What to do with inheritance money?

EleriRhiannon

I've inherited a five-figure sum from my late great uncle and I have no idea what to do with it. This is the first time I've been in charge of it as I'm turning 21 this weekend and so my grandmother who previously had control over it is passing the responsibility on to me. I was going to use it as a deposit for a house but the mortgage fell through last minute and I have nothing else to spend it on. I have no debts or anything like that to pay and the only short term use I can think of for it is for travelling but I'll still have lots of money left even after that. I'm a complete novice when it comes to finance, banking etc. Looking through various ISAs and savings accounts makes me feel lost and I don't want to waste such a big sum. What is the most sensible thing to do with it currently and does anyone have any specific recommendations? Any advice would be greatly appreciated!

xylophone

In the very short term you might use National Savings Income Bonds.

http://www.nsandi.com/income-bonds

If you require individual tailored advice you can consult an independent financial adviser,

http://www.thepfs.org/yourmoney/find-an-adviser/

A fee will be payable for the advice.

https://www.moneyadviceservice.org.uk/en/articles/choosing-a-financial-adviser

If you are likely to want to purchase a property in the near future, you will need to keep enough for the deposit, legal fees, furnishings etc easily accessible in cash.

Flobberchops

Xylophones ideas are all great. You mentioned you were looking at a house deposit; I assume that's still a short-term plan? If so you'll presumably be wanting to keep the majority (if not all) liquid and accessible.

This is one of the few circumstances where I'd be tempted to recommend a normal cash ISA over a Help to Buy one: you'd benefit from more interest in the short term than having most of your cash idle as you drip-feed a HTB. As it sounds like you're looking to buy in the near future you possibly wouldn't even accrue enough to get the 25% bonus. An ISA would take up to £15240 of your inheritance, and when April the 6th rolls round, another £15240.

I suppose what would help is knowing a bit more about what kind of figure you're talking about (you say five figures, there's a big difference between, £10,000 and £99,999), what your plans are, and what percentage (if any) you're willing to invest and/or lock away for a duration.

colsten

A financial advisor will only be interested in investments. Investments should be commitments for 7-10 years at least.

If you want to buy a house this side of the next 5 - 7 years, you should not get into investments - at least not with all of your money.

If you can be a bit more precise on the size of the 5 figures, it will be much easier for people to comment. It makes a huge difference whether we are talking £10,000 or £99,999. A financial advisor wouldn't be interested in anything much less than £40K or so, and only if you are investing at least this sort or sum.

Eco_Miser

Where is the money at the moment?

If you're going to buy a house more than 3 months away, put £1000, and £200 a month into a Halifax Help to Buy ISA, earning 4% AER plus that big government bonus when you buy.

Then have a look at https://forums.moneysavingexpert.com/discussion/5374614
These are the best savings rates available. You should qualify for all the accounts, and you're allowed as many as the banks will give you.
If the sum is more than you can put in those accounts, look at NS&I.

EleriRhiannon

Sorry for being so vague, it is around £70,000. I was going to use £20,000 for a deposit and another £10,000 on doing up the house in question but we are no longer purchasing it. I would like to buy in the next 5 years so I suppose investments are out of the question. It's currently in one of my grandmother's accounts earning no interest.

Flobberchops

£70k earning *no* interest at all? Yikes, that's criminal.

I'd say definitely consider opening a Halifax Help to Buy ISA and opening it with - and adding - the maximum allowed each month.

With the rest, how much do you need to be instantly accessible and how much could you potentially lock away for a year or more? Also, how do you feel about setting up multiple current accounts to make the most of interest offers?

xylophone

If you want to buy a house within the next five years and are not sure how much you will need, it might be best to keep the lump sum ( or the bulk of it) in cash for the time being.

If your grandmother has been holding this money in trust for you it should not have been held in her sole personal name.

At all events, the money should be passed to you now - your grandmother should give you a letter giving details of the legacy together with the cheque which you can pay into your own account.

The rates available on savings accounts are not very good at the moment

http://www.thisismoney.co.uk/money/article-1583859/Best-savings-rates-General-savings-Internet-branch.html

but you might be eligible to open high interest current accounts.

https://forums.moneysavingexpert.com/discussion/5374614

Apodemus

If the money has been held informally by your grandmother for you, on behalf of your late uncle (rather than in some form of legal trust) then it might be good to get as much documentation on this together as you can. Families do wonderful, informal things, which can later cause unforeseen complications.

Depending on your grandmother's financial situation and the state of her and your uncle's wills, I would have thought that there could be a risk that if anything happened to your grandmother in the next few years, your £70k could be seen as having been disbursed from her estate or be seen as a deliberate deprivation of assets. This could have Inheritance tax consequences if she is wealthy or State support consequences if she is taken into care.

getmore4less

Why only 20k deposit?
House changes are expensive think future.

What is your earning potential going forward?

To get on the investments learning curve
Start with account tarting rotating money through high interest accounts.
Read an investment forum like the UK motley fool.
Depending on future cash flow as you want to be adding to any stock based investments start an ISA. 2years ISA allowance is a good start for a basic portfolio self select ISA.

Some like property as their investments again read up about being a landlord first.

No rush just preserve the capital get it working while you decide. Nothing wrong with sitting on it for a year probably the best action to avoid rushed decision.

If this gas been sitting doing nothing for sometime in trust you may have case for compensation. The trustees should have taken investment advice for this amount.

SilverSix

Would you prefer to buy a house or other product at 20% off? It's no different with the stock market. People see volatility or drops as a reason to not invest whereas with any other item you'd normally jump at the chance to get something at a cheaper price.

This echo's my thoughts.

I'm in a very similar position to the OP, though slightly older at 26 and having just cleared the primary mortgage on my property I have a small amount of additional borrowing for my car which will be cleared with proceeds of my inheritance.

My only existing debt will be my student loan which will whittle itself away through PAYE and it makes no sense to clear it sooner.

My short term-medium term plan, until I decide long term how I want to apportion it specifically will be to:

• Top up this years S&S ISA allowance and invest mostly in managed funds.

• Start a SIPP but I have yet to decide quite what this will consist of.

The remainder:

• Easy access/short term savings accounts

• Premium Bonds, I know frowned upon by most but whilst ISA/SIPP allowances renew it is a safe enough place with hopefully *some* return.

You're still very young but I would consider allocating some of this to your retirement planning. 40 years + of compounded interest/growth on £10,000.00 would be a considerable amount and I'm sure come retirement you'd be pleased with the decision.

I would not hastily invest long term or consider a house purchase unless you are certain you won't be relocating and wont have other needs or uses for the money.

I inherited a substantial sum in my 20's and invested this through an IFA with a 5 year view. Less than 12 months later I found living at home after Uni too problematic and surrendered everything to fund my house purchase, I've been there 5 years and am happy as larry. If your career propsects are still uncertain tying yourself down with property might not be particularly wise. Though it can always be rented/let but that's not without it's difficulties.