£100k+ Inheritance advice

User6565

We’re in a similar dilemma but will go for mortgage for the bulk of the money as that was what the deceased would have wanted. It will take us 3-4 years to drip feed it in as were on a fixed rate with high penalties for overpaying over a certain percentage. We’ll park the money in premium bonds or regular saviers as we dont want to take any risks (and also need to be careful re interest income as we’re on a threshold where we need to keep income lower unless in a tax free wrapper). We will invest about 10-20k depending on the final distribution. Although there would be significant benefits to pension savings, for us the psychological benefits of paying down our very large mortgage outweigh the future tax benefits. If you just looked at the maths pensions would win but we’re too young to have all our money tied up in pensions and I want a cushion with mortgage.

Audaxer

Paul_the_electrician wrote: »

I will definatly look into premium bonds, i think that as with everything, everything in moderation and diversify

I think you would need to put £50k into Premium Bonds to have a reasonable chance of getting winnings of 1.4% per annum, and a little chance of a big win, so I don't think that's a great choice for an investment.

It would just be a great feeling to smash that mortgage though!:beer:

In your position I think making a bit dent in the mortgage would give me a great feeling as well. To own a £480k house with only £60k left on your mortgage would be a great position to be in for someone your age.

AlanP_2

The other thing I would look at is your wife's pension. Could you put £8k gross into a SIPP for her?

8k gross would be 6k net with HMRC adding the extra 2k even though no tax paid on her salary of 8k.

That would help to balance retirement incomes out a bit and probably help to make full use of both tax free allowances.

Being comfortable with your mortgage situation is not just a financial calculation, a great deal of personal psychology comes into it.

Paul_the_electrician

User6565 wrote: »

We’re in a similar dilemma but will go for mortgage for the bulk of the money as that was what the deceased would have wanted. It will take us 3-4 years to drip feed it in as were on a fixed rate with high penalties for overpaying over a certain percentage. We’ll park the money in premium bonds or regular saviers as we dont want to take any risks (and also need to be careful re interest income as we’re on a threshold where we need to keep income lower unless in a tax free wrapper). We will invest about 10-20k depending on the final distribution. Although there would be significant benefits to pension savings, for us the psychological benefits of paying down our very large mortgage outweigh the future tax benefits. If you just looked at the maths pensions would win but we’re too young to have all our money tied up in pensions and I want a cushion with mortgage.

Yes for me the issue of family security is a very big factor, also i really hate having debt, even with a super low interest rate, and if i have this money in house equity rather than locked away in a pension then if some worthwhile opportunity did come up in the future i could always take some of the equity back out(not that i would unless it was really worth it)

atush

I think your scattershot approach is a good one with saving in cash, pensions, S&Sisas etc being a good idea.

I would however save a separate amount to GET married (or at least civil partership) as you will both be better off tax/inheritance wise. Might be fun to have a party too lol.

atush

Paul_the_electrician wrote: »

for me saving for a pension seems to have no point at which ill ever know ill defiantly have enough, bit like putting money into a black hole that will never be filled, theres so many unknown unknowns. and with rough calculations ill need to have around £600k invested to have a relatively modest income to draw from

paying off a mortgage is so much a more clear cut goal with an achievable end, i suppose thats why most fall into the trap of having an underfunded retirement

It may be more clear but you are VERY wrong.

A pension is a great way to save for your retirement, and you need to do so- it isnt a black hole, A black hole is where you will find yourself if you can't retire and have to keep working thru your 70s.