Inheritance...what to do with it?

forsya

Hello

I have inherited some money and I don't know what to do with it. Some has just been put in our ISA's, savings and kids accounts but I know I need to invest it somehow but not sure where to start...it's scary!

I went to one Financial Advisor and their rates seem high 3% initial and 0.85% - 1%.

Or do I get investment advise from our bank? Do my own research? Or get advice from a FA?

Any help appreciated,
Many thanks
Aly

Brilley

...not enough information by a country mile.

Do you have any debts / mortgage, do you own your own property, what age are you / when will you retire, do you have any dependants, what are your objectives, do you have a pension, what sort of income do you have, how much do you need to spend, how much inheritance are you talking about, what is you attitude to risk regarding investments...as a starter for 10...General advice is to pay of any debts first as these normally cost more than you can get from any savings interests.

Sea_Shell

A lot will depend on the amounts involved. £10k or £500k?

gm0

Bank is a No No. Poor skill levels, tied to selling own dreadful value products (typically). Could conceivably get lucky with an individual but branch relationship banking has (largely) been dead for a long time now.

Make sure any advisor (IFA) is whole of market independent and not a company product salesperson - the man from the Pru or a St James' place who will match you up conveniently to something they sell - often with opaque charges.

But before you sit down with anyone (if indeed you do) then a level of self education and reading the FAQ and various helpful sites around investment topics would be a good start. Stocks and Shares ISA, pensions (SIPPs) etc. Passive investing vs Active. Monevator is a good one.

This forum has helpful IFAs on it and consumers like me. There is a bit of a DIY bias (avoiding IFA/FAand fees as an unnecessary drag on returns. But as people point out DIY investing done badly costs a lot more than the fees. You need to be willing to put in the time to identify a mainstream approach that suits your goals avoiding the scammers and the more extremely risky stuff. With a bit of study "mainstream" DIY investing is not rocket science provided you have understood the issues that attend all such "stockmarket" investment - volatility and timescale. A 50% (temporary usually historically) swing down in value is a NORMAL thing to happen as part of a long term upward trend. Clearly a terrible outcome if you "must" have the money at the wrong time.

All the above assumes you have clearly expressible long term goals for the money 10 years +

Any advisor is going to want to understand your income and capital needs in future years and how the invested inheritance plays into this alongside your other family income, assets, liabilities (debts)

What is an appropriate risk level for you to take with investments is going to need that whole of finances and goals point of view. How you look at "achieving the growth to - say help children with step onto property ladder" vs capital preservation over all (lower risk, lower return investment).

Linton

No-one can say what options may be suitable until you provide a bit more information.....


How much, roughly? £10K is very different to £100K which is very different to £500K+.
What do you want the money for? When will you spend it? 0-5 year, 5-10 year, 10 year+?
How old are you? Working, married, dependents?
Roughly how much savings/investments/pension do you already have?



If you want to put it somewhere until you decide, bank accounts for up to £85K, beyond £85K NS&I.

Albermarle

You could also type in the search box for the board at the top - 'inheritance' ' lump sum' etc and look through various threads on the same topic.

littleredhen

I paid off my mortgage (12K) then put the rest in a savings account that had instant withdrawal as I didn't want to lock it away but you could lock some away to get a better interest rate etc as op's have said it depends how much you have and how your debts are

forsya

Thanks everyone. So some more info!

Amount £200k
Age - soon to be 40
Married
2 children aged 4 and 5
Husband income £36k
My income - stopped working October, plan to work in Sept when second child starts school (using £500 a month of savings)
No credit cards
Current mortgage £150k monthly payments £680
Car loan - £5579 left to pay
Pension -
Husband - £51k
Me - £3500 (terrible)

We have spent some money I got last year on a new boiler, front door, painted bedrooms. No plans to move house/extend/spend any more on the house.

I would say I am medium risk perhaps? I need to look into that.

Thanks

kinger101

Various options worth considering.

(a) assuming you're a non tax-payer, put £2880 each year into a pension. Repeat again on 6th April if you're unlikely to pay tax next year - i.e. earn under the personal allowance.

(b) stick £4K into a LISA. Repeat again on 6th April if you're still under 40. You won't be able to access until your 60, but it the government will bung in another 25%. I'd be inclined to use world index fund such as Fidelity Index World.

(c) if the car loan has interest and no early redemption costs, pay that off.

(d) would be worth husband increasing pension contributions if this can be done under salary sacrifice.

(e) mortgage overpayments/repayments are also an option, but are not as tax-efficient as pensions (and generally a lower return on investment).

(f) Leave rainy day fund of 6-12 months expenditure.

(g) Buy me a Ford Mustang.

In the meantime, do not leave more the £85K of money in any one bank. Split it between accounts, or use NS&I. That way it's protected if the institution holding the money does a Northern Rock.