Inheritance of £45k - what would you do ?

Daffodil1234

Hello All

I'd welcome commentary from people (I'm aware that I can of course also ask an IFA but I do find the wide range of views on this board very helpful).

It is likely that I will receive ~ £45k inheritance in 2022 (money is pending completion of probate etc).  What would you do with this money ?

I have ~ 4 years until a possible retirement; no debts or mortgage; no dependent children; no major property concerns where the money needs to go.  I never expected to get this money and I haven't factored it into any retirement plans or savings plans.

The only thing I am certain I don't want to do is any sort of buy to let or property extension on our current house.  Of course I can find an investment account and put the money in there, but wondered if anyone has any other comments on what they would see as a good solution for this ?  I am open to ideas.

blue.peter

You say that you have no debts or mortgage, so that wipes out my first thought.

No dependant children... OK, but independent children? Would it still be appropriate to give a little to them?

If it was me, I know exactly what I'd do with it. I want to move house, so I'd put it straight into the kitty for that purpose. But is that relevant to you?

If you've no immediate use for the money (nice position to be in!), savings/investments looks obvious. How much scope do you have for getting it into an ISA? Obviously, you can't put it all in at once, but maybe put part into an S&S ISA and the rest into a general investment account alongside it, with a view to transferring into the ISA as allowances permit? Obviously, this then raises the question of how you invest it. I've no idea how much knowledge and experience you have, so I won't make suggestions for risk of becoming patronising. And I'm very sorry if I've already crossed that line. If I haven't and it might be of interest, I wrote some notes on ISAs for a couple of my niblings, and can make them available to you.

MovingForwards

I'm in the same situation and also never expected an inheritance, therefore all my financial planning has been based round my income too.

That leaves me with three options:
1. Keep saving as I am and be a cash buyer in a couple of years (house).
2. Use some of it as a deposit to get a better property (house).
3. Use all of it as a deposit, with a full mortgage, and buy my forever home (bungalow).

If I do option 2, it would leave me with enough to add extra to my pension, savings, early retirement fund, some nice holidays, fund for home maintenance etc.

The equity from my current flat could be put back into all of the above, or pay a chunk off the new property over a few years if I went for option 2 or 3.

Unless you've got more money, it wouldn't be viable to speak with an IFA as it's not a big pot.

It's early days for you and your options will keep changing as you give it some thought.

lisyloo

It’s hard to say without knowing your current asset balance and appetitive for risk.

you could
1) top up your pension if there is available allowance and your priority is bringing forward your retirement. If you have salary sacrifice available then it may be a “no brainer” to increase your contributions and back fill your income from the lump sum.
2) put into a S&S isa (if your pension is maxed out) if you have enough cash and no foreseeable need for the next few years
3) put into a cash isa or premium bonds if you want to keep it in cash. I like premium bonds at todays low rates but I like a bit of a flutter and rates are so low there isn’t much to lose. With that amount you would win something most months.

If it was me I’d First fill my pension (already maxxed), then my S&S isa, then my cash isa then premium bonds.

QrizB

Daffodil1234 said:

It is likely that I will receive ~ £45k inheritance in 2022 (money is pending completion of probate etc).  What would you do with this money ?

I have ~ 4 years until a possible retirement

In my case a £45k windfall might let me retire between 1 and 2 years earlier than otherwise planned. Would this be an option for you?

matelodave

I got around that sum ten years ago when I was 65, but I'd  been retired for ten years, my mortgage was paid, we'd just move into our bungalow which we'd refurbed and had no debts. We have a reasonable to good company pension and I just started drawing my state pension so I gave 10k each to my kids (one to help with paying off a mortgage and the other for a new kitchen, put 5k each to my four grandkids to help them through uni etc and kept £5k and we had a decent holiday ( a cruise through the Panama canal).

I'm now 75 and my wife is 72, we have more than enough to live on and can still save money which no doubt may get dissipated in a care home in the future (a situation that has already befallen a mate of mine) or by twigging it before my time (which another three mates have managed to do) so I dont really feel the need to stash anymore.

We aren't well off but comfortable and feel that we benefit from spending it on stuff we want rather than squirrelling it away it away just so we can count it. Just my opinion you understand

As others have said, it depends on your circumstances and how well you've planned your finances.

Grumpy_chap

Daffodil1234 said:

Hello All

I'd welcome commentary from people (I'm aware that I can of course also ask an IFA but I do find the wide range of views on this board very helpful).

It is likely that I will receive ~ £45k inheritance in 2022 (money is pending completion of probate etc).  What would you do with this money ?

I have ~ 4 years until a possible retirement; no debts or mortgage; no dependent children; no major property concerns where the money needs to go.  I never expected to get this money and I haven't factored it into any retirement plans or savings plans.

The only thing I am certain I don't want to do is any sort of buy to let or property extension on our current house.  Of course I can find an investment account and put the money in there, but wondered if anyone has any other comments on what they would see as a good solution for this ?  I am open to ideas.

Reading this post as a whole, it appears as though you have no debts, fully paid for owned property and adequate retirement provision for a comfortable future.

If that is all correct, and you say this inheritance is entirely unexpected and not really "needed", then you could split the amount and spend a proportion (25% - 50%) "frivolously" on some extras in life - holiday, new car, new stuff for the house - and put the other portion to sensible use.

lisyloo

My SIL bought a touring caravan and now has it on a semi-permanent pitch.
she is risk averse re international travel.

that might not appeal specifically but I agree with grumpy chap that it’s worth considering whether anything more discretionary appeals.
doesnt have to be wasted money, for example camper van or touring caravan could eventually be money saving if it replaces other holidays.

Daffodil1234

Thank you all very much for comments so far- very useful and several mentioning things for me to think about more (the "discretionary" ideas sound like fun !)

Savvy_Sue

Personally, I'd be looking at future proofing the house, if that was where I was sure I wanted to stay, and if I knew I'd want to move for / at retirement it would go into that fund. 

missile

Spend it. Whoever is leaving you money saved for what..... to give it to you?