Inheritance - savings account for best return

LALA123

Hoping for some advice, please. I am about to inherit around £340,000. It is likely that I will put the money into property at some point within the next year (currently looking for something suitable) but in the meantime want to ensure that a) the money is safe b) it is earning some sort of interest and c) it is accessible if I find a property. Most bank accounts that offer a decent return have savings limits on them. Can anyone offer any advice please?

It may help to know that I have £108,00 remaining on my current mortgage. I plan to put 300K of the inheritance into a new home and rent out the current property to cover the mortgage payments- eventually leaving me with a mortgage free home and an investment property. Not sure if that is a sensible plan, but having I am new to having savings and money to invest. Any thoughts welcomed! Thank you.

xylophone

For this short time period and instant access, NS&I Income Bonds would be worth considering for the whole lump sum.

Interest is paid monthly and gross so you may need to advise HMRC.

http://www.nsandi.com/our-products

AndyT678

LALA123 wrote: »

I plan to put 300K of the inheritance into a new home and rent out the current property to cover the mortgage payments- eventually leaving me with a mortgage free home and an investment property. Not sure if that is a sensible plan, but having I am new to having savings and money to invest. Any thoughts welcomed! Thank you.

A mortgage free home is a nice thing to have and certainly provides security - at least you'll always have somewhere to live.

Piling all of the rest of your worldly wealth into a single asset is pretty risky. Have you considered any options other than starting a business? Being a landlord is not just about buying a house then forgetting it.

Keep_pedalling

I think I be making myself mortgage free as soon as I had the money, or buy a new place with the cash then clear the mortgage by selling your existing house.

This would free up a good chunk of income that you could push into building a decent pension pot, and the remainder of your windfall could be invested into a more balanced portfolio that does not have the hassle associated with being a landlord.

LALA123

Thanks to all for the suggestions and advice. I am a novice when it comes to having money to invest, so property seems the obvious choice.

lalman

LALA123 the other posters are right in that having property is a business rather than just an investment. I have 2 BTL's and a full time job and right now I am spending around 10 hours a week for paperwork etc on them...


Do you have kids? how old are you? are you married? do you have a private pension? and importantly... what income level do you want when you retire... you can then reverse engineer a plan.

badger09

LALA123 wrote: »

Thanks to all for the suggestions and advice. I am a novice when it comes to having money to invest, so property seems the obvious choice.

One of the classic mistakes of a novice investor, is to pile all their available funds into a single asset, e.g property, or asset class in a single market, e.g shares in the UK FTSE 100.

Why do you think property is the obvious choice?

AndyT678 wrote: »

A mortgage free home is a nice thing to have and certainly provides security - at least you'll always have somewhere to live.

Piling all of the rest of your worldly wealth into a single asset is pretty risky. Have you considered any options other than starting a business? Being a landlord is not just about buying a house then forgetting it.

This

badger09

Put your money somewhere safe such as NS&I or spread between 4 different banks/building societies, while you do some reading.

This forum is great. Others like Monevator are easy to read as a novice.

http://monevator.com/

Better to take some time and avoid some potentially expensive mistakes.

atush

I agree that you want your money somewhere safe like NSI or split it into tranches to protect it.

However I also agree that investing in multiple properties is a business. It is also not very tax efficient. AS a novice investor, I think this is a highly unsuitable path to take with your investment.

If you went a new house, buy one, but sell the old one. If you want an investment property with some of your money, buy an inexpensive one, not an expensive one.

What other savings and investments do you have? How much of an emergency fund? Any debt other than mtg? What is your mtg rate? Is it fixed?

I'd be inclined to set aside enough to pay off your mtg if the rates go up. In the mean time, pay off debt, start or boost any pensions to the max (ie 40K PA or you total income incl using past 3 years relief) and set aside 3-6 months outgoings.

Then if you have more left over, buy a small rental flat/terrace somewhere with good rental potential (such as near university/hospitals). Get a BTL mtg as the interest is deductible from any profits.