What to do with my £7,000 inheritance?

leona1

Hello,

I have recently inherited £7,000. I'm 25 and live with my parents currently, so wish to put this money towards a house deposit in the next 5 years.

Can anyone recommend what to do with this money? I want the best return that is possible with limited risk. Thank-you!

bowlhead99

Santander current account pays 3% on your first £20k.

If you're willing to have multiple accounts, Lloyds current account would pay 4% on 5k and TSB and Nationwide pay 5% on smaller sums.

Once the government launch their special 'help to buy' ISA accounts later this year, put the maximum allowable into one of those, to get the free matching bonus.

ColdIron

Search the forum for Nationwide FlexDirect, TSB Classic Plus, Club Lloyds etc, there are gazillions of threads about these

xylophone

You might consider opening a TSB Classic Plus set for paperless with £2000 - and opening a Lloyds Club with £5000 (need DDs? 1 Tesco Internet Saver and 1 Instant Access saver will allow you set them up to pull money from the account).

You would set up SO on TSB to send £1500 to Lloyds once a month and a SO on Lloyds for the same day to send £1500 back to TSB.

Have you seen https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/414027/FTB_factographic_final.pdf

Babbawah

Do you have a 5yr plan currently in place to save this deposit you need ?

If you do then your 5yr plan has just become a 4yr or 3yr plan.

If not, then use this £7k to pay off all your debts, then sit down and start planning how you'll end up with enough deposit after 5yrs.

edinburgher

If not, then use this £7k to pay off all your debts

OP hasn't mentioned debts.

leona1

Babbawah wrote: »

Do you have a 5yr plan currently in place to save this deposit you need ?

If you do then your 5yr plan has just become a 4yr or 3yr plan.

If not, then use this £7k to pay off all your debts, then sit down and start planning how you'll end up with enough deposit after 5yrs.

I don't have a plan to save the deposit I need. This is something I'm sorting out now. I want to buy in 5 years, as I am a self employed web developer & need to build my income up first. I will also need 3 years of good enough accounts being self employed. I have absolutely no debt (including no student) .

macman

A share ISA will give you a higher rate of return, but of course the risk is greater-though it is possible to have share investments that are lower risk.
However with a government-subsidised tax-free top up of 25% (up to a limit of £3K, so you can save up to 12K), the help to buy ISA looks like a no-brainer-and the five year limit, assuming you save the maximum £200 per month, fits your proposed purchase date very well.
You still have to place your inheritance funds in the meantime of course.

masonic

macman wrote: »

A share ISA will give you a higher rate of return, but of course the risk is greater-though it is possible to have share investments that are lower risk.

There aren't any investments that could be held in a S&S ISA I can think of that could be held for less than 5 years and offer a superior risk/reward than cash.

masonic

Babbawah wrote: »

Use the £7k, don't waste it, and certainly don't invest it at 3% - 4% as these MSE wasters would have you doing.

Invest it in you.

What would the originator of your inheritance do? Was it Granma / Granmps ?

If you have confidence in your future then tying up a paltry £7k today won't make much difference.

I can't speak for the OP, but if I was still living with my parents at 25, I'd consider finding a place of my own one of the most important investments in my future.

leona1

xylophone wrote: »

You might consider opening a TSB Classic Plus set for paperless with £2000 - and opening a Lloyds Club with £5000 (need DDs? 1 Tesco Internet Saver and 1 Instant Access saver will allow you set them up to pull money from the account).

You would set up SO on TSB to send £1500 to Lloyds once a month and a SO on Lloyds for the same day to send £1500 back to TSB.

Have you seen [Link to help to buy isa]

Thanks, I'm having a look at the help to buy isa now.:)