What to do with 400k?

JP130

I am about to inherit about £400k. What are the best ways to invest this money?

I don't need immediate access to the money, so what are the best medium to long term investments?

I am tempted by purchasing property to rent out, are there any better % return options? 

I already own my own home, with about a 50% mortgage, would paying that off with some of the the money be a good option? 

Thanks!

p00hsticks

JP130 said:

I am tempted by purchasing property to rent out, are there any better % return options? 

In my view there's not much appetite on these boards these days for Buy To Lets - the days of soaring house prices giving a big return on your capital have gone, and there is a whole raft of increasingly onerous legislation for landlords to meet. And if only buying one or two properties, the risk of the 'tenant from hell' not paying rent, trashing the place and refusing to move is not one I'd be prepared to take. 

you could probably get a similar return for much less hassle in other ways.

Mark_d

There is no simple answer as it depends on your financial situation, age, pension, existing savings/investments, life ambitions...

Personally I don't like the buy-to-let business idea.  A lot of capital is tied up in property, there are a lot of expenses and the best return you can expect is from a capital gain which would be taxed.

I'm in a similar position to you in that our outstanding mortgage is about 50%.  I'm 20 years away from retirement.  My career, income and pension pot are very healthy.

If I was to inherit 400k I would max out my S&S ISA, premium bonds, pay off the mortgage and then invest the remainder in a fund.  It's about maximising what you can earn tax-free and then maximising how much of your pay packet you spend.

FlorayG

I invested in property ( with a BTL mortgage, the hassle of which you won't need unless you buy more than one). I have good tenants and I'm a good landlord. I get a small profit every month ( it used to be quite a bit larger until I remortgaged  ) and I'm happy with what I did. Eventually, in 10-20 years time, I will sell them. It's definitely for the long term. The new legislation is to bring poor properties up to decent standard because there are a lot of shi**y landlords out there who don't care about their property; I think if you get a decent one and decent tenants it's hardly going to make any difference to you. But - there is always a but - you don't know if they are good tenants until they are installed, so there's a risk

farwasilvia1

JP130 said:

I am about to inherit about £400k. What are the best ways to invest this money?

I don't need immediate access to the money, so what are the best medium to long term investments?

I am tempted by purchasing property to rent out, are there any better % return options? 

I already own my own home, with about a 50% mortgage, would paying that off with some of the the money be a good option? 

Thanks!

With $400k, you’ve got options! You could invest in stocks, start a business, grab some real estate, or even take a year off and travel the world like a boss. Want to play it safe? Diversify your investments. Feeling adventurous? Maybe start that dream project. Either way, you're in a sweet spot! 🎉

sk2402005

Typicall the best investment would be to max out your pension as you will get tax releif.

The question of your mortgage depends on the interest rate you are paying.

One option that rarely gets menioned - how about just spending abit of it - new/newer car, nice holiday for yourself & family - make some memories - you cant take the money with you.

dunstonh

I don't need immediate access to the money, so what are the best medium to long term investments?

What is the best will depend on your objectives.  There is no single best option.

I am tempted by purchasing property to rent out, are there any better % return options? 

Interesting you feel that way when so many landlords are exiting.    What is your experience of being a landlord?   Will you use the limited company structure to hopefully avoid some of the potential issues?

I already own my own home, with about a 50% mortgage, would paying that off with some of the the money be a good option? 

If it suits your objectives, then yes.  If not, then no.    

Linton

What are your long term aims? Your objectives should drive how you invest your money.

£400K would bring early retirement much closer if you arent already retired (a 50% mortgage suggests not).  Or do you have other ambitions?  £400K would help if you wanted to set up a business, help buy you a more desirable house. Or perhaps you would simply like a higher on-going income whilst working.

Decide what you want and when you want it, then invest accordingly.

Albermarle

farwasilvia1 said:

JP130 said:

I am about to inherit about £400k. What are the best ways to invest this money?

I don't need immediate access to the money, so what are the best medium to long term investments?

I am tempted by purchasing property to rent out, are there any better % return options? 

I already own my own home, with about a 50% mortgage, would paying that off with some of the the money be a good option? 

Thanks!

With $400k, you’ve got options! You could invest in stocks, start a business, grab some real estate, or even take a year off and travel the world like a boss. Want to play it safe? Diversify your investments. Feeling adventurous? Maybe start that dream project. Either way, you're in a sweet spot! 🎉

AI response ?

JP130

Thanks all, this is really helpful. 
For a little more context, I'm late 30s, married, 2 kids, not planning to move house at any point. Both myself and my wife work full time. 
As for goals, I'd like to use some of the money to generate an extra income to make life more comfortable/retire earlier, but also want to leave a good amount to my kids. 

Bostonerimus1

1) Do a budget to see where you can save.
2) Pay off any high interest debt, ie credit cards or car loans.
3) Put 6 months to 1 year's spending into an easy access saving account for emergencies.
4) Make extra pension payments. If you have a DC pension invest in an appropriate mix of low cost equity and bond index funds
5) Make S&S ISA payments. Invest in an appropriate mix of low cost equity and bond index funds.
6) Anything that's left over open a general investing account and invest in an appropriate mix of low cost equity and bond index funds.
7) Make extra mortgage payments to pay it off before your retirement date.