Examples of investing inheritance

ViktorOnopko

Hi all,

I've been reading through previous posts on inheritance as my OH is about to inherit a house to the approximate value of £380k and cash to the approx value of £200k after her mum sadly passed away at the start of August. We are planning to use £40k of the inherited money to pay off the remainder of the mortgage and then follow some of the advice shown via the forums in terms of diversification, savings, and potentially property.

For context, my OH is 28, I'm 35, we rent and have gone from "I wonder when we'll have a chance to buy" as I was the only one with savings of c.£40k to her owning a house with zero mortgage and significant inheritance. It's a strange situation as we'd give it all back in an instant but it is what it is.

The thing is I don't see any follow up to the advice threads so it's hard to know what people have experienced and what has or hasn't worked. So, does anyone have examples of how they've used inheritance and how that's progressed for them?

I'd also be interested to know how people draw the line in terms of investigating in their pension and retirement versus enjoying life before then. I've seen OH Mum pass away at 54 and my Dad won't make it to retirement either, sadly.

Any input welcome, thanks.

ViktorOnopko

Oh, and one more thing. We're making plans to move in to the house left to my OH, which she'll own outright. It feels a bit weird for me though. I always I thought I'd either pay the deposit on our first home and pay 50% of the mortgage but now I'll be living in a home which I don't own.

I'll obviously benefit from our far reduced outgoings (we've been together 10 years, unmarried) so I guess I just look to invest my money like OH with her inheritance. It just feels a bit strange I guess :-)

reeac

Seems to me that there are three main issues:
1. Do you want to retain separate finances?
2 What balance do you both seek between living it up with this windfall versus sensible saving and investing for the future?
3. What level of risk for investments are you comfortable with?

These are all matters that only you can decide on. Detailed advice can only follow after these issues have been decided.

ViktorOnopko

reeac wrote: »

Seems to me that there are three main issues:
1. Do you want to retain separate finances?
2 What balance do you both seek between living it up with this windfall versus sensible saving and investing for the future?
3. What level of risk for investments are you comfortable with?

These are all matters that only you can decide on. Detailed advice can only follow after these issues have been decided.

1. We haven't discussed finances. We've always had separate accounts but we'll certainly set up join accounts where we can for interest purposes.
2. I think we'll put some money aside for an emergency fund and some for decorating/improving the house. We might use a bit for occassional holidays (we've never had the money to go far afield) but don't plan on splurging it as that's not what her mum would have wanted.
3. Tough question to answer. My OH is in a low paid job so certainly not high risk but this is why I was looking for examples.

kidmugsy

Do you want to have children?

LHW99

Do you / your OH have any pension provision? If not it is worth considering putting some in that direction IMO.
The longer funds are invested, the longer they have to grow, and if your current salaries are low, autoenrollment (currently) won't build up a great amount on the whole, though its definately better than nothing.

xylophone

Do you expect to marry/start a family?

What is your/ OH's pension position?

As things stand at the moment, you will be a lodger in your OH's property?

Audaxer

ViktorOnopko wrote: »

My OH is in a low paid job so certainly not high risk but this is why I was looking for examples.

Providing it's sensible investments like for instance globally diversified multi asset funds or a well researched single sector portfolio, the level of risk is about the amount of volatility that you can stand rather than a risk of losing all your money. If you have a long time frame (say 20 years or more) and you are investing towards retirement, some people would invest 100% in equities, but to do that you would have to not panic and sell at these times when there is a market crash and the value of your fund drops by 50%. A medium risk portfolio which a lot of people may be more comfortable with, would normally be around 60% equities and 40% bonds, where there should be less volatility, but most likely a lower 20 year return.

Thrugelmir

ViktorOnopko wrote: »

I'd also be interested to know how people draw the line in terms of investigating in their pension and retirement versus enjoying life before then. I've seen OH Mum pass away at 54 and my Dad won't make it to retirement either, sadly.

Life is a balance that hangs on a thread. What you put away now for retirement will guarantee a comfortable one. Life doesn't stop when you retire. In some ways it's only just begun. Money takes seconds to spend if yo are so inclined.

ewaste

The main asset is the property which leaves £160k cash once the remaining mortgage on that has been cleared?

If that's the case I would probably utilise both ISA Allowances for the current year to invest a quarter of the money and possibly look at doing the same next year especially if you both have worries about tying the money up in a pension that you will have no access to for a considerable amount of time. Especially given your respective ages children and other life events are a valid reason in my opinion for wanting to have easier access to some of that money. Although some thought may be needed on how this might interact with the benefits system as money in an ISA is counted as savings whereas a pension is not.

With the remainder I would then look into the most efficient way of building up a pension, which may include using some of that to live off of while maximising contributions to a workplace pension to benefit from matching employer contributions or salary sacrifice arrangements. Although depending on circumstances your partner may be able to wrap it in a pension as a lump sum carrying forward unused allowances from the previous three years.

Everyone will draw the line in different places and the nature of this board will more than likely mean most people prioritising pensions over having a nice car or multiple holidays. With no mortgage or rent costs to worry about life should still be pretty good even if your incomes are on the lower end of the scale. Especially so if your financially savvy enough to check outgoings like energy, insurance, telecoms etc to find the best deals for you on a regular basis.

System