What to do with inheritance?

amylloyd98

Hi everybody,
due to the recent passing of a family member I am set to inherit roughly 100k at 21 years of age. Im currently a full time university student with little savings, this amount of money is quite overwhelming and I’m not quite sure what to do with it. I have differing opinions from my parents who suggest putting the money evenly split into two savings accounts may not be the best move considering the low interest rates right now and maybe investing in a property might be the best move. I just wondered if anybody else had ant suggestions or advice on how to manage and optimise this amount of money. 

Many thanks

george4064

I suggest you have a read through various parts of this page: https://www.moneysavingexpert.com/banking

I assume you don't own any property (and never have)? If so, you should open up a LISA and contribute as much as you can in there. Read more about LISAs here: https://www.moneysavingexpert.com/savings/lifetime-isas/

You can also read through many previous threads created about people who have received an inheritance and asking what to do with it, however remember that there isn't a 'one size fits all' approach at all because everyone has different circumstances etc. https://forums.moneysavingexpert.com/search?adv=1&search=&title=inheritance&author=&cat=17&tags=&discussion_d=1&within=6+months&date=

Once you have had a good read of the banking link posted earlier in my post, come back here with any questions you may have.

amylloyd98

Hi, thanks so much for your reply. I have read through the savings accounts and did consider splitting the money 50/50 and putting it into two savings accounts and i also considered the LISA for when i buy my own first property, but the thought my parents had was to buy a property outright to buy-to-let as currently im living in their home so dont really pay any outgoings, perhaps i could then use this to save for a deposit in a few years for a house that i plan to mortgage and move into? Do you have any advice on whether this is a good idea?

Alistair31

amylloyd98 said:

Hi, thanks so much for your reply. I have read through the savings accounts and did consider splitting the money 50/50 and putting it into two savings accounts and i also considered the LISA for when i buy my own first property, but the thought my parents had was to buy a property outright to buy-to-let as currently im living in their home so dont really pay any outgoings, perhaps i could then use this to save for a deposit in a few years for a house that i plan to mortgage and move into? Do you have any advice on whether this is a good idea?

And if your tenants lose their jobs or are otherwise unable to pay their rent and you cannot evict them easily or in short time, do you want that worry and responsibility whilst you are a full time student? 

I think having a roof over your own head as soon as you are ready would make more sense. 

amylloyd98

Hi, yes I completely understand your point! Forgot to mention that my parents would most likely step in and help in that situation and would also help with all landlord duties (i think they are just desperate in trying to help me get a good start in life) However i have to admit that that was also my concern too as I’m so young

Gary1984

Use the money to support your life plans. Do you work part time? If so you could quit and use some of the money to support yourself and free up more time for uni studies thus earning the best degree you can.

If you plan on buying your own house in the coming years funnel the max, £4k into a Lisa each year.

Spend some on traveling once the pandemic has passed. Interrailing is cheap and fun.

What are your post-uni plans? Could you use some of it to support yourself for a PhD or internship? What are you studying? 

If you're going onto a graduate plan then it could be a deposit on a property where you'll be based. Some cities you could even buy cash. 

Do you want to learn how to drive? If you can drive what about getting a 2nd hand car if you think you need one. 

Don't buy a buy to let. You don't need the hassle. 

Until you have made plans split it across 2 savings accounts. 

amylloyd98

Gary1984 said:

Use the money to support your life plans. Do you work part time? If so you could quit and use some of the money to support yourself and free up more time for uni studies thus earning the best degree you can.

If you plan on buying your own house in the coming years funnel the max, £4k into a Lisa each year.

Spend some on traveling once the pandemic has passed. Interrailing is cheap and fun.

What are your post-uni plans? Could you use some of it to support yourself for a PhD or internship? What are you studying? 

If you're going onto a graduate plan then it could be a deposit on a property where you'll be based. Some cities you could even buy cash. 

Do you want to learn how to drive? If you can drive what about getting a 2nd hand car if you think you need one. 

Don't buy a buy to let. You don't need the hassle. 

Until you have made plans split it across 2 savings accounts. 

Thanks this is great advice, i start my final year of uni in september and then plan to graduate and get a graduate job, i already drive and have a car and eventually in the next few years i plan to move out and buy a property, so i think a savings account and a LISA might be the best way forward. Thank you

Alistair31

You could also consider the maximum premium bonds holding. I’d probably do that, were I in your position. £50k premium bonds, £4K cash LiSA, £46k in the best saving account available. 

Gary1984

Best of luck, sounds like a sensible plan. I would stress that you should use a small portion of the money to enjoy yourself in the summer after finishing uni but before starting a graduate scheme such as going backpacking if that's something you'd be interested in. You may never again have the combination of time, money and youth again in your life! (Assuming Covid-19 won't be too much of an issue by then). 

Notepad_Phil

I'd stay well clear of property as a means of investing unless you come from a family where it is commonly invested in and hence you know all of the risks involved. And even if you do come from such a family, I still wouldn't recommend it whilst you were a university student.

Inflation is currently low, so provided it remains low then it does not matter so much that interest rates are also low. You will lose a bit to inflation, but personally I'd open a LISA and put the max amounts in each year and then just stick the rest into something like the NS&I income bonds until you've completed your education and hopefully got a job lined up. At that stage you can reconsider at leisure on what best to do next with the money.

Also please make sure that you don't look on google, facebook or similar for best returns for savings - unfortunately you'll likely just find a bunch of scammers that will give you a plausible story but will just run away with your money.

amylloyd98

Thank you everyone for all of the advice, its really helped me!