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

Linton

Deleted_User said:

House prices fall when purchasers can no longer afford to buy.
Either the house price is unrealistically high or the cost of borrowing to buy it is rising.
Or both as the case is now which is why prices are on their way down and sales have fallen off a cliff.
If the OP's father decided not to wait a year and was to spend £500k on a property now and not invest the half mil in a 4% interest one-year savings bond and property prices fell by only 10% in the rest of 2023 he'd be 70 grand worse off than if he'd been patient and waited a year.

The OPs father has "only" got £500K and was been living in a shared rented house with a minumum wage job.  I dont think he will be in the market for a 4 bedroomed detached in a good area.

barnstar2077

Deleted_User said:

House prices fall when purchasers can no longer afford to buy.
Either the house price is unrealistically high or the cost of borrowing to buy it is rising.
Or both as the case is now which is why prices are on their way down and sales have fallen off a cliff.
If the OP's father decided not to wait a year and was to spend £500k on a property now and not invest the half mil in a 4% interest one-year savings bond and property prices fell by only 10% in the rest of 2023 he'd be 70 grand worse off than if he'd been patient and waited a year.

However, if he waits a year and prices have gone up a bit, then he has wasted a year.  I don't think anyone is suggesting it would be wise to buy a property the day someone receives an inheritance, but as someone who lost a parent that was in their sixties, I wish I could look back on them having had a better life/retirement before they past.

Clearly we are not going to agree, but I don't think the decision is a purely financial one as no one knows how much time they have left. 

[Deleted User]

barnstar2077 said:

Deleted_User said:

House prices fall when purchasers can no longer afford to buy.
Either the house price is unrealistically high or the cost of borrowing to buy it is rising.
Or both as the case is now which is why prices are on their way down and sales have fallen off a cliff.
If the OP's father decided not to wait a year and was to spend £500k on a property now and not invest the half mil in a 4% interest one-year savings bond and property prices fell by only 10% in the rest of 2023 he'd be 70 grand worse off than if he'd been patient and waited a year.

However, if he waits a year and prices have gone up a bit, then he has wasted a year.  I don't think anyone is suggesting it would be wise to buy a property the day someone receives an inheritance, but as someone who lost a parent that was in their sixties, I wish I could look back on them having had a better life/retirement before they past.

Clearly we are not going to agree, but I don't think the decision is a purely financial one as no one knows how much time they have left. 

You make it sound like the OP's father can hear the sound of the Grim Reaper sharpening his scythe - he's only 63 for goodness sake.
Putting money into property at a time when every expert worth their salt is predicting a house price fall makes no economic sense.
Holding fast while prices drop and you earn significant interest on your cash for the first time in many years does.
In many countries such as Germany it would be considered perfectly normal for older people to rent permanently.
The OP's father might even prefer to enjoy his windfall on a few luxuries rather than invest in a falling housing market.

[Deleted User]

Linton said:

Deleted_User said:

House prices fall when purchasers can no longer afford to buy.
Either the house price is unrealistically high or the cost of borrowing to buy it is rising.
Or both as the case is now which is why prices are on their way down and sales have fallen off a cliff.
If the OP's father decided not to wait a year and was to spend £500k on a property now and not invest the half mil in a 4% interest one-year savings bond and property prices fell by only 10% in the rest of 2023 he'd be 70 grand worse off than if he'd been patient and waited a year.

The OPs father has "only" got £500K and was been living in a shared rented house with a minumum wage job.  I dont think he will be in the market for a 4 bedroomed detached in a good area.

He's also managed to save £20,000 from that minimum wage job.
I'd say he's smarter than you give him credit for.

Universidad

Deleted_User said:

Putting money into property at a time when every expert worth their salt is predicting a house price fall makes no economic sense.

But you keep advising people to put a few hundred grand into an account with 3.9% interest while inflation is in double figures?

This makes even less sense, because we cannot be certain that the house OP's father would buy will go down in value, but we can be sure that your idea is an outright real terms loss.

Sea_Shell

This isn't all about what makes "financial" sense.

It's what makes life better, or more comfortable, or more enjoyable.

That could mean a home, not just an "investment".

But he might decide that other things are more important than a home.

Linton

Deleted_User said:

Linton said:

Deleted_User said:

House prices fall when purchasers can no longer afford to buy.
Either the house price is unrealistically high or the cost of borrowing to buy it is rising.
Or both as the case is now which is why prices are on their way down and sales have fallen off a cliff.
If the OP's father decided not to wait a year and was to spend £500k on a property now and not invest the half mil in a 4% interest one-year savings bond and property prices fell by only 10% in the rest of 2023 he'd be 70 grand worse off than if he'd been patient and waited a year.

The OPs father has "only" got £500K and was been living in a shared rented house with a minumum wage job.  I dont think he will be in the market for a 4 bedroomed detached in a good area.

He's also managed to save £20,000 from that minimum wage job.
I'd say he's smarter than you give him credit for.

Or maybe he leads a very simple life and would find it difficult to spend £500K on anything he wants.  We dont know.

non_cents

Or maybe he leads a very simple life and would find it difficult to spend £500K on anything he wants.  We dont know.

@Linton is correct here . We've actually been looking at flats/ bungalows for almost a year now. Being used to very little, he hasn't been comfortable spending the money on anything excessive (other than the odd meal). I like and very much support all the suggestions of cruises but it's definitely out of his current comfort zone. 

The money has been split into savings accounts and the rate is now i think about 4.5%. Which sounds great but is of course less than inflation. 

non_cents

For the adult children it can be a very hard situation to navigate. I think it’s great your Dad wants to talk it through with you. I wish my parents had been open to that. I would suggest not focusing on the money to start with but what a good retirement would look like for your Dad on a day to day basis. Who he wants to spend time with and what he wants to do. 

Then once he has thought about that gently discuss aspects of ageing (proximity to reliable adult children and easy to manage and a cheap to run, warm house without too many stairs rapidly became very important to my IL and parents). Then it’s much easier for your Dad to think about what he wants to spend his money on. In summary focus on his goals in life first then the money decisions are likely to be much easier. 

Cornish_mum thank you and couldn't agree more. I think we started a bit backwards a year ago (what's the correct thing to do), and are now trying to go back to the basics as you suggest. 

[Deleted User]

Universidad said:

Deleted_User said:

Putting money into property at a time when every expert worth their salt is predicting a house price fall makes no economic sense.

But you keep advising people to put a few hundred grand into an account with 3.9% interest while inflation is in double figures?

This makes even less sense, because we cannot be certain that the house OP's father would buy will go down in value, but we can be sure that your idea is an outright real terms loss.

I'm not sure " don't keep your money in a savings account that pays 4% when until very recently you might have only got 0.5% because inflation means you're going to lose money anyway " is sound financial advice.
Fortunately it sounds like the OP and his father have already taken advantage of these recent favourable rates.
I wish them luck.