You inherit £500k, you're 63 and you're renting. What do you do?

Albermarle

non_cents said:

I see @Pat38493 - thank you for explaining! So you're saying it makes more sense from my perspective / IHT wise, for him to own are home rather than rent. Even if it's just a small place under £175k. Great. He'd like to buy, so sorts that question  

No it should be worth at least £175K , but it does not need to be any more.

There were some sensible suggestions to look at retirement properties/retirement villages. However just be aware that these are rarely good from a financial point of view, even is suitable for other reasons. Service charges can be high, reselling can be  difficult. Some retirement villages are pretty posh and you might need £500K just to buy something, especially in the more expensive parts of the country.

non_cents

thanks everyone! really well made and articulate points all round, collating all of them 👍

DIYPhil

If I was your Dad, I would buy a small house or bungalow. To make his money go further, could he move to a cheaper property price area of the UK? Maybe budget up to £250,000 for this. Avoid buying a flat as the service charges can often be a nightmare.

Invest a good proportion of the rest - maybe set up a SIPP to gain tax relief on the contributions. As others have suggested, he would benefit from seeing an IFA.

If he has not yet qualified for a full State Pension, make catch up contributions so that he does.

He should see a Solicitor and make a will and set up Powers of Attourney.

[Deleted User]

At this point in time I'd do nothing.
Certainly don't think about buying property until the current fall in property prices comes to an end and that could take some time.
A house near me was sold last month for 950k but the sale fell through and it's now back on the market for £875k.
Overall prices have fallen at least 10% since the beginning of the year.
In the meantime stick the half million into a decent one-year saving plan while he thinks about things.
I put 600k into a Barclays One-Year Fixed Rate Bond at 3.9% last month - it pays just under two grand a month.
Your Dad will get a tidy sum every month to indulge in a few treats.
Perhaps a cruise or something like that.

Albermarle

Overall prices have fallen at least 10% since the beginning of the year.
In the meantime stick the half million into a decent one-year saving plan while he thinks about things.
I put 600k into a Barclays One-Year Fixed Rate Bond at 3.9% last month - it pays just under two grand a month.

It is not normally recommended to have more than £85K with any one bank/saving provider.

Keep_pedalling

Deleted_User said:

At this point in time I'd do nothing.
Certainly don't think about buying property until the current fall in property prices comes to an end and that could take some time.
A house near me was sold last month for 950k but the sale fell through and it's now back on the market for £875k.
Overall prices have fallen at least 10% since the beginning of the year.
In the meantime stick the half million into a decent one-year saving plan while he thinks about things.
I put 600k into a Barclays One-Year Fixed Rate Bond at 3.9% last month - it pays just under two grand a month.
Your Dad will get a tidy sum every month to indulge in a few treats.
Perhaps a cruise or something like that.

But with inflation in double figures you are still loosing real value. The OPs father will be paying rent and living in a rough area so I would not but off buying something that improves his quality of life just in case prices fall further. The primary purpose of buying would be to provide a comfortable low cost home that provides security for many years it is not an investment.

[Deleted User]

Albermarle said:

Overall prices have fallen at least 10% since the beginning of the year.
In the meantime stick the half million into a decent one-year saving plan while he thinks about things.
I put 600k into a Barclays One-Year Fixed Rate Bond at 3.9% last month - it pays just under two grand a month.

It is not normally recommended to have more than £85K with any one bank/saving provider.

Says who ?

You think multi-millionaires ( I'm only a single one ) have dozens of bank accounts all with exactly £85K in them ?

A quick reminder - Barclays Bank did not require a government bailout during the 2008 financial crash ( thanks mainly to their chums in Qatar ) .

[Deleted User]

Keep_pedalling said:

Deleted_User said:

At this point in time I'd do nothing.
Certainly don't think about buying property until the current fall in property prices comes to an end and that could take some time.
A house near me was sold last month for 950k but the sale fell through and it's now back on the market for £875k.
Overall prices have fallen at least 10% since the beginning of the year.
In the meantime stick the half million into a decent one-year saving plan while he thinks about things.
I put 600k into a Barclays One-Year Fixed Rate Bond at 3.9% last month - it pays just under two grand a month.
Your Dad will get a tidy sum every month to indulge in a few treats.
Perhaps a cruise or something like that.

But with inflation in double figures you are still loosing real value. The OPs father will be paying rent and living in a rough area so I would not but off buying something that improves his quality of life just in case prices fall further. The primary purpose of buying would be to provide a comfortable low cost home that provides security for many years it is not an investment.

So the alternative is not to invest it at all ? At a time when savings rates are at the highest in donkey's years ?

And buying property in the current market is like trying to catch a falling knife - by investing the money for a year the OP's father would have the money to rent in a much nicer area.

Sit tight for the long haul is my advice as we are in for serious economic punishment for some time yet.

Buy low, sell high.

The old property buying maxim never, ever changes.

And at 63 the OP's father has plenty of time on his hands yet.

Albermarle

Deleted_User said:

Albermarle said:

Overall prices have fallen at least 10% since the beginning of the year.
In the meantime stick the half million into a decent one-year saving plan while he thinks about things.
I put 600k into a Barclays One-Year Fixed Rate Bond at 3.9% last month - it pays just under two grand a month.

It is not normally recommended to have more than £85K with any one bank/saving provider.

Says who ?

You think multi-millionaires ( I'm only a single one ) have dozens of bank accounts all with exactly £85K in them ?

A quick reminder - Barclays Bank did not require a government bailout during the 2008 financial crash ( thanks mainly to their chums in Qatar ) .

I think multi millionaires are a rather niche area, not normally covered much on this forum. The advice from this site ( and many other money advice sites is not to go over the £85K limit FSCS bank protection limit - Are my savings safe? - MSE (moneysavingexpert.com)
and many of the posters on this site are anxious not to do so, and/or have the majority of their money in investments rather than savings accounts.

You are right that the chance of Barclays going under is pretty slim, and you can of course do what you want with your own money. However the OP's dad who has got some serious money for the first time in his life, and I don't think putting all of it with one bank is a very good idea. 

barnstar2077

Deleted_User said:

Keep_pedalling said:

Deleted_User said:

At this point in time I'd do nothing.
Certainly don't think about buying property until the current fall in property prices comes to an end and that could take some time.
A house near me was sold last month for 950k but the sale fell through and it's now back on the market for £875k.
Overall prices have fallen at least 10% since the beginning of the year.
In the meantime stick the half million into a decent one-year saving plan while he thinks about things.
I put 600k into a Barclays One-Year Fixed Rate Bond at 3.9% last month - it pays just under two grand a month.
Your Dad will get a tidy sum every month to indulge in a few treats.
Perhaps a cruise or something like that.

But with inflation in double figures you are still loosing real value. The OPs father will be paying rent and living in a rough area so I would not but off buying something that improves his quality of life just in case prices fall further. The primary purpose of buying would be to provide a comfortable low cost home that provides security for many years it is not an investment.

So the alternative is not to invest it at all ? At a time when savings rates are at the highest in donkey's years ?

And buying property in the current market is like trying to catch a falling knife - by investing the money for a year the OP's father would have the money to rent in a much nicer area.

Sit tight for the long haul is my advice as we are in for serious economic punishment for some time yet.

Buy low, sell high.

The old property buying maxim never, ever changes.

And at 63 the OP's father has plenty of time on his hands yet.

Trying to catch a falling knife is exactly what you are suggesting though.  How do you know that house prices a year from now will be cheaper than they are today?

It is impossible to say.  So if all things are equal (between the two scenarios of waiting a year or so, or buying a house in the near future), then it comes down to the money lost renting for another year.  I know which option I would choose.

Especially as a year or two would be too short of a timespan to risk an investment in anything that could give someone good enough returns without significant risk to the capital.