savings advice

and3r5on

Hey
I joined mse because i am in need of advice on saving and investments
I have recently through inheritance and the sale of my fathers house came into a fairly large some of money that I have no idea what to do with. I have a small amount of debt and will pay that off but I should be left with approximately 1,200,000 I have never lived a high life and worked full time for the past 20 years but money, banking or investments have never been my thing. I was hoping to just bank the money go part time at work and let the interest top up my earnings. But looking into things online has been a minefield so any advice would be more than welcome. I live a moderate lifestyle and only really want to take things a little easier
Thanks in advance

Eco_Miser

1.2 million pounds would give a gross income of around £13,000 a year in the NS&I Direct Saver and slightly more in the NS&I Income Bonds. NS&I, being backed by HM Treasury, is the only financial institution where such a sum is guaranteed. You would need accounts with 16 different institutions to get long-term FSCS cover on that amount. You could get higher interest on about £50k by spreading it around the current accounts paying 3% or more.

Other than that you would need to use investments of some kind, and should consult an Independent Financial Adviser (IFA) see https://www.unbiased.co.uk/ for some in your area.

and3r5on

in a perfect world I would love to give up work and live on the interest however I know that's not possible in this day and age I currently earn 21k and wanted to boost that as much as possible while also cutting my hours to as little as possible

grey_gym_sock

do you own your home? if not, consider using part of the money to buy a home (as a cash buyer - i.e. without taking out a mortgage).

banking the money will only give you about enough interest to keep up with inflation. so if you spend the interest, the real value of the capital will reduce gradually. which is not that bad, but you can do better by investing the money (or some of it).

investing is something you could either learn to do yourself, or pay an IFA to do for you. though i would suggest starting with an IFA for somebody who hasn't invested before and suddenly has such a large sum.

investing might be expected to generate about 3% or 4% of the capital per year which could be spent, i.e. on the full £1,200,000, very roughly £40,000 per year. and that should rise with inflation over the years, as should the value of the remaining capital. however, the value of the capital will fluctuate - sometimes go up, sometimes go down - so you have to get used to that. and none of this is guaranteed. however, you can err on the side of caution (e.g. spend less than is actually generated) and still come out far ahead of where you would be by just sticking it all in the bank.

if you either invest most of the money, or buy a home and then invest most of the rest, and if you live modestly enough, you may not have to work again. which doesn't necessarily mean you shouldn't work again. but it does give you a lot more options for what to do with the rest of your life.

Archi_Bald

Do you have a pension? This might be many years away, but what will you live off when you cannot work any longer?

I would suggest you see an IFA very quickly.

badger09

Archi_Bald wrote: »

Do you have a pension? This might be many years away, but what will you live off when you cannot work any longer?

I would suggest you see an IFA very quickly.

This ^^^^^^^

and3r5on

I don't own my home no, yes i have been paying into a pension plan but don't assume it will be worth much when i reach retirement. I live a modest lifestyle and have no desire to change that my main goal was to work less as i often have to work away in a fairly demanding job. I have always saved for the things i needed and never invested before but i think i will see an ifa and see what is what
Thank you all for your responses

atush

You need a safe place for the money for now, you need a house of your own for long term stability/retirement, you need a pension (and if you have one now top it up). Then you need to look at other tax wrappers like S&S isas.

so first, decide where and in what type of property you want to live. If you have no skills (and no spouse with same), consider perhaps a new build with a 10 yr NHBC guarantee. So see an estate agent (or 3- find someone you like). where do you live?

In the meantime, put all the money (less the amt to pay off debt plus a five thousand as emergency cash) into NSI and start getting some interest. Do you have anything that is worn out- needs replacing? From car to TV to a warm winter coat. Do these things.

Your pension will only pay out a small amt if you put a small amount in it. So this year you can out in up to 21K (incl tax relief and employers contributions) but you will also be able to put in the last 3 years unused allowances. So what % of your slary goes in each month from both you and your employer? If you top it up, you should be able to shelter up to 80K of the money.


S&S isas are the next place to look. You can put in over 15K each year now and going forwards.

So to sum up, whack the money in NSI less your toal debt and 5K cash emergency savings.

Decide where/what you want to live in, and how much to spend.

Top up your pension. These 3 things you can do before you find an IFA via the unbiased website (see 2 or 3, get back to us with their charges).

then you can use the IFA to help you build a portfolio of investments from cash, thru to equities.

Then, take break somewhere, Relax. Decide how you want to move forwards.

Al.

and3r5on wrote: »

Hey
I joined mse because i am in need of advice on saving and investments
I have recently through inheritance and the sale of my fathers house came into a fairly large some of money that I have no idea what to do with. I have a small amount of debt and will pay that off but I should be left with approximately 1,200,000 I have never lived a high life and worked full time for the past 20 years but money, banking or investments have never been my thing. I was hoping to just bank the money go part time at work and let the interest top up my earnings. But looking into things online has been a minefield so any advice would be more than welcome. I live a moderate lifestyle and only really want to take things a little easier
Thanks in advance

Bittersweet, to lose your dad and inherit a life changing sum.

My advice, right now, is to do little. Don't sign anything. Dump your brain, pay off your debt, park it in a current account and do nothing until the New Year.

On the surface of it, what you want to do is easily achievable, but from experience, I imagine there'll be lots more to consider too. And that'll only come out over time. Go to work, plod along for a couple of months, put some yellow stickies on the fridge with notes of everything you'd like to do, and what you want your life to stand for, and provide you with, knowing that you can walk out if you ever need to.

That sounds arty but a couple of my High Net Worth (get used to seeing 'HNW') do a lot of charity work with their money. It gives them pleasure that seeing numbers on a statement never could. And have a blummin' good Xmas! :T

MEM62

With that sum of money you want proper advice. Consult an IFA.

badger09

Al. wrote: »

Bittersweet, to lose your dad and inherit a life changing sum.

My advice, right now, is to do little. Don't sign anything. Dump your brain, pay off your debt, park it in a current account and do nothing until the New Year.

On the surface of it, what you want to do is easily achievable, but from experience, I imagine there'll be lots more to consider too. And that'll only come out over time. Go to work, plod along for a couple of months, put some yellow stickies on the fridge with notes of everything you'd like to do, and what you want your life to stand for, and provide you with, knowing that you can walk out if you ever need to.

That sounds arty but a couple of my High Net Worth (get used to seeing 'HNW') do a lot of charity work with their money. It gives them pleasure that seeing numbers on a statement never could. And have a blummin' good Xmas! :T

Apart from the bit in bold, I'd agree.

Al, did you really mean OP should dump £1.2million in a single current account:eek:

Eco Miser's suggestion would make more sense to me.