

Kernel_Sanders

anoncol wrote: »

You should really start a pension.

That would probably cover the rent for the retirement period, with nothing to pass on at the end.

If one of you moves into the house then they'll already have 33% equity in it, which should make it much easier to get a mortgage and pay off the other two siblings.

jimjames

Kernel_Sanders wrote: »

That would probably cover the rent for the retirement period, with nothing to pass on at the end.

If one of you moves into the house then they'll already have 33% equity in it, which should make it much easier to get a mortgage and pay off the other two siblings.

That does sound like a logical idea. I wonder if it's in the wrong area.

£60k mortgage should be easily do-able for a £30k joint income.

Kernel_Sanders

bowlhead99 wrote: »

If you've already made it to 50, you will on average make it to 89. A 1 in 4 chance of making it to 98. Husband a little less if he is also 50.
http://visual.ons.gov.uk/how-long-will-my-pension-need-to-last/

On that link it states:
On average, people aged 55 today will live to their mid-to-late 80s. Around 1 in 10 men and 1 in 5 women this age will live to 100 – and receive their telegram from The Queen.

With three generations of male heirs lined up, the chances of any of today's 55-Y-Os receiving a telegram from a queen are virtually nil