Inheritance

chelseablue

penners324 said:

chelseablue said:

p00hsticks said:

You don't mention employment or pensions at all ?

If you are employed it might be worth looking at whether your employer would pay more if you do, and doing that, if necessary dipping into the inheritance money to make up for the resulting drop in take-home pay. 

Or you could set up a SIPP yourself. 

If you are not likely to have a need for (some of) the money in the next twenty years or so pensions are a very tax-efficient way of 'saving' and will help ensure a comfortable retirement.   

Thank you, Im in the emergency services so have a DB pension (I joined after they got rid of final salary pensions) where contributions are already pretty high from me and employer (no chance of them paying in more unfortunately) 

Er, DB pensions are final salary pensions.

Putting a chunk into a pension is still a got idea.

Yes sorry I meant it’s now a CARE scheme instead of the old style where they went on what you earned in the last years of your career 

Albermarle

penners324 said:

chelseablue said:

p00hsticks said:

You don't mention employment or pensions at all ?

If you are employed it might be worth looking at whether your employer would pay more if you do, and doing that, if necessary dipping into the inheritance money to make up for the resulting drop in take-home pay. 

Or you could set up a SIPP yourself. 

If you are not likely to have a need for (some of) the money in the next twenty years or so pensions are a very tax-efficient way of 'saving' and will help ensure a comfortable retirement.   

Thank you, Im in the emergency services so have a DB pension (I joined after they got rid of final salary pensions) where contributions are already pretty high from me and employer (no chance of them paying in more unfortunately) 

Er, DB pensions are final salary pensions.

Putting a chunk into a pension is still a got idea.

Although DB schemes are often referred to as Final Salary pensions, some are not actually based on Final Salary anymore

elkiedee

In quite a lot of public sector pension schemes which remain Defined Benefit, they are now career average rather than final salary, and contributions and those defined benefits have changed.

chelseablue

elkiedee said:

In quite a lot of public sector pension schemes which remain Defined Benefit, they are now career average rather than final salary, and contributions and those defined benefits have changed.

Yes this is what mine is its a Career Average Related Earnings DB scheme 

chelseablue

EthicsGradient said:

If your time horizon is about 6 years, it might be reasonable to invest a bit of it in stocks and shares. As people say, it'd be nice to avoid tax if possible, and if some is going to be cash, it'd be good to avoid the tax on that now. So here's an alternative plan:

Put £20k in a cash ISA now
Put £25k in an accumulating global tracker fund now, held outside an ISA (this will get accumulated dividend income, but, at say 1.7% - the yield on HSBC FTSE All World Index - under the £500 zero tax allowance for dividends)
You have £25k in a regular savings account - you'll likely pay a little income tax on the annual interest on this (but, a tip: divide that between an account that pays monthly interest, and one that pays just once, in the next tax year. That way, you use some of this tax years £1k allowance, and may even avoid any tax next tax year).

In 25-26 tax year, put another £20k in a cash ISA. Now you only have about £6k (if you left the interest in) in a savings account outside an ISA, so won't pay interest on it (unless your existing savings take you over the £1k threshold, I suppose)

In 26-27, do a "Bed and ISA" with £20k of the tracker - sell it outside and use the proceeds to buy it inside an ISA (you could choose a platform that does this for you with the minimum of hassle, or DIY)
(if it has turned out to grow well over those 2 years, limit this to a gain of 3k - eg if it grew 25% over those 2 years, then sell 3000/(1-(1/1.25)) = 15000 - that would be 12k of your original purchase that had grown into 15k)
(if, thanks to your existing savings, you have been paying some tax on the interest, then use some of your £20k limit to put it in a cash ISA)

In 27-28, repeat what you did in 26-27 - depending on growth, this may be all of it, or you may have a bit left over, in which case you Bed and ISA that the next tax year.

So that gets it all into ISAs, cash and S&S, with a bit invested for the 6 years until you want to use it, and hopefully growing better than 100% cash. If you can tolerate risk, you could start with a bit more than £25k in the tracker, though it might mean the dividend becomes liable to income tax a little (marginal rate is less than for earnings or savings, anyway).

Thank you, must admit that's my head well and truly blown for today. Will have a read of this again tonight and try and get my head round it 

bobfredbob

The advice of chelseablue is good.  The idea behind the FTSE All World Index is that you're buying something that buys a little of all stocks around the world.  So, instead of thinking, "this is the year that I'll invest in C&A, BHS, and Ratners", you'll be invested in Apple, Google, and several thousand other companies, all by buying this one item.

The idea is that overall, some stock may go up, some may go down, but over a long enough period, you'll get a profit since that tiny company of ten years ago has now grown and replaced that big company.
  
Other companies do similar offerings, such as Vanguard, or may track slightly different things.  You'll probably want the "accumulating" fund (which re-invests the dividends automatically for you), rather than the "income" fund (which gives you money that you then need to re-invest).

If you don't have a S&S ISA then look carefully at what fees will eat away at your money since some charge a percentage of what you invest, others charge a fixed fee.

To play Devil's Advocate, I'd also say think about how much it would knock off your mortgage.  When do you re-mortgage?  How much is the mortgage arrangement fee?  What will be the interest rate then?  Perhaps the earnings you'd make from having the money outside the mortgage merely offsets the costs of needing to reapply?  Perhaps knocking five/ten years off a mortgage gives you greater peace in the long run?  Perhaps the new interest rate will exceed profits you make?

And, of course, before investing, look at any future outgoings that could be done quicker or need access to the money, such as replacing car without a car loan, new boiler, etc.

And remember that stock markets can go down.  Significantly.  Especially on a tight timescale.
Good luck!

chelseablue

bobfredbob said:

The advice of chelseablue is good.  The idea behind the FTSE All World Index is that you're buying something that buys a little of all stocks around the world.  So, instead of thinking, "this is the year that I'll invest in C&A, BHS, and Ratners", you'll be invested in Apple, Google, and several thousand other companies, all by buying this one item.

The idea is that overall, some stock may go up, some may go down, but over a long enough period, you'll get a profit since that tiny company of ten years ago has now grown and replaced that big company.
  
Other companies do similar offerings, such as Vanguard, or may track slightly different things.  You'll probably want the "accumulating" fund (which re-invests the dividends automatically for you), rather than the "income" fund (which gives you money that you then need to re-invest).

If you don't have a S&S ISA then look carefully at what fees will eat away at your money since some charge a percentage of what you invest, others charge a fixed fee.

To play Devil's Advocate, I'd also say think about how much it would knock off your mortgage.  When do you re-mortgage?  How much is the mortgage arrangement fee?  What will be the interest rate then?  Perhaps the earnings you'd make from having the money outside the mortgage merely offsets the costs of needing to reapply?  Perhaps knocking five/ten years off a mortgage gives you greater peace in the long run?  Perhaps the new interest rate will exceed profits you make?

And, of course, before investing, look at any future outgoings that could be done quicker or need access to the money, such as replacing car without a car loan, new boiler, etc.

And remember that stock markets can go down.  Significantly.  Especially on a tight timescale.
Good luck!

Thank you, such a minefield knowing what to do. 

We are currently 1 year into a 5 year fixed rate mortgage (rate is 3.94%) 

I do have a S&S ISA that I was think of putting £20,000 in this year but what to do with the rest? 

6022tivo

20k in ISA, the rest in Premium Bonds. 

Winnings are TAX free, it's a bit of fun, funds can be got back at any time to put in next years ISA etc. 

Simple and easy! 

pjs493

How much is left to pay on your mortgage? Could the amount clear your mortgage? If so, that might be the first place to start. If not, but it could pay off a big chunk, check what the overpayment fees are. You may find that in the long run, the fee for going over the overpayment threshold is less than what you’d otherwise pay in interest over the life of your mortgage. This may be a good option for you and would in turn reduce your monthly
mortgage payments going forward unless you decide to continue to pay the current amount you pay, but it would then reduce the term of your mortgage. 

Or if you’d prefer just to put some towards your mortgage so that. Pay off any debts that are costing you more than you could earn in interest. Eg if you’ve got a 0% credit card, continue to pay that off and put money in savings instead. Utilise your full ISA allowance. If you don’t already have one, you could set up a private pension and make contributions to that. Any contributions to a private pension are topped up by the government by 20%. 

Ideally you want to earn interest on savings but pay as little of that interest to HMRC as possible. As a basic rate tax payer you don’t pay tax on the first £1000 of savings interest, this increases to £5000 if your earnings stay below £17500 (assuming you don’t benefit from the married tax allowance). 

 Search around for high interest savings accounts to put any residual money once you’ve paid some towards your mortgage and maxed out your ISA. Remember that anything that you put into a pension can’t be touched until you reach a certain age. 

oxfordgirl_2

I've just received an inheritance although I have different circumstances to you. I've but 20 thousand in an isa and the rest in premium bonds my hubby has a small amount in premium bonds and does really well with them, hoping I'm as lucky 😅