Zero experience - how to invest £150k?

brightonelizabeth

Hi,

I am 23 years old. My brother and I recently inherited £146,000 (73k each). It is currently just sitting in my bank not doing anything. We want to invest it and are willing to club together to do so. We are not interested in buying property and I don't think we would qualify for a mortgage even if we wanted to (I graduated in the summer and my brother is a student).

Any advice to a pair who have zero experience in investing? Surely there is something better we can do other than let it sit in our bank? 

Thanks!

Linton

What do you want the money for? How much and when?  If you dont know come up with a possible scenario - you can always change your mind.  How you invest/save depends on the timescale - months, 5 years, 25 years?  The longer the time the higher the return you can reasonably expect.  For any timeframe of less than 5 years you should keep what you need in cash.  True investing means taking short term risks and so the full amount may not be there when you need it.  If you can accept a long timeframe then funds of shares is probably the best option with least effort.

I suggest you dont club together.  Investigate the options together, fine, but keep your monies separate.  Money seems to be a common reason for serious family arguments.  

eskbanker

First piece of advice would be to do your own thing - I can't see any benefit in 'clubbing together' as a pair to invest your own individual stakes together, even though you may both end up choosing to do the same thing (but independently).

The main question is what you're eventually likely to want to do with the money?  Many in your situation would be interested in getting onto the property ladder but it's not exactly obligatory.  Are you working?  Have you started a pension yet?  Assuming you don't have clear plans yet, your best bet would be to put the money somewhere that it'll earn some return but without committing to long-term investing:
https://www.moneysavingexpert.com/savings/which-saving-account/
https://www.moneysavingexpert.com/savings/savings-accounts-best-interest/

Albermarle

Normally there is no one answer to such questions . Usually it will be better to deploy the money in more than one way , once you have thought about a longer term plan about how you want to use it . No need to rush, a few more weeks/months of it sitting in the bank will not make much difference.
Premium bonds can be an alternative to a savings account in the meantime.

dunstonh

We want to invest it and are willing to club together to do so.

That is a bad move and actually disadvantages both of you.  For example, ISA allowances are single name only.   As are pensions.    To hold it jointly would compromise on tax.  It could also lead to conflict as you will have different views on risk and different understanding and behaviour.

Money and families do not go well together.  Keep things separate. 

Eco_Miser

Linton said:

What do you want the money for? How much and when?  If you dont know come up with a possible scenario - you can always usually change your mind. 

I suppose changing your mind is always possible, changing the investment sometimes isn't. Pensions, fixed term savings are the most obvious examples.

OP, the only good reason for pooling your money is to go into business together - and that's fraught with possible disputes.

On that, it sounds like you've currently got the whole £146k in your sole bank account, you should really each have your own share in your own account.

If you decide to invest for the long term in share funds or similar, the best place for this is in an ISA (or maybe a pension if saving for retirement), so both of you might want to get £20k into ISAs before 5 April - it's use it or lose it. Possibly £4k into a LISA for buying a house (attracts a £1k bonus, which you would lose if you never bought a qualifying house, or waited until you're 60), and 16k into either a cash ISA, preserving the allowance while you decide what to do, or straight into a Stocks and Shares ISA, which also can be used to buy funds and bonds.  In case you don't know, all kinds of ISA protect against UK tax, allowing tax-free growth and income.

These are, of course, just bringing some things to your attention, you each need to do your own research and make your own decisions.

[Deleted User]

What do you want to do with your lives? Best option for both of you is to invest in your career/passion/absorbing interest. That means being an early adopter of the latest facilities in your chosen area; most often paying a  premium for the privilege but it is amazing how much advantage is conferred by being slightly ahead of the curve. 

Second best is to put your money into Disney shares. A lot of brands won't be around in fifty years, this one will. Currently $195.
$2 in 1985. 7cents in 1964.

Eyeful

1. Do you know the difference between savings and investments?
2. What is your attitude to risk?
3. For what length of time do you want to invest?
4. Do you have a job?
5. Do you have an, ISA, SIPP or pension?
6. Are you renting or living at home and for how long?

Just remember
(a) "the higher the return the higher the risk"
(b) " If it looks to good to be true, its because you do not know the risk"     
(c) Rule of thumb:-
Average Risk = yield on the FTSE 100.     
High risk starts above = (1.25 x  FTSE yield ).
Above (2 x FTSE yield), stay away.            

Anyway these might be of interest to you:-
https://www.getrichslowly.org/bull-bear-markets/
https://www.kroijer.com/
https://www.hsbc.co.uk/investments/isas/hsbc-global-strategy-portfolios/#balanced

Good luck on whatever you choose to do with your inheritance.

steampowered

The obvious solution is to invest your money into a diversified investment fund. The Vanguard funds are a great place to start (other funds are available).

Those funds are diversified across thousands of different companies and different stock markets, so you get something approaching the average performance of the stock market as a whole. That means you don't have to worry about trying to pick specific shares. It also means that if a single company goes bust that doesn't cause much damage to your portfolio.

The stock markets return on average about 7.5% per year. That's true whether you look at the last 10 years or the last 50 years. Obviously that is an average so some years will be better and some years will be worse.

AlanP_2

ZingPowZing said:

What do you want to do with your lives? Best option for both of you is to invest in your career/passion/absorbing interest. That means being an early adopter of the latest facilities in your chosen area; most often paying a  premium for the privilege but it is amazing how much advantage is conferred by being slightly ahead of the curve. 

Second best is to put your money into Disney shares. A lot of brands won't be around in fifty years, this one will. Currently $195.
$2 in 1985. 7cents in 1964.

What does the first paragraph mean?

As for the second - If the OP and her brother are not sure about the best use of their money and have not said what or when they need it for how can Disney shares be the right answer? Come to that how can an extremely high risk, specific, single company share for all your money be the right answer to almost any investing question?

Thrugelmir

brightonelizabeth said:

We are not interested in buying property and I don't think we would qualify for a mortgage even if we wanted to (I graduated in the summer and my brother is a student).

Perhaps not now, but when.  Investing should be undertaken with a long term view.