Investing suggestions for 30/40 year olds

ShinyStarlight1

Two members of my family are late 30s and nearly 40s. Like me, they inherited when my father died (approx £40k to each of them) and are unaccustomed to having excess money. 

Both have busy, quite overloaded lives balancing work with raising under 12 year olds. As a result of all of the above, they have little time/energy to research about investing. Both said “I wish someone would just say Do That!”.

I don’t have the knowledge to advise them so I thought I’d post here to see what others think.

What I do know is:

Compounding interest will boost their investments over the next 20 years.

One is fairly nervy about money going down whereas the other would be more philosophical.

They both have workplace pensions.

Both have mortgages.

Do any of you have thoughts about where they might invest say £10k for the next 15-20 years?

xylophone

Savings rates here

https://www.thisismoney.co.uk/money/article-1583859/Best-savings-rates-General-savings-Internet-branch.html

https://www.gov.uk/apply-tax-free-interest-on-savings

Maybe consider a stocks and shares ISA - they could consider opening with say Hargreaves Lansdown and  start with the £10,000 in say 

a global equity  fund and then make modest monthly contributions?

https://monevator.com/low-cost-index-trackers/

https://monevator.com/best-global-tracker-funds/

nbrewitt

Top priority for me would be to pay off part or all of those Mortgages if possible

eskbanker

ShinyStarlight1 said:

Two members of my family are late 30s and nearly 40s. Like me, they inherited when my father died (approx £40k to each of them) and are unaccustomed to having excess money. 

Both have busy, quite overloaded lives balancing work with raising under 12 year olds. As a result of all of the above, they have little time/energy to research about investing. Both said “I wish someone would just say Do That!”.

I don’t have the knowledge to advise them so I thought I’d post here to see what others think.

I'd direct them towards this high-level method of establishing what they could/should do in very broad terms, before drilling into details:

The Flowchart - UKPersonalFinance Wiki

Beddie

Just suggestions, as there's no "right" answer:

Keep £5-10k for emergency fund in a cash ISA. Maybe more if you have any other spending needed soon. For example, buy their next car used, with cash instead of finance.
Pay the rest off the mortgage. They might be limited to how much they can pay extra, of course. In which case keep it in savings until the next time they remortgage and reduce it then. Or if the current rate is fixed below about 4%, again keep it in savings for now until the fix ends. Or if they have any unsecured loans at higher rates, pay them off first.

Alternatively, invest some of it. Perhaps £500pm into a Stock and shares ISA with Vanguard or others, for a little taste of investing and its ups and downs. Or keep it all in savings - £20k into an ISA and the rest in a decent savings account, getting around 5%.

Probably more questions than answers, but hopefully with these replies you can get somewhere!

MEM62

nbrewitt said:

Top priority for me would be to pay off part or all of those Mortgages if possible

Depending on the mortgage rate that they have that may not be the best decision.  We are in a position to clear our mortgage but will not do so why (a) we still have an ERC and (b) the cash is earning close to 5% while our mortgage is costing us 1.3.     

Albermarle

They both have workplace pensions

They should maybe consider adding more to these. Pensions are a tax efficient way to invest for later life.

One simple way to do this is to ask their employer to increase their % contributions, and use part of the £40K to compensate for slightly lower take home pay.