Need a kind and honest friend

OnlineAlex

Hi everyone, 

With such a volume of information conflicting advice online, I feel like I could do with the help of an honest friend. 

I'm 42 and sadly in the last 3 years I've lost both my mum, and last month my younger sister to breast cancer. As a result, I have inherited £51k and have no idea what's best to do with it. I have my sister's words ringing in my ears to go out and live life but I'm also conscious of not being totally irresponsible with the money. I'm not clued up on all things finances and don't have a good friend I could lean on for advice either. 

I moved in with my now husband 3 years ago into his Shared Ownership home. We hold 50% of the property with a mortgage with a projected £36,500 in equity. We have no credit card or loan debt. I earn £31000 and he earns £42000. The large outgoing (over £30pcm) is £360pcm on my husbands car. He has £6k in savings. We would like to buy the other half of the property or move in the future. 

I would like to use some of the money, perhaps £15k to buy a new car. I'm leaning towards buying this outright rather than finance and having another outgoing which might reduce what we can borrow for a future mortgage. 

I also don't know what I should do with the remaining money after the car purchase. It's currently in a metro current account that's giving 4.6% interest. 

I suppose to summerise, I'm asking:

• Do you think it's better for me to keep the lump sum of money and finance a car or to buy the car outright if we're going to remortgage to 100% in the not too distant future?

• What should I do with the remaining money that's going to make it work well for me but not tie it up so I can't access it if we want to 'live a little' and also put it into a house?

Thank you in advance of your kind responses. 
 

tacpot12

4.6% is a good rate of interest on cash, and it's below the £85K limit for the Financial Services Compensation Scheme (FSCS), so it is relatively safe.

I've never been a fan of borrowing money when you don't need to. Do you really need a new car though? Are you running two cars already and do you need to so?  

If you need a new car and it would really make you happy (more so than holidays abroad, or anything else you can think to spend it on), then I would spend £15K on a new car and enjoy it. I would leave the rest with Metro until you can pay off more the mortgage or buy more of shared equity in the property. With your income, you should be paying the mortgage hard to get rid of it. I would keep £6K back as an emergency fund. 

Brie

When I got some redundancy money a couple of years back I put £2k into premium bonds for both myself and my OH.  Perfectly safe and you might win something.  It's a little bit frivolous but not like buying a designer anything.

gm0

To park money successfully.  You need to think about the timescales on which this money is "needed" to be spent.  Many forms of speculative investment with the best long term prospects (and the highest risks) require you to be prepared to sit tight for as long as 10 years if things go south for a spell in the meantime.  And not make theoretical on paper (and temporary) "losses" real.  If you need the money sooner - then that's the wrong sort of investment for you. 

Stocks and shares ISA is probably not right with a plan to ladder up the shared ownership of the house and trade more mortgage for less rental component in the near future. How attractive that idea is depends on your shared ownership terms, interest rates and affordability.  Some people would do higher risk investments anyway and take the risk over 1-5 years in an S&S ISA.  No tax on growth (because ISA). 20k pa can go in. 2 years - done. Sheltered.  Risk tiered fund based on % equities.  Better than savings returns.  Come with risk of losses and volatility. 
Cash ISA as an alternative yet rates are derisory generally vs other savings accounts and you have a personal savings allowance before taxes bite.

Also think about the realistic income stream from 50k in bonds or savings accounts.  Call it £200 pcm.  ~4-5%
Taxable (after savings allowance). Is that little bit extra income material as a "found money" for luxuries out and about - around the core plan. If you take it all - inflation will attack your pot.  So if you invest in an S&S ISA and hope for the best - hoping for an average circa ~7% over the years.  And you draw around 4% - leaving 3% to top up for inflation. Does that monthly "income" change your life in a meaningful way that you care about.  Income pov. Not capital pov.  It's how people used to talk about what people were "worth" financially as the cashflow view is how you live day to day.

Cars are currently stupidly expensive due to energy cost spike and regulations.  And a wasting asset. £15k used isn't a banger. But it sadly doesn't get what it used to.  Ten years ago that was a nice big family car - one year old and <10k miles.  Inflation means 25k would be more realistic in the £ of today for the same transaction - yet I keep finding 30k and 35k on the sticker looking at replacing ours.  5-10k more expensive *after* currency depreciation and CPI For something similar yet smaller and in some ways worse. Nah.  Stick tires on the old one. And keep it. The Chinese brands arriving to scale may shake things up if the governemnt don't tariff them out as the EU seem to be planning to do to protect VAG and Renault and the jobs etc. All the action on EV has been BIK tax avoidance for employment linked.  Not individual cash buyers dropping 40k-50k on SUV EVs.   There are few old school technology cars coming in - because of the targets and fines for selling petrol over % target - which gets baked in. That part of transition is working to reduce the wrong kind of sales.  But low supply = firm prices.  And the 40k list price thing "luxury" car tax surcharge seems to apply to a lot of models now.  That you would not think of as large or luxurious. 

Still a share of 50k allows a car PCP to be smaller (or non-existent i.e. paid off for minimal interest while retaining the incentives to take it out).  And while that credit probably won't be as attractive as mortgage.  The question being what share.   You already have the key issue on the mortgage affordability - more regular outgoings = less borrowing capacity.  So there is an upper bound on other credit and you need to know what it is.

The information you need a better handle on is the mortgage affordability test that will apply for your desired laddering equity transaction. And how that stacks up at different levels of interest rates.   There is a mortgage forum and brokers who comment here.  And the affordability info on mortgage provider sites.  Not my field sorry.  But you need to work it out to ~10% or so

With criteria in view - what slack you have in your capital and income plans will then be easier to see.  And that can inform house v car vs fun - or a mixture of those that you choose. 

I was always keen on "house" over extra fun. One holiday not two summer and winter etc. And kept paying it down whenever there was bonus or other found money.  It's a totally personal decision.  I was glad I had done it when 2008 came along and jobs were lost.  But you can't know what the future holds - health and time for fun being included in that. I'd have been gutted if I'd had a coronary event before early retirement or had to sell up at the worst time when employment was interrupted by being leveraged up to the cashflow max.  Mortgage, cars etc.  Buy the ticket.  Take the ride.

GadgetGuru

Yes cars are a wasting asset, but you need to live. I'm sorry for your multiple losses. I have also had recent close family loss - he was only 38 with no health issues - but it's opened my eyes. Yes you need to save for your future, but on the flip side you also need to consider that you may not have a long future. I honestly hope you do and I mean no disrespect to you. I hope you live a long and happy life, but we have to realise we could be gone next year, next week, etc.

I'm not saying spend all the money, but also use some to treat yourself. If you want that new car, then go for it. It's not going to leave you broke and you still have plenty to invest as well as your, and your husbands income streams too. Don't ever put yourself into debt over such an asset - I would pay it outright - maybe even treat yourself to a holiday. Take your sister's advice. 

A few years back I purchased a new car. £60k. Paid up front. It's currently on my drive and although I only use it on weekends, so not very often, I love it. 
I pay over the odds every year for insurance, car tax, fuel, servicing directly at the dealer, etc - but what the hell. Life is short, and if you can afford it, why not?

I've been a saver for many many years, although I'm at the age now (44) where I feel enough is enough - I need to enjoy some off my earnings from my hard work. 
No mortgage, No debts (other than my iPhone which I pay off monthly only because its 0% interest!) and have a decent income from work. I have £190k sitting across several shariah compliant accounts and I don't know what to do with it. I have no interest in building it with different rates of interest etc (against my religion). I have no interest in buying a second home to rent out as I don't want the hassle. I take the kids on one holiday every 2 years or so, and we live basic, 'normal', lives. I want them to earn money and appreciate what they have. 

At some point when my children are married/move out (12, 16, 18) I want to downsize the house, release equity, and buy a holiday home to travel between here and there. Enjoy life a bit more (if I get to see it). 

I pay into my pension via work and thats it - I even thought of stopping that! I don't trust the pension system. The retirement age keeps moving and the average number of years people withdraw their pension after retirement is 8 years! I have a group of friends who buy and run convenience stores in Scotland and I am looking to invest some there (maybe £100k) with a 15% fixed yearly return. Other than that, and 2 ISA accounts, thats the gist of my inventments. 

The reason why I'm using myself as an example is because I'm trying to advise and air my opinion from my own personal experience. Plan for your future, yes, but not at the expense of now. Enjoy life. Have no regrets. Don't wait until you're old and can barely walk before you sit and think of what to do with money and how you should have spent it in your earlier years. The investment minded here will be cursing me, but it's a balance. Save towards your retirement but don't forget to live for now too!

Albermarle

 I earn £31000 and he earns £42000.

Hopefully you are both enrolled in your respective employers workplace pensions?

Although your questions ( and the answers) mainly relate to short to medium term plans, you also need to be building up money for later in life and a workplace pension is a good way of doing that.

auser99

OnlineAlex said:

Hi everyone, 

 It's currently in a metro current account that's giving 4.6% interest. 

Sorry, not advice as such, but was interested to read this.

I'm with Metro Bank, and their current account doesn't pay any interest, and the easy access savings account has now fallen to 3.64%.

So was just wondering what account this is? 

Angelica123

I am really sorry of your losses. I am sure it must be very bittersweet to have the new sum of cash. You must be also acutely aware of how unpredictable life is. 

In my mind, try to get the balance between future proofing while also enjoying the present. Consider you short, medium and long goals. 

Short: you mention buying a second car. Make sure to consider not just the purchasing cost but the ongoing maintenance cost (insurance, MOT, service). It would be better to better it outright if you have the money readily available.

Medium: You have talked about buying your place outright or moving. What would be your time scale? How much would you need to buy your place outright? 

Longterm: you haven't mentioned work space pension - if you don't have one, it would be good to start one. You may also want to consider long term investments that you could be cashed out before pension age too. 

Take your time. You don't need to plan it all now. It wouldn't hurt to lock away some of your money in a fixed saver while you consider your options further. 

OnlineAlex

I wanted to say a huge thank you to all for your warm and informative comments. I am now going to reply to you all separately, but the time you have taken to respond means a great deal to me - thank you. 

OnlineAlex

tacpot12 said:

4.6% is a good rate of interest on cash, and it's below the £85K limit for the Financial Services Compensation Scheme (FSCS), so it is relatively safe.

I've never been a fan of borrowing money when you don't need to. Do you really need a new car though? Are you running two cars already and do you need to so?  

If you need a new car and it would really make you happy (more so than holidays abroad, or anything else you can think to spend it on), then I would spend £15K on a new car and enjoy it. I would leave the rest with Metro until you can pay off more the mortgage or buy more of shared equity in the property. With your income, you should be paying the mortgage hard to get rid of it. I would keep £6K back as an emergency fund. 

Thank you for your help. My car is on its last legs unfortunately and I don't want to panic buy when it fails me. I've always loved cars and whilst I recognise they're never an investment I would like to use some of the money for that purpose and, like to said, enjoy it. I really appreciate you taking the time to reply, thank you.  

Brie said:

When I got some redundancy money a couple of years back I put £2k into premium bonds for both myself and my OH.  Perfectly safe and you might win something.  It's a little bit frivolous but not like buying a designer anything.

I'm thinking I might do this with the interests I siphon off from the savings account. Thank you

gm0 said:

To park money successfully.  You need to think about the timescales on which this money is "needed" to be spent.  Many forms of speculative investment with the best long term prospects (and the highest risks) require you to be prepared to sit tight for as long as 10 years if things go south for a spell in the meantime.  And not make theoretical on paper (and temporary) "losses" real.  If you need the money sooner - then that's the wrong sort of investment for you. 

Stocks and shares ISA is probably not right with a plan to ladder up the shared ownership of the house and trade more mortgage for less rental component in the near future. How attractive that idea is depends on your shared ownership terms, interest rates and affordability.  Some people would do higher risk investments anyway and take the risk over 1-5 years in an S&S ISA.  No tax on growth (because ISA). 20k pa can go in. 2 years - done. Sheltered.  Risk tiered fund based on % equities.  Better than savings returns.  Come with risk of losses and volatility. 
Cash ISA as an alternative yet rates are derisory generally vs other savings accounts and you have a personal savings allowance before taxes bite.

Also think about the realistic income stream from 50k in bonds or savings accounts.  Call it £200 pcm.  ~4-5%
Taxable (after savings allowance). Is that little bit extra income material as a "found money" for luxuries out and about - around the core plan. If you take it all - inflation will attack your pot.  So if you invest in an S&S ISA and hope for the best - hoping for an average circa ~7% over the years.  And you draw around 4% - leaving 3% to top up for inflation. Does that monthly "income" change your life in a meaningful way that you care about.  Income pov. Not capital pov.  It's how people used to talk about what people were "worth" financially as the cashflow view is how you live day to day.

Cars are currently stupidly expensive due to energy cost spike and regulations.  And a wasting asset. £15k used isn't a banger. But it sadly doesn't get what it used to.  Ten years ago that was a nice big family car - one year old and <10k miles.  Inflation means 25k would be more realistic in the £ of today for the same transaction - yet I keep finding 30k and 35k on the sticker looking at replacing ours.  5-10k more expensive *after* currency depreciation and CPI For something similar yet smaller and in some ways worse. Nah.  Stick tires on the old one. And keep it. The Chinese brands arriving to scale may shake things up if the governemnt don't tariff them out as the EU seem to be planning to do to protect VAG and Renault and the jobs etc. All the action on EV has been BIK tax avoidance for employment linked.  Not individual cash buyers dropping 40k-50k on SUV EVs.   There are few old school technology cars coming in - because of the targets and fines for selling petrol over % target - which gets baked in. That part of transition is working to reduce the wrong kind of sales.  But low supply = firm prices.  And the 40k list price thing "luxury" car tax surcharge seems to apply to a lot of models now.  That you would not think of as large or luxurious. 

Still a share of 50k allows a car PCP to be smaller (or non-existent i.e. paid off for minimal interest while retaining the incentives to take it out).  And while that credit probably won't be as attractive as mortgage.  The question being what share.   You already have the key issue on the mortgage affordability - more regular outgoings = less borrowing capacity.  So there is an upper bound on other credit and you need to know what it is.

The information you need a better handle on is the mortgage affordability test that will apply for your desired laddering equity transaction. And how that stacks up at different levels of interest rates.   There is a mortgage forum and brokers who comment here.  And the affordability info on mortgage provider sites.  Not my field sorry.  But you need to work it out to ~10% or so

With criteria in view - what slack you have in your capital and income plans will then be easier to see.  And that can inform house v car vs fun - or a mixture of those that you choose. 

I was always keen on "house" over extra fun. One holiday not two summer and winter etc. And kept paying it down whenever there was bonus or other found money.  It's a totally personal decision.  I was glad I had done it when 2008 came along and jobs were lost.  But you can't know what the future holds - health and time for fun being included in that. I'd have been gutted if I'd had a coronary event before early retirement or had to sell up at the worst time when employment was interrupted by being leveraged up to the cashflow max.  Mortgage, cars etc.  Buy the ticket.  Take the ride.

This was all so helpful - thank you! Experiencing multiple losses has really changed our 

perspectives. Life needs to be lived but not so frivolously that it leads to complications. Thank you for the advice to visit the mortgage for him, I will definitely do that.

GadgetGuru said:

Yes cars are a wasting asset, but you need to live. I'm sorry for your multiple losses. I have also had recent close family loss - he was only 38 with no health issues - but it's opened my eyes. Yes you need to save for your future, but on the flip side you also need to consider that you may not have a long future. I honestly hope you do and I mean no disrespect to you. I hope you live a long and happy life, but we have to realise we could be gone next year, next week, etc.

I'm not saying spend all the money, but also use some to treat yourself. If you want that new car, then go for it. It's not going to leave you broke and you still have plenty to invest as well as your, and your husbands income streams too. Don't ever put yourself into debt over such an asset - I would pay it outright - maybe even treat yourself to a holiday. Take your sister's advice. 

A few years back I purchased a new car. £60k. Paid up front. It's currently on my drive and although I only use it on weekends, so not very often, I love it. 
I pay over the odds every year for insurance, car tax, fuel, servicing directly at the dealer, etc - but what the hell. Life is short, and if you can afford it, why not?

I've been a saver for many many years, although I'm at the age now (44) where I feel enough is enough - I need to enjoy some off my earnings from my hard work. 
No mortgage, No debts (other than my iPhone which I pay off monthly only because its 0% interest!) and have a decent income from work. I have £190k sitting across several shariah compliant accounts and I don't know what to do with it. I have no interest in building it with different rates of interest etc (against my religion). I have no interest in buying a second home to rent out as I don't want the hassle. I take the kids on one holiday every 2 years or so, and we live basic, 'normal', lives. I want them to earn money and appreciate what they have. 

At some point when my children are married/move out (12, 16, 18) I want to downsize the house, release equity, and buy a holiday home to travel between here and there. Enjoy life a bit more (if I get to see it). 

I pay into my pension via work and thats it - I even thought of stopping that! I don't trust the pension system. The retirement age keeps moving and the average number of years people withdraw their pension after retirement is 8 years! I have a group of friends who buy and run convenience stores in Scotland and I am looking to invest some there (maybe £100k) with a 15% fixed yearly return. Other than that, and 2 ISA accounts, thats the gist of my inventments. 

The reason why I'm using myself as an example is because I'm trying to advise and air my opinion from my own personal experience. Plan for your future, yes, but not at the expense of now. Enjoy life. Have no regrets. Don't wait until you're old and can barely walk before you sit and think of what to do with money and how you should have spent it in your earlier years. The investment minded here will be cursing me, but it's a balance. Save towards your retirement but don't forget to live for now too!

I think this was exactly the words I needed to hear. I'm so sorry to hear of your loss. We've experienced so much loss, so young with people who saved and saved for a retirement that never came. 

Albermarle said:

 I earn £31000 and he earns £42000.

Hopefully you are both enrolled in your respective employers workplace pensions?

Although your questions ( and the answers) mainly relate to short to medium term plans, you also need to be building up money for later in life and a workplace pension is a good way of doing that.

We are, thank you so much for asking the question though. We're both putting in the maximum. 

auser99 said:

OnlineAlex said:

Hi everyone, 

 It's currently in a metro current account that's giving 4.6% interest. 

Sorry, not advice as such, but was interested to read this.

I'm with Metro Bank, and their current account doesn't pay any interest, and the easy access savings account has now fallen to 3.64%.

So was just wondering what account this is? 

You're right and this only highlights how rubbish I can be with money. It was 4.6% and I assumed it had stayed that way but I have checked and it's dropped like you said. Thank you for informing me so I know to keep a close eye on it. 

Angelica123 said:

I am really sorry of your losses. I am sure it must be very bittersweet to have the new sum of cash. You must be also acutely aware of how unpredictable life is. 

In my mind, try to get the balance between future proofing while also enjoying the present. Consider you short, medium and long goals. 

Short: you mention buying a second car. Make sure to consider not just the purchasing cost but the ongoing maintenance cost (insurance, MOT, service). It would be better to better it outright if you have the money readily available.

Medium: You have talked about buying your place outright or moving. What would be your time scale? How much would you need to buy your place outright? 

Longterm: you haven't mentioned work space pension - if you don't have one, it would be good to start one. You may also want to consider long term investments that you could be cashed out before pension age too. 

Take your time. You don't need to plan it all now. It wouldn't hurt to lock away some of your money in a fixed saver while you consider your options further. 

Thank you for your warmth, it has been so lovely to have such kindness from complete strangers on the internet. I think we'd perhaps be looking at moving/staircasing to 100% beginning of 2026. We have good workplace pensions. 

Thank you all again - I'm blown away!

ShinyStarlight1

OnlineAlex said:

Hi everyone, 

With such a volume of information conflicting advice online, I feel like I could do with the help of an honest friend. 

I'm 42 and sadly in the last 3 years I've lost both my mum, and last month my younger sister to breast cancer. As a result, I have inherited £51k and have no idea what's best to do with it. I have my sister's words ringing in my ears to go out and live life but I'm also conscious of not being totally irresponsible with the money. I'm not clued up on all things finances and don't have a good friend I could lean on for advice either. 

I moved in with my now husband 3 years ago into his Shared Ownership home. We hold 50% of the property with a mortgage with a projected £36,500 in equity. We have no credit card or loan debt. I earn £31000 and he earns £42000. The large outgoing (over £30pcm) is £360pcm on my husbands car. He has £6k in savings. We would like to buy the other half of the property or move in the future. 

I would like to use some of the money, perhaps £15k to buy a new car. I'm leaning towards buying this outright rather than finance and having another outgoing which might reduce what we can borrow for a future mortgage. 

I also don't know what I should do with the remaining money after the car purchase. It's currently in a metro current account that's giving 4.6% interest. 

I suppose to summerise, I'm asking:

• Do you think it's better for me to keep the lump sum of money and finance a car or to buy the car outright if we're going to remortgage to 100% in the not too distant future?

• What should I do with the remaining money that's going to make it work well for me but not tie it up so I can't access it if we want to 'live a little' and also put it into a house?

Thank you in advance of your kind responses. 
 

I’m so sorry you have had to endure such loss. Please accept my sincere condolences.

I experienced multiple bereavements a few years ago and similarly inherited money I never expected.

I was given a very useful piece of advice at the time: don’t make any huge decisions while you are experiencing such bereavement. Give yourself time to bereave without making important changes. So I took that advice and used the time to read around and find out information I needed to know, gently and calmly.

I know others on here will provide you with practical financial help but these are my more general thoughts. I wish you peace in this sad time.