£100,000 Inheritance - now the right time to invest?

Toby76

I am writing this on behalf of a friend.

He is lucky enough to own a property with a smallish mortgage and has inherited the above sum. Bearing in mind the current situation, what would you do? He was planning on placing it in his index funds portfolio as always but fears that now is not the right time. Paying off his mortgage isn't necessary as the monthly sum is fairly small.

Any thoughts?

Stevie_Palimo

Peoples opinions differ on this one but for me I'd rather have the house paid off and then invest any additional monies left over as having a property owned outright is peace of mind.

richy999

I would take out a small % for a treat and pay off the mortgage initially.

If I had no other goals for the money in the short to medium term, I would drip feed the remainder into my retirement portfolio over the next 5-10 years, split between S&S ISA and my SIPP.
I would be wary of dumping the whole lot into the portfolio at once.

kidmugsy

What's the interest rate on his mortgage? Would he like to try to gear up his good luck by putting £50k into Premium Bonds?

Is he a higher rate taxpayer? If so, pension contributions until he isn't.

High interest current accounts beckon. If he has access to safe storage, buy some gold sovereigns - free of VAT and CGT.

And, if he's considered trading up to a bigger or better house, consider it again. The tax deal on owner-occuped housing is absurdly good.

jimjames

If you're looking to invest is it better to do so when the market is at a high or when it's got 20% off?


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.

eskbanker

jimjames wrote: »

If you're looking to invest is it better to do so when the market is at a high or when it's got 20% off?


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.

Not sure this analogy really holds up though, you wouldn't jump at 20% off if you thought that it could just as likely be 40% off in the near future rather than going back to 'RRP', although yes, knowing what we know now, buying now is better than buying a year ago....

SilverSix

kidmugsy wrote: »

And, if he's considered trading up to a bigger or better house, consider it again. The tax deal on owner-occuped housing is absurdly good.

Would you mind elaborating on what you mean by the 'tax-deal?'

I'm in a similar scenario to the OP's friend so currently evaluating options too.

kidmugsy

On owner-occupied you get (i) no CGT to pay when you sell (ii) no income tax on the imputed rent you've avoided, (iii) favourable treatment for inheritance tax.

atush

20K in cash accts, top up his pension, pay off mtg, the rest in s&S isas. Done.

bigfreddiel

atush wrote: »

20K in cash accts, top up his pension, pay off mtg, the rest in s&S isas. Done.

Hmmmmm ........

Seems to assume that after paying off mortgage, etc there will only be £15k left. How do you know that?

Anyway, besides that I would agree, pay it all into s&s, ISA or not.

Don't drip feed, it won't really make a big difference especially the small amount you would be drip feeding every month. It's time in the market, not timing the market that matters

Cheers fj

atush

If it is more than 15K, you invest it (same platform) unwrapped and transfer the allowance over each year?

Why make easy complicated?