Investing an inheritance

TangoPhoenix

ValiantSon wrote: »

Many have downgraded their accounts to Santander 123 Lite, which pays the same cashback, but only costs £1 per month.

Thank you for such a comprehensive reply all round.

The 123 Lite does look like a better option for me, I'll do some research.

ValiantSon wrote: »

By all means split investments across platforms, but don't worry too much about the strict limit of £50,000 - you'll start to run out of platform options!

I think it's going up to £85,000 in April? (I've read a lot of stuff over the last few weeks so I may be making things up?!) But even so, I did see an issue with running out of platforms Thank you for the reassurance about ring-fencing.

ValiantSon wrote: »

Time in the market really is a better option than timing the market, which drip-feeding is simply a version of. When you have the capital as a lump then drip-feeding makes little sense.

Excellent points.

ValiantSon wrote: »

Considering flat fee platforms may well be a better option, especially if you don't go down the - in my view pointless, and potnetially counter-productive - route of drip-feeding.

Good point. I will choose wisely

ValiantSon

eskbanker wrote: »

Pretty sure we've discussed this before but for the record those £500/1% figures aren't accurate, despite being erroneously portrayed that way in (one part of) the MSE calculator.

The odds of any bond winning a prize each month are 1 in 24,500, so with the maximum £50K holding, average luck would bring just over two prizes, i.e. £50, and therefore over a year the median return would be £600 or £625, or 1.2-1.25% [the MSE calculator is only comparing which is more likely between a £500 or a £750 return]. You're obviously right that this is still lower than the easy access alternative though, but the gap isn't as large as suggested, and the mean return is greater than the median so the published 1.4% figure isn't actually invalid!

We have discussed it before.

I don't think the mean is particularly helpful in assessing the likely return. The median is much more appropriate. Anyway, we are agreed that whether the mean or the median is used, savings accounts are likely to beat premium bonds.

Terry_Towelling

Can I just add my condolences for your loss - I have an inkling of what you have gone through.

Can I also do the trick of turning the mortgage question on its head?

If you had no mortgage and received an inheritance of £500K would you think, 'oh that's not enough, I'd better take out a £100K mortgage so that I will have £600K to save and invest'?

I'm not saying that paying the mortgage is the most profitable way forward but life isn't always about financial gain and turning the question on its head will enable you to gauge how you really feel about that particular debt.

Premium Bonds are another issue that divides opinion. Your most likely return (over the longer term) with the maximum holding is about 1.25% (tax-free). Could be more, could be less, could be the top prize - it's a gamble. When you consider about 2.8 million of the 2.9 million prizes are for £25 you will understand how slim the odds are of making anything more than a simple savings account will pay you.

The other thing to consider is whether you want to turn investing into a hobby. Just how much do you really need to make from the inheritance? Do you want to be rolling in wealth or do you want to simply secure your long-term future, live comfortably and try to find a route back to happiness? Don't take too many risks because you just don't need to.

Getting yourself a retirement income (other than state pension) is probably going to be one of your highest priorities and then trying to avoid paying too much tax on any gains will follow - and good luck getting your business back together.

TangoPhoenix

Terry_Towelling wrote: »

Can I just add my condolences for your loss - I have an inkling of what you have gone through.

Can I also do the trick of turning the mortgage question on its head?

If you had no mortgage and received an inheritance of £500K would you think, 'oh that's not enough, I'd better take out a £100K mortgage so that I will have £600K to save and invest'?

Thank you.

That's a really interesting way to think about it!

Terry_Towelling wrote: »

The other thing to consider is whether you want to turn investing into a hobby. Just how much do you really need to make from the inheritance? Do you want to be rolling in wealth or do you want to simply secure your long-term future, live comfortably and try to find a route back to happiness? Don't take too many risks because you just don't need to.

Definitely the latter. I'm looking for a comfortable level of living and security in retirement. I am enjoying learning about investment though and would like to DIY it as much as I can rather than turning it all over to someone else to manage.