HELP! What do I do with it all?

asmuchasthat

I have just come into a lot of money (for me anyway!).

After paying off the mortgage I have over £500k left :eek:

At the moment it's sitting in a savings account and I'm off to see someone at the bank soon and an accountant.

I have seen the best tips on the main site for ISA's and NS&I savings but what do I do with the rest!!!???

I know an IFA and accountant and the bank will all give advice and the bank says it can offer better rates than that published (true, or just to get me to go in?). But I would love to hear other peoples thoughts who have a better idea of what to do than me so I can bounce the experts a little.

I am already close to the 40% tax bracket but my civil partner is still 20k short.

What I really want to know is the logical steps for maximising income from this without too much risk.

Thanks,

Ian

jem16

The one place you don't want to take financial advice from is a bank. They are fine for savings but not for investments. For investments, their products are limited, poor and usually have high charges.

With an amount like £500k you should really be looking for an investment portfolio. If you stick the lot into savings it will soon lose its value due to inflation. You are also going to have tax issues especailly as you are already close to the higher rate bracket.

You need proper advice on this and would be well advised to see an investment specialist IFA before anyone else.

Jonbvn

With this sort of money, an IFA is a must.

However, an IFA will not usually recommend NS&I products. In your position, I would have a look at index linked savings certs for a portion of the money. They are guaranteed to beat inflation, and are completely tax-free. You and your OH could invest £60k immediately, and 60k when there is a new issue (usually twice a year).

asmuchasthat

Thanks for that...

I was thinking of shares etc but what with the fluctuations in interest rates and the possibility of them increasing I was worried an interest rate increase would impact on share value etc.

I am typically cautious :rolleyes:

jem16

An investment IFA will organise a portfolio that will take into account your attitude towards risk. This is why it's important you see the right type of adviser. A bank's adviser is tied to one insurance company's product and they can only pick from those products.

An investment IFA will typically use funds from different sectors and different geographical areas and will be able to choose from thousands of products and these will be matched to the cautious risk that you fell you want to take.

Searcher2

You don't say how old you are or if you have any dependents... but another reason you may want to see an IFA is to plan for inheritance tax avoidance for any dependents. If you are likely to spend most of the money before you meet thy maker then this of course is not an issue.

dunstonh

However, an IFA will not usually recommend NS&I products.

Yes we do. However, you need to look at the size of the transaction and the attitude to risk and tax position of the indivual. NS&I certs are great for the cash element of a portfolio but for someone wanting to invest they are not good. IFAs are investment advisers not savings accounts advisers. When you get to around £250k plus, then things like NS&I come more into play than say someone with £50k.

I am already close to the 40% tax bracket but my civil partner is still 20k short.

She will be a higher rate taxpayer once you factor in the £500k and interest payable on it. Indeed, you will both be.

The problem here is timescale. Investments have to be 5 years plus unless you are an experienced investor and accept high risk. So, with most of the tax wrappers to reduce your liability being geared to investments rather than savings, that could be a problem. If you plan to spend some of the money later but not all of it, then an offshore or onshore investment bond could be in order as this will avoid higher rate tax by deferring the tax calculation until such time you are basic rate taxpayers (by using withdrawals in the future to benefit from top slicing relief).

If you are cautious, you would buy shares. You are more likely to utilise a spread of funds to match your risk profile. Some of these would include share based funds but the weighting is key there.

Jennifer_Jane

Why don't you see a couple of IFA's (pay a fee if necessary), then come back here to see if anyone has any comments on what has been recommended?

Incidentally (and I am not a financial advisor), when I did my FPC3, we HAD to include NS&I products, and would have failed the exam if we hadn't included them.

Jen
x

asmuchasthat

Thanks everyone you have helped me a lot.

We are a gay couple with no kids (though we have nieces and nephews with a demand on our cash)

I have built myself a spreadsheet (yes a bit geeky too) taking roughly into account our earned income, allowances and tax thresholds as I know from the site we can pass money between us. But of course I'm no tax and savings expert.

The bank (HSBC) claim to have IFA's which are not tied to HSBC products or is this cloak and dagger stuff?

jem16

asmuchasthat wrote: »

The bank (HSBC) claim to have IFA's which are not tied to HSBC products or is this cloak and dagger stuff?

I would very much doubt that financial advisers from a bank would be independent. As far as I'm aware they are employed by the bank and therefore tied to the bank.

dunstonh

HSBC do have IFA access if you ask for it and you are on one of the service levels. However, their IFAs are saleforce with targets etc. I have seen the advice they have given a few times and it always seems to be the same which suggests its more panel based than whole of market.