You'e just recieved £175k...

grumiofoundation

SavvySaver24 said:

steampowered said:

The main options are:
1) Pension
2) Stocks & Shares ISA
3) Regular stocks & shares investments
4) Overpaying the mortgage
5) Cash savings accounts or premium bonds

Those options are ordered from "most profitable" to "least profitable".

It is not a good idea to keep this money in savings accounts for a long period of time. By all means do that while you work out what to do, but for goodness sake don't leave the money in savings accounts indefinitely. If you do that it is going to lose value over time due to inflation. The UK's inflation target is 2%. 2% of £175k is £3.5k per year. So if you leave the money in the bank getting hardly any interest, think of that as losing £3.5k per year. 

It is worth spending the time to educate yourself about the basics of investing. Any money which you intend to have for more than 5-10 years should really be invested.

Open a stocks & shares ISA, and invest the maximum amount possible (£20k each tax year) into it. Buy a low cost, diversified stock market fund - such as a Vanguard fund (other fund providers are available). That's going to get you a good return - the average return generated by the stock markets over the past few decades is 7-8% per year - over a long time period that's a pretty safe bet. 

You could also consider boosting your pension contributions, and using some of this money to pay for that. The benefit of pension contributions is that you get investment returns (i.e. 7-8% per year) AND you get tax relief, which boosts the value of what you put in by an extra 20% for basic rate taxpayers or 40% for higher rate taxpayers.

Thanks for this. I know I am woefully uneducated about investing, I'm just not sure where to start. With the Stocks and Shares ISA, can you have one of those and put £20k in tax free in addition to a regular ISA. Or is it either or?

20k contribution limit (new contributions not transfer) is across all ISA types.

Do you actually need to save in a cash ISA - i.e. versus a normal (non-ISA) savings account?

Pension is a good call, I don't actually pay much attention to it.... I don't pay into it but my employer pays in 12% od salary.

Pension and/or stocks and shares lifetime ISA would be the most tax efficient way of investing.

But if you are looking to use all/some of the money before retirement then not appropriate.

If you pay into pension will employer match any contributions? (If so maximise this immediately = free money)
Are you a higher rate tax payer?
If you make pension contributions will they be via salary sacrifice (means save NI as well as tax)?
Is your pension Defined contribution (DC) or defined benefit (DB)?

Although you say don't know about stocks and shares and are risk adverse your pension is (assuming DC) is invested in the stock market so good to educate yourself. 

In 2 to 5 years we may look to move at which point I would consider contributing £85 to £100k of my inheritance to the next house if it meant we could afford our 'forever' home.

If you are looking to use the money within next 5 years this is quite a short timescale for investing - in 5 years could be worth less than is today.
As said premium bonds are the 'best' easy access product available. Max. 50k per person so could have 50k each

30. I'm nearly at my tax free limit on my ISA for the year (will be after my March pay). Bur thinking of giving my partner £20k to put in an ISA (he doesn't currently have one).

In your OP you say this money is "mine". Be aware if you gift money to your partner that becomes "theirs".

- I jointly own a house with a partner. We easily afford the mortgage each month and I don't want to use the money to pay off the mortgage as whilst I see no doubts about our future, this money is "mine" and the house is joint.

Albermarle

With investing , time is your friend. They will go up and down but in the long term the trend is  up . In some periods more than others, but you can expect at least to beat inflation and probably significantly better than that.
If you add to that have a need to have some long term plan for when you retire ( even early maybe ) , such as a pension .
A pension is a long term investment that has the added advantages of also giving a tax benefit . ( even more so if your salary increases and you start to pay 40% tax ) 
So a good plan would be to start contributing a % from your salary to your employer pension ( now you can easily afford it) and maybe add an occasional lump sum as well.
Next follow the advice above  I would suggest looking into what your pension fund invests in and if you could do better either DIY or IFA. Ignorance will cost you when you retire

OldMusicGuy

If you want to make the most of this money, do a bit of reading before you make any decisions. Pensions and investments are the best places for long term wealth, but you need a level of knowledge you may not have. These books helped me a lot, both are by John Edwards and they are not complicated:

DIY Simple Investing: A Guide to Simple but Effective Low Cost Investing
DIY Pensions: A Simple Guide to Pensions, SIPPs & Retirement Planning

There are others, but if you start with these they will help you build a level of knowledge to make better informed decisions. 

You have been offered a great opportunity, you owe it to yourself and your family to spend a bit of time making sure you make good decisions about how to use this opportunity.

SavvySaver24

csgohan4 said:

Pension is a must for you, especially as you don't put in money for it. I would suggest looking into what your pension fund invests in and if you could do better either DIY or IFA. Ignorance will cost you when you retire

Whilst I don't pay it in, my employer contributes 12% of my salary which is pretty significant

Albermarle

SavvySaver24 said:

csgohan4 said:

Pension is a must for you, especially as you don't put in money for it. I would suggest looking into what your pension fund invests in and if you could do better either DIY or IFA. Ignorance will cost you when you retire

Whilst I don't pay it in, my employer contributes 12% of my salary which is pretty significant

For sure 12 % as an employer contribution is significantly better than average . We do not know how much is in the pension or your age, so it is difficult to make exact judgements. What is known is that the amount of money you have to accumulate to get a decent retirement income, and/or retire early, is seriously underestimated by many people. Your future self will thank you for adding more to your pension now whilst you have the chance. 

ratechaser

SavvySaver24 said:

csgohan4 said:

Pension is a must for you, especially as you don't put in money for it. I would suggest looking into what your pension fund invests in and if you could do better either DIY or IFA. Ignorance will cost you when you retire

Whilst I don't pay it in, my employer contributes 12% of my salary which is pretty significant

But apart from that 'base' 12%, do they also match additional contributions that you put in? That's a common feature of pension schemes, at least the more generous ones.

SavvySaver24

ratechaser said:

SavvySaver24 said:

csgohan4 said:

Pension is a must for you, especially as you don't put in money for it. I would suggest looking into what your pension fund invests in and if you could do better either DIY or IFA. Ignorance will cost you when you retire

Whilst I don't pay it in, my employer contributes 12% of my salary which is pretty significant

But apart from that 'base' 12%, do they also match additional contributions that you put in? That's a common feature of pension schemes, at least the more generous ones.

That's something I'll have to look into actually. I am more leaning towards something I have nearer access to though - 10 years rather than 30.