I want a monthly income from my inheritance, what should I do?

bostonerimus

OK so £120k will not change your life or provide enough income to live off, here's what to do.

Pay off high interest debt,
Use some for house deposit, make sure you can afford the mortgage,
Put a year's spending in the bank for emergencies.

With what's left
Contribute the max to your company pension, buy a fund like VLS60,
Contribute the max to an ISA, buy a fund like VLS60.

Keep saving to those accounts and eventually you'll have enough of a pot to live off.

job done.

Smellyonion

bostonerimus wrote: »

OK so £120k will not change your life or provide enough income to live off, here's what to do.

Pay off high interest debt,
Use some for house deposit, make sure you can afford the mortgage,
Put a year's spending in the bank for emergencies.

With what's left
Contribute the max to your company pension, buy a fund like VLS60,
Contribute the max to an ISA, buy a fund like VLS60.

Keep saving to those accounts and eventually you'll have enough of a pot to live off.

job done.

£120k would change most peoples lives. It would allow most people to pay off all or a large chunk of their mortgage or put down a meaty deposit - all of which would drastically boost lifestyle and/or disposable income and would lead to a much higher quality of life.


If saving rates are less than debt, the logical thing is to put the money into the debt as you suggest.

Norman_Castle

smashy wrote: »

- Pay off my debts
- Use a % for a deposit for a mortgage
- Invest the rest of the money

A mortgage is a debt. Investing in that will give either a shorter mortgage or lower monthly repayments.
Its pointless creating a monthly income to repay a debt you don’t need to have.
https://www.moneysavingexpert.com/mortgages/mortgages-vs-savings/

Flobberchops

A couple of points. First, some people need to calibrate their Troll detecting apparatus and extend a bit more benefit of the doubt to new posters.


Second, everybody is talking about the £70k lump sum but ignoring the £4k monthly income. I'm speculating wildly about OP's lifestyle and financial situation here but say he can save/invest £1000 of that a month from now until retirement. That changes the picture significantly.


OP: Although the stock market is considered a long term investment due to the volatility, that doesn't mean the returns are deferred or locked away. If you bought some dividend stocks, or income funds, they would start paying out immediately. *Most* dividend stocks pay twice a year but there are so many exceptions to the rule that you should look carefully into each one you're considering. It's a big subject so definitely spend some time getting to grips with the concepts before diving in. Perhaps pay for the advice of an IFA, but in my opinion the best place to start would be doing some learning yourself. Buy a book or two about investing (try to choose ones with a UK or at least international focus, much of the literature out there centres on the USA), or even read some of the free advice and FAQs on sharedealing websites. There's a lot of freely available information out there.

smashy

Thank you so much guys for your help and advice, I have been learning loads in here!

£120k will definitely change my life.

First of all I have several debts from credit cards and loans and being able to pay off all of them will make a huge difference in my monthly income! No more paying large sums every month to that!

Also, I have been wanting to buy my own house for ages but didn't have enough money for a deposit, now I do.

Those two things combined with definitely make a LARGE difference in my lifestyle and quality of life.

Instead of paying monthly a rent plus all the debts, I'll only have the mortgage to pay and that's it.

So that also means that now I can save more money too instead of paying debts.

From what I understand here, I don't know much about investing, so I'm not going to do much in that regards until I learn more or find a good financial advisor.

I'll just put the rest of the money in a savings account for the time being, and save more money every month into it until I decide what to invest.

Is that a good idea?

Norman_Castle

smashy wrote: »

First of all I have several debts from credit cards and loans and being able to pay off all of them will make a huge difference in my monthly income! No more paying large sums every month to that!

Also, I have been wanting to buy my own house for ages but didn't have enough money for a deposit, now I do.



Instead of paying monthly a rent plus all the debts, I'll only have the mortgage to pay and that's it.

So that also means that now I can save more money too instead of paying debts.

From what I understand here, I don't know much about investing, so I'm not going to do much in that regards until I learn more or find a good financial advisor.

I'll just put the rest of the money in a savings account for the time being, and save more money every month into it until I decide what to invest.

Is that a good idea?

Why not use whatever is left after paying your debts as the deposit? This will make your monthly mortgage payments lower or reduce the mortgage term.
Invest the money in the property you will live in.

smashy

Norman_Castle wrote: »

Why not use whatever is left after paying your debts as the deposit? This will make your monthly mortgage payments lower or reduce the mortgage term.
Invest the money in the property you will live in.

Because money in a property I am living in is money that is "stuck" so to speak.

I am living there, so it's no buy to sell or buy to let where I can make a profit.

I just think it's a waste having everything going into the deposit and have nothing left for savings or investments!?

bowlhead99

smashy wrote: »

Because money in a property I am living in is money that is "stuck" so to speak.

I am living there, so it's no buy to sell or buy to let where I can make a profit.

I just think it's a waste having everything going into the deposit and have nothing left for savings or investments!?

I would agree to not putting all of your money into the property equity if it would leave you without savings and investments.

The reason you had debts in the first place was because of not succeeding to manage your income against your expenditure needs. So you need some sort of cash savings to cope with expected and unexpected costs (especially as you will now have a property to maintain), allowing you to avoid potentially high-cost debt. And you will perhaps need some investments to support longer-term goals (not forgetting retirement). So putting every penny to clear the mortgage is probably not wise.

The 'profit' you make by paying off more of the mortgage, is the avoidance of interest charges on what you've borrowed under the mortgage, which in the longer term might be expected to be much higher than they are today, because mortgage interest rates aren't fixed for the life of the mortgage and are currently at quite a low point compared to their long term average.

Investments, especially tax-efficient ones inside pensions, may be expected to generate a bigger return over the long term than the saving to be made by paying off the mortgage. But pension investments are also 'stuck' so to speak, in that you can't get at the profit until your late 50s (you can still keep reinvesting the profit inside the pension, to make profits on top or profits on top of profits).

atush

As far as i can tell, you dont really need extra income.

You do need to keep some (20K maybe) in emergency cash- put into the best interest rate acct you can find. Boost your pension maybe- another 10K. Start a pension if you dont have one (more than 10K as you are playing catch up).

Then invest the rest. instead of taking the income, you reinvest it. Look up compounding returns. This is the route to wealth/comfort.

MoneySaverMick

smashy wrote: »

Because money in a property I am living in is money that is "stuck" so to speak.

I am living there, so it's no buy to sell or buy to let where I can make a profit.

I just think it's a waste having everything going into the deposit and have nothing left for savings or investments!?

Clearing your debts is a very smart move and probably the most obvious one. Get yourself you own residential property to live in then have you ever considered property investment?

It's something I'm looking into as I have friends and family that are currently landlords. You can recycle some of your cash back out of each property you buy so that £70k could probably get you a few properties. On an interest only mortgage, £250 profit from a single property is very achievable so 4 would give you £1k. But that's as long as your happy with the risk in property, bad tenants, voids which may crop up from time to time.