Large inheritance, and I don't know what to do!

atush

I agree with posts 2/3. Put it into NSI and give yourself time to think.

IMHO, my own plan of attack would be-

1 Emergency savings of at least 6 months outgoings. Maybe 12.
2 pay off debt (incl mtg if the rate isnt great)
3 Boost pension
4 S&S isas
5 enhancements to your home that are required/desirable

IanManc

I'd vote for putting it in NS&I while you think about it too.

I would also be keen on paying off the mortgage so you're rid of it once and for all. Being mortgage free is very liberating - more than I expected!

ValiantSon wrote: »

Perhaps, but the fee (£5) is actually quite high, and many people don't cover it with the cashback.

In many instances the best return is achieved by paying the much lower fee (£1) for the same cashback in Santander 123 Lite, and using a decent easy access savings account.

I'm in a dilemma about this at the moment. I've always thought that it was good to have a decent sum handy if I needed it, but I never have needed £20k on immediate instant access and although I've never been the victim of fraud I'm getting increasingly windy about having such a large sum in a current account. A friend who worked in a city centre branch of a high street bank for years regards high current account balances with horror - she says you're just making it too easy for fraudsters. :eek:

Jane_B

If you are just starting a 5 year fixed mortgage, I would hold off paying that off yet, as the penalty for early repayment will probably outweigh the benefits of not paying the mortgage payments for the next few years.

I would in your situation, firstly put it in NS&I while seeking independent financial advise. As if you have never invested etc. before it might be handy to at least have a sit down with a professional.
I would then set aside in a low interest but safer general savings account the amount it will cost to pay off your mortgage in 5 years time. And not touch it. Calculate how much you will have left after the 5 years.

Any left over I would consider putting into a stocks and shares ISA and maybe start contributing to a SIPP for retirement.

Depending on how many hundreds of thousands this is, I would personally also consider buying a rental property, as long as it was a sound investment and you can find a decent estate agent to manage it. As if you can do this with no mortgage, you'd get a relatively stable income from this going forwards, which could give you flexibility for early retirement down the line.

ValiantSon

IanManc wrote: »

I'm in a dilemma about this at the moment. I've always thought that it was good to have a decent sum handy if I needed it, but I never have needed £20k on immediate instant access and although I've never been the victim of fraud I'm getting increasingly windy about having such a large sum in a current account. A friend who worked in a city centre branch of a high street bank for years regards high current account balances with horror - she says you're just making it too easy for fraudsters. :eek:

At present, I retain a 123 account. Despite what I said above, it is still a decent option for some. The interest rate is good, although beaten by combining 123 Lite with top easy access savings (but not by a vast amount). However, with declining bill costs I am beginning to consider the switch. The issue for me, is that I like to keep a float in the account (and I use it as the hub for my other accounts), so not all of the £20,000 would actually go in to a savings account. This would mean that I had a few thousand sitting earning nothing in Santander, and I've yet to find a savings account that can compensate me for that. For the time being, I have a watching brief on it.

Fraud doesn't particularly worry me. If the bank gives someone access to my account then it is the bank who will pay, rather than me. I don't anticipate falling for any cons where I give someone my account information, or access to my computer.

Primrose

I send you my condolences.
As have suggested take your time and don,t be rushed into changing your lifestyle.
In your shoes ai would go the NSand I safety route and opt to pay off the mortgage, if onky to have this debt burden removed permanently from my shoulders, even if you can afford it.
With this large amount of money it,s going to be sensible to reduce your tax burden so perhaps be sure that you and your wife bOth take advantage of your £20K tax free isa allowance every year. You may also want to both take advantage of your £50k tax free premium bond holding allowance. Returns are not huge may you may enjoy the mknthky thrill of checking if you've hadnthenodd winner with that amount.

Also look at pension options for you and your wife. Even if you are relatively young, life can have swings and roundabouts and making early provision will assure financial security in later life.

Keep a separate account for emergencies and contingencies.

AndyPK

Only £85K is protected per bank institution. (you are probably covered for 6 months), but long term you need to spit the money up.

Jimmithecat

AndyPK wrote: »

Only £85K is protected per bank institution. (you are probably covered for 6 months), but long term you need to spit the money up.

....unless you go with ns&i

ValiantSon

Jane_B wrote: »

If you are just starting a 5 year fixed mortgage, I would hold off paying that off yet, as the penalty for early repayment will probably outweigh the benefits of not paying the mortgage payments for the next few years.

Agreed. The fix period does make paying it off less attractive an option, but the OP will need to do their sums. One option may be to make annual overpayments upto the permitted amount (often 10%). This would bring down the capital and reduce the interest being paid in total. At the end of the fix, they could then clear the mortgage in total.

Jane_B wrote: »

I would in your situation, firstly put it in NS&I while seeking independent financial advise. As if you have never invested etc. before it might be handy to at least have a sit down with a professional.

No harm in talking to an IFA, although they won't give any specific advice until you start paying. The OP may find that they can learn about investments to have sufficient confidence to DIY.

Jane_B wrote: »

I would then set aside in a low interest but safer general savings account the amount it will cost to pay off your mortgage in 5 years time. And not touch it. Calculate how much you will have left after the 5 years.

I wouldn't use an easy access acount for this, but rather fixed rate accounts. I would suggest just taking one year fixes, which allows for an annual review of the best rates. I'd also keep aside enough money to funnel into regular savers (in particular HSBC, First Direct, Nationwide and Santander, who all pay 5%). That would take up £950 per month, so an easy access account with £11,400 in it would cover that. This money can then be recylced each year through the regular savers.

Jane_B wrote: »

Any left over I would consider putting into a stocks and shares ISA and maybe start contributing to a SIPP for retirement.

Almost certainly the advantages of maximising pensions outweighs ISAs, but a SIPP may not be the best option. The OP should look at what their present pension arrangements are and then maximise those. A SIPP may not then be appropriate, because of limitations due to annual and lifetime allowances. (They may need to hold some money back as cash for several years to make maximum annual contributions into their existing pension(s). An ISA, therefore, may well make a lot more sense.

Jane_B wrote: »

Depending on how many hundreds of thousands this is, I would personally also consider buying a rental property, as long as it was a sound investment and you can find a decent estate agent to manage it. As if you can do this with no mortgage, you'd get a relatively stable income from this going forwards, which could give you flexibility for early retirement down the line.

I wouldn't touch a rental property with a bargepole! The ship has sailed on the tax advantages of buy-to-let, and the hassles of being a landlord come at their own cost, both financial (repairs, insurance, periods without tenants....) and emotional/time. Returns are also not necessarily that great. Investing in good funds are likely to produce better results in the long run.

System

Read this guide here:

https://www.reddit.com/r/ukpersonalfinance/wiki/lumpsuminvestment

Also this:

Matt5_2

I'd like to thank you all for your words of advice and support, I've certainly got some reading to do!

Naturally, going forward I want to put the money into areas where it will collect the best return for my future. I'll seek independent advice on the best route of investment and savings for my circumstances when things have settled somewhat. In that time I'll try and soak up some of the fantastic knowledge and advice on these forums to try and understand even a fraction of the implications of various forms of investments and savings options.

My main concern ofcourse was to make sure that if a large cash bequest is coming my way imminently, then I can secure it somewhere safe, that will work for me financially in some respect, and be accessible when the time comes that I make further use of it, and I think the resounding advice here is to hold it in an NS&I Income Bond for the time being.

With that, I'd once again like to thank everyone for their input, it has been a great help, thankyou.