Help Investing £120K

Gg1295

Hi all,

I've been very fortunate to have recently had a windfall of £120K at the age of 29 and am contemplating best strategy for maximising returns on the money.

Any advice / suggestions would be very much appreciate. I have made contact with IFA's but thought I'd seek advice from here also

For context:
- I have no financial dependents.
- I am a basic tax-rate earner.
- I do not own property and do not have plans to purchase within the next couple of years as I currently value flexibility. I have a separate pot of money set aside for a future deposit in any case.
- I have maxed out my ISA allowance for this year and currently have £20K in an all-world fund. 
- I make voluntary contributions to my SIPP each month so not overly keen on depositing a large amount into this.

I would value any advice as to whether it's worth investing outside of my ISA vs. a fixed term savings account, or e.g. premium bonds.

Any responses are much appreciated! Thanks.

IvanOpinion

For 29, you seem to be doing quite well for yourself - wish I had been that organised in my 20's.
I will leave it to others with more expertise than me to answer your query but I would put in a vote in for treating yourself to something with part of it. I know you said you weren't keen about it but I would put something into your SIPP (future you might well thank you for doing that).

InvesterJones

The IFA will be some help as they can further interrogate your circumstances/needs.

In a general, non-advisory, sense, 'maximising returns' is itself not a very useful financial goal - 'maximising returns in order to...' is far more beneficial in terms of helping set appropriate return and volatility tolerances. Could it go towards an additional house deposit to reduce amount borrowed? Could it go towards making your pension better? (you say you already contribute.. but have you run the sums to find out if you're contributing enough?) Might there be child costs down the line? Might you consider retiring early? Would you consider retraining? Do you like material goods? etc.

Please don't think of answering them all here! But just examples of different goals which come with different timescales, which is the most important factor when recommending an appropriate strategy. The shorter the timescale, the less the appetite for volatility. The more important the goal, the less the appetite for risk. The more return needed to achieve a goal, the more risk/volatility might have to be taken on. 

All of which are kind of saying understanding your goals helps you achieve them with the least amount of risk, while maximising returns might end up maximising risk too.

DjangoUnchained

spend it on wine women and fast cars, the rest you can just waste away. sorry not very helpful.

xylophone

https://www.hl.co.uk/savings/savings-account?utm_source=afmon&utm_medium=Affiliate&utm_campaign=afmon+Emirates+6+month+April&theSource=afmon&Override=1

Might be of interest  - couple of fixed rates then £20,000 into stocks and shares ISA next April and following years as required?

GazzaBloom

As already suggested, in my opinion, the first thing to ask yourself is "what do I plan to do with the money and when?".

The answer to that question can then inform decisions on where to put the money and whether to spend it, save it or invest it and may broadly indicate the type of account and asset classes to invest it in.

A general principle that I try to drum into my kids is that all money should have a purpose allocated to it with a timescale, be it today, tomorrow, next year or decades from now. If this approach can be adopted then you are starting to master the money that comes your way and being intentional with it. 

Unallocated money has a habit of drifting off and disappearing in an uncontrolled or unintended way.

Bear in mind that you may wish to split the £120K down into chunks with differing purposes, for example:

New iPad or Phone tomorrow
Cash to cover emergencies
Saving for a new car in 3 years
3 months back packing holiday round Australia in 4 years
Adding to savings for a house deposit in 5 years
Retirement in 30/40 years

etc...

tacpot12

I agree that flexibility is an important consideration at your age.

Investing the money is probably the most sensible thing to do, rather than saving it in savings accounts where, over time, the interest rates will drop and your inheritance will lose some of its buying power. 

As you have maxed out your ISA, you will have to invest either via your pension, or in a General Investment Account (GIA), and deal with the tax on any gains (you will need to read up on Capital Gains Tax as it applies to shares). While ISA limits remain the same, you should expect to sell £20,000 of your investment in the GIA every year, report the gain or loss on the sale for CGT (losses can be carried forward to offset gains in subsequent years), and invest the sale proceeds back into a Stocks and Shares ISA. You can buy the same investments that you held in the GIA, and you will only be out of the market for a few hours while you do this.

Eventually you will have all your inheritance sheltered in an ISA, or a Pension. You could consider putting some of the windfall, e.g. £10K-£20K, into your pension as it should grow quite spectacularly over the next 28-30 years. 

When you are ready to buy a house, your investments should have grown to the point where you will only need a small mortgage, and this will mean that you can survive even large swings in interest rates.

MEM62

Gg1295 said:

- I make voluntary contributions to my SIPP each month so not overly keen on depositing a large amount into this.

Why not?  It would keep the money away from the tax man and give your future self a fantastic return.  If you have no specific use for the money, using a chunk of it to boost your retirement position makes very good sense.   

Mark_d

So you have £120k to play with.  I would put £50k in to premium bonds where you get a good rate of tax-free prizes.  With the remaining £70k I'd be looking to generate additional income to supplement your main basic-tax-rate income.

Perhaps you could invest the £70k in a  low cost tracker fund that generates an  income, or you could use a mix of instant access and fixed rate savings accounts.  Check what rates you can get

Albermarle

I make voluntary contributions to my SIPP each month so not overly keen on depositing a large amount into this.

Is this your workplace pension? or do you have both a workplace pension and a separate SIPP ? If so why ?