What to do with £30,000 inheritance?

ronaldadio

After posting a while back we are now about to get the £30,000 in November as our part of my Wife's parents estate.

I'm 53 & my wife is 50, we are both fit and healthy, both self employed and between us make around £1,000 a week after tax.

We don't own a house, have a mortgage or any other savings. We rent and have 3 siblings still living with us. My Daughter is actively looking for a house to buy with her boyfriend, the other two will be with us for a while I guess.

We are about to move into rented accommodation, paying £700 for a 4 bed semi in Northumberland. Reason we are doing this is that we need a bigger house for the (Old) kids.
When the kids start to move, we will downsize and obviously be paying less rent.

Mortgage is not an option at the moment. (Age, size of house we would need at moment, etc)

We need to get a good return for the cash we will get in the next couple of weeks but we don't & can't take risks.

Very open question, what would you guys do?

Sam_J12

If you can't take any risks then your only option is to keep the money in cash. Your best option in terms of returns is to open lots of current accounts, which is currently the only way to get decent levels of interest. Three Nationwide Flexdirect accounts (two individual and one joint) that will give you a 5% on £7500, three TSB classic plus account to give you 5% on £6000, three Club Lloyds current accounts to give 4% on £15000 and a Tesco saver to give yourself 3% on the last £1500. This will give you a decent ~4.5% on your £30k. There are some regular saver options out there too that can give you 6% on some of your money.

There is a government guarantee up to £75,000 for any one institution which ensures you can't lose money if a bank goes bust, ensuring no risk.

Another option, the suitability depending on your current pension situation, is to invest the money in a personal pension which will give you significant tax benefits (especially if either of you are 40% rate tax payers).

jimjames

What replies did you think would be suitable from before?

ronaldadio

jimjames wrote: »

What replies did you think would be suitable from before?

Not so much what was suitable more what was not.
For example, we had an idea that we could buy a flat for £30k, rent it out to DSS people. However we have decided that would not be good.
ISA was another idea we had but was explained and we decided it was a no no.
Some of the stuff Sam J mentioned is good.
This is the kind of thing we were thinking of

princeofpounds

I think Sam is right, if you can't take risks then gaming around to get the best yield in bank accounts makes sense. It's small enough that it's a practical strategy, you won't beat that risk-adjusted return in bonds, and leveraged property and equities is probably too much of a risk.


Depending on your tax status you might wish to look at putting it in a pension, that's the only thing you might want to check. You may be in a position to save tax now by putting it in, then take it out at a lower marginal rate in just a few years' time.

Pincher

It's a no brainer.


£20k in 3% Santander 123.

Regular Saver on 5~6%. Four accounts, two each.

Stagger the Regular Savers every three months, so the amount earning interest doesn't go from peanuts to £10k, then back again.

Assume £250 per month Regular Saver.

Account 1 starts in January, so it's £250, £500, £750, £1,000

Account 2 starts in April, so it's £0, £0, £0 and £250

Account 3 starts in July,

Account 4 starts in October.


In December, Account 1 is £3,000 , Account 2 is £2,250 , Account 3 is £1,500 , Account 4 is £750. The maximum amount in play is £7,500. Starting from the second year, most of the money is generating interest, despite accounts maturing every three months.

It's like a four crop a year rice paddy field, with a harvest every three months. You also have access to some money every three months, not annually.

Premium Bonds? Do you feel lucky?