Scared of losing an inheritance and fears about the market crashing.

JCH71

Hello,
I inherited unexpectedly last year a lot of money - £385K and i'm terrified of losing it.
It is currently in different bank accounts at different rates up to around 1.5% and also in premium bonds. (Marcus, Virgin, Investec, Santander, Tesco)
I am freelance and earn about £25-30k a year
I am 48
I also have significant savings in Lindsell Train (?) and have a tiny SIPP in Hargreaves Patient Capital which I am not sure what is happening but the money I've lost about 60% on it.
I am scared of being in debt so I do not have a credit card, don't owe any money and am close to paying off my mortgage.
I have no work pension or pension bar the sipp which is disappearing.
I know i am very lucky and am very careful but I know that this can all disappear in a heartbeat. My dad lost lots of money in the past and I am very nervous that would be the case.

My questions:
What can I do to mitigate losing it? Am worried about the market at the moment?
One of the bank accounts has over the £85k protection limit should I move it?

Any other suggestions on what I could do that could safely grow it.

Thanks so much.

Jude

MaxiRobriguez

If I were you, I'd start maximising pension contributions via salary sacrifice or SIPP. You'll get a 30% tax avoidance bonus on it and you'll be able to access it in under ten years. Even if you do nothing in terms of investments and just keep it as cash within the pension wrapper, it would be more beneficial to sacrifice £20k from salary and use £20k from the inheritance as living expenses.

In terms of being scared about losing it - unfortunately the reality is in equities/bonds that the capital is at risk. It might go down as well as up. You can lessen the chances of this by diversification, which spreads your investments over a number of different countries/sectors/company size etc, so if one area underperforms the others should pick up the slack. Doesn't always work that way, but does reduce the risk of complete wipeout. If you hold your investment through the bad periods and wait for it to recover then you'll be fine.

When you're coming up to retirement just start moving some of the money out of investments which are volatile and keep a constant small proportion in cash, so you can use that as living expenses rather than selling off investments.

SonOf

I also have significant savings in Lindsell Train (?) and have a tiny SIPP in Hargreaves Patient Capital which I am not sure what is happening but the money I've lost about 60% on it.

Have you got any proper investments to follow a proper strategy?
Or is just going gung ho for high risk the plan?

and am very careful

Not with your investments you are not.

Any other suggestions on what I could do that could safely grow it.

When you take a young child to teach them to swim, you get the armbands and go to a safe swimming pool with lifeguards around and a shallow end to get the child to learn steadily and sensibly.

What you have done with your investing is take the child and throw them in at the top of Niagra falls.

So, for someone that says they are careful and scared, you have taken a 1 to 10 risk scale and jumped right in at 10.

Any reason for that?

Aretnap

Hargreaves Patient Capital does not appear to be a thing. Do you mean Woodford Patient Capital, perhaps via the HL platform? if so this was always an extremely high risk investment trust, taking speculative punts on early stage companies making use of often unproven technologies. It now provides a good lesson in what can go wrong with that sort of investment. No investment expert would have ever recommended that it should make up more than a small percentage of your total portfolio - for reasons which will now be obvious.

Given that you have a lot of money to play with and you obviously don't have much idea of what to do with it (no.offence.intended, but there's no point pretending otherwise) it's probably worth paying a bit for professional advice. A local IFA will be able to recommend a portfolio which should give a better return than a savings account over the long run, while being more balanced and in tune with your personal needs and attitude to risk. You will be a lot better off than you would be putting all your money into.one.or two funds which are flavour of the.month in the financial pages of the newspapers, which it sounds like you've been doing up to now.

In the meantime, no you should not have more than £85K in any single financial institution (other than NS&I). You may lose a few quid a year interest by splitting up the largest account, but you will gain security..

El_Torro

JCH71 wrote: »

Hello,
I inherited unexpectedly last year a lot of money - £385K and i'm terrified of losing it.
It is currently in different bank accounts at different rates up to around 1.5% and also in premium bonds. (Marcus, Virgin, Investec, Santander, Tesco)
I am freelance and earn about £25-30k a year
I am 48
I also have significant savings in Lindsell Train (?) and have a tiny SIPP in Hargreaves Patient Capital which I am not sure what is happening but the money I've lost about 60% on it.
I am scared of being in debt so I do not have a credit card, don't owe any money and am close to paying off my mortgage.
I have no work pension or pension bar the sipp which is disappearing.
I know i am very lucky and am very careful but I know that this can all disappear in a heartbeat. My dad lost lots of money in the past and I am very nervous that would be the case.

My questions:
What can I do to mitigate losing it? Am worried about the market at the moment?
One of the bank accounts has over the £85k protection limit should I move it?

Any other suggestions on what I could do that could safely grow it.

Thanks so much.

Jude

As has already been eloquently put, your current investments don't really fit with your risk averse philosophy.

With the amount of money you have I suggest seeing a couple of IFAs to see if one of them can help you invest more sensibly. The first meeting should be free and give you a feel for whether you are willing / able to work with the person.

You can invest relatively cautiously, though remember that you have to take some volatility risk if you want your investments to at least keep up with inflation. An IFA should be able to help you clarify (and hopefully achieve) your goals.

xylophone

https://adviserbook.co.uk/

When the menu comes up, tick "confirmed independent" and such other specialisms as are required.

tacpot12

I would not worry too much about the bank account that has over £85K in it if the account is with a big bank. If it is with a smaller bank, then I would suggest you move it to National Savings & Investments or invest it.

The advice to go to see an IFA is good advice, but as with any professional service, it pays to understand what you are buying. People have wasted a lot of money on buying a service they don't understand.

What you can do to avoid losing it is to invest it in large well-managed equity funds. You do need investment advice to select a balanced portfolio (with a bias towards cautious investing), unless you can find a ready-made portfolio you can buy into.

Malthusian

tacpot12 wrote: »

I would not worry too much about the bank account that has over £85K in it if the account is with a big bank.

Northern Rock and HBOS were big banks. And anyone expecting the Government to bail out depositors in full next time on the basis of "too big to fail" may get a nasty shock. (Or they may not. I wouldn't be risking tens of thousands of pounds on it.) Next time the Government may take the view that the taxpayer shouldn't be bailing out rich lazy people. It was different in 2007 when anyone with more than £2,000 in the bank had a risk of capital loss.

The OP should split it up as risking 100% loss for the sake of an extra 0.1%pa is insanity. If they don't want the hassle of finding yet another savings account, they can use Raisin or NS&I Income Bonds.

Linton

The first step is to put the money safely into bank accounts or an NS&I account. I like the latter because it is 100% guaranteed government backed for the full amount with zero hassle and pays moderate interest, probably better than a high street bank for large sums of money. Do not put it into investments yet.


You can then leave the money there whilst you decide what to do with it. The first part of that is to decide what you want the money for. Do you want an ongoing income now or save it for later? If the latter how much later? Perhaps you want to use some now/immediate future and save the rest. If so how much now? You should be able to come up with documented requirements. This wont be cast in stone and can always be changed later but it will form the basis for the next step.

This type of high level view is essential if you are to invest sensibly because it will then be possible to select appropriate funds to make it likely that the right amount of money is available for when you need it. You can either select the funds yourself or if you feel nervous about that pay an IFA to translate your financial requirements into a portfolio.