300k lump sum

YB2009

Hi, I have recently been fortunate enough to receive a 350k lump sum and I have no idea where to start in terms of investing this.

I am 25 years old with a current mortgage of 140k, is it worth paying this off before looking to invest?

Ideally I would like something that will provide a monthly/quarterly return to supplement my usual income but also something that will grow over time. I am unsure on whether investing in property for rental or some form of fund would give me this and which of these options would be better?

I have very little knowledge of investment so any ideas and thoughts that I can look into would be greatly appreciated

Thanks.

steampowered

YB2009 wrote: »

I am 25 years old with a current mortgage of 140k, is it worth paying this off before looking to invest?

The answer is no. There are a few reasons for this:

- The long term return on investments is likely to exceed the interest you are paying on the mortgage.

- There are tax benefits to investing. For example you can make use of your ISA allowances which makes your investment returns tax free. Or if you invest through a pension you'll get tax relief.

Ideally I would like something that will provide a monthly/quarterly return to supplement my usual income but also something that will grow over time.

The most important thing you should look is whether you are putting enough money aside to allow you to retire in old age. The later you start doing this the harder it will get, so 25 is an ideal time to start with a sensible long term plan.

Are you contributing say 10-15% of your income (including employers' contributions) to a pension? If not, you should be doing that.

I am unsure on whether investing in property for rental or some form of fund would give me this and which of these options would be better?

In summary the returns from investing investing in a diversified investment fund are likely to exceed the return from property (as they have done historically); are taxed for much less; and require a lot less work.

Probably the best thing will be to select a diversified investment fund (e.g. a Vanguard fund) and invest in that through a stocks & shares ISA.

El_Torro

Paying off your mortgage could be a good idea. You'll probably get better returns if you have the £140k invested but many people like the security of no longer having a monthly mortgage payment to make.

For the amount of money you have I would say that talking to an IFA would be money well spent. Have some exploratory meetings with a few (i.e. talk to them to the point that they don't start charging for their time) to see what it is they can offer you and how they will benefit you.

It is possible to manage and invest the money yourself, as many people on this forum do. If you do it wrong though it could be an expensive mistake to make, going with an IFA could save you money in the long term. They can also discuss your goals with you, see how realistic they are and ultimately help you in achieving them.