Im getting £250,000 Inheritance ,,, benefits will stop .. Best way to invest it ?

boingy

powerspowers said:

There’s been some rather unkind comments on here!  

Sadly, unkind is somewhat of a trend on these boards. Sometimes it feels like a tabloid newspaper. 

ob1kinobi

powerspowers said:

Hi moneytree 
it seems you’re feeling a bit overwhelmed by the inheritance and what to do next. 

you’ve had some unkind comments on here, I think people forget that not everyone is super
savvy with their money. it can be overwhelming and feel easier to keep things as they are. I understand why buying a house feels out of reach. 

I agree you need first to do a realistic budget. Don’t try and make it too tight as you are best having wriggle room if things go up. 

Then look into annuities and see if you can get an estimate of how much you need to spend vs yearly income. Also check if it is fixed income or rising each year. 

Take into account that you will have  your state pension soon. So maybe think about pension +annuity, and keep back the same amount as your state pension in savings (so maybe £7k each year until your state pension age)

If you can’t get an annuity that covers enough, I think your option is to invest the money and live off it each year, then look at HB and PC when eligible. 

Do your housing providers have any tenancy support workers who can help you with your budget? Or money helper may be able to help https://www.moneyhelper.org.uk/en/contact-us/money-guidance

Just a small point for the OP to consider regarding regular income to top up State Pension in 6 years time, if that is the path that they adopt. Should the State Pension at their State Pension age be a nominal £9K p.a. (75%) and the Annuity was paying out £21K (e.g.) annually, based on a regular 20% tax payer (at today's tax rates) their tax deduction would be approx £3,486.00, excluding any additional tax deduction levied against interest gained from non ISA accounts (if any). That would reduce the £30K p.a. of income to £26,514. Any other taxable income of course would alter this.

I raise this point as a 'just in case' as it could easily be overlooked by anyone who isn't already dealing with HMRC for income tax. It is quite an important aspect of budgeting.

kimwp

boingy said:

powerspowers said:

There’s been some rather unkind comments on here!  

Sadly, unkind is somewhat of a trend on these boards. Sometimes it feels like a tabloid newspaper. 

The debt areas of the forum are almost unwaveringly kind, but there's a noticeable difference in the other areas!

saajan_12

Simple solution: if you put the money into a couple of high interest accounts and a small part in a broad, low risk stocks tracker. Average return around 5% (the stocks should beat that, the interest will come slightly lower currently). 

Annual cost of 15k sounds pretty reasonable:
£300 rent, £300 utilities, £300 food plus another £350 a month on fun / miscellaneous, all comfortable estimates totals £1250/month = £15k / year. 

5% Interest on 250k = 12.5k / year. 

So most of the spend is effectively replenished by the interest. You may have some tax etc but the overall capital should only reduce slightly eg 5-10y a year for several years yet. So it may well last you, and if not then you have the same benefits that you would have relied on without this. 

moneytree999

saajan_12 said:

Simple solution: if you put the money into a couple of high interest accounts and a small part in a broad, low risk stocks tracker. Average return around 5% (the stocks should beat that, the interest will come slightly lower currently). 

Annual cost of 15k sounds pretty reasonable:
£300 rent, £300 utilities, £300 food plus another £350 a month on fun / miscellaneous, all comfortable estimates totals £1250/month = £15k / year. 

5% Interest on 250k = 12.5k / year. 

So most of the spend is effectively replenished by the interest. You may have some tax etc but the overall capital should only reduce slightly eg 5-10y a year for several years yet. So it may well last you, and if not then you have the same benefits that you would have relied on without this. 

Thanks for info ... My Rent tho is £250 a week ( £1,000 a Month ) .. which comes out at around £23,000 Needed ?
I suppose i could dip in, and use £8,000 a year shortfall ... only thing i see tho, is ill have say after 10 years £170,000, and interest will be obviously less than at start of lump sum ...... when i get my State Pension in 6 years time ( 2031 ) ... the interest wont pay my rent, so ill have to use the money even quicker

masonic

moneytree999 said:

saajan_12 said:

Simple solution: if you put the money into a couple of high interest accounts and a small part in a broad, low risk stocks tracker. Average return around 5% (the stocks should beat that, the interest will come slightly lower currently). 

Annual cost of 15k sounds pretty reasonable:
£300 rent, £300 utilities, £300 food plus another £350 a month on fun / miscellaneous, all comfortable estimates totals £1250/month = £15k / year. 

5% Interest on 250k = 12.5k / year. 

So most of the spend is effectively replenished by the interest. You may have some tax etc but the overall capital should only reduce slightly eg 5-10y a year for several years yet. So it may well last you, and if not then you have the same benefits that you would have relied on without this. 

Thanks for info ... My Rent tho is £250 a week ( £1,000 a Month ) .. which comes out at around £23,000 Needed ?
I suppose i could dip in, and use £8,000 a year shortfall ... only thing i see tho, is ill have say after 10 years £170,000, and interest will be obviously less than at start of lump sum ...... when i get my State Pension in 6 years time ( 2031 ) ... the interest wont pay my rent, so ill have to use the money even quicker

Whoa! I thought the original £300 figure you quoted was monthly. Thought that was quite cheap. If it's £250 per week, then that's £13k per year just in rent.

jimjames

masonic said:

moneytree999 said:

saajan_12 said:

Simple solution: if you put the money into a couple of high interest accounts and a small part in a broad, low risk stocks tracker. Average return around 5% (the stocks should beat that, the interest will come slightly lower currently). 

Annual cost of 15k sounds pretty reasonable:
£300 rent, £300 utilities, £300 food plus another £350 a month on fun / miscellaneous, all comfortable estimates totals £1250/month = £15k / year. 

5% Interest on 250k = 12.5k / year. 

So most of the spend is effectively replenished by the interest. You may have some tax etc but the overall capital should only reduce slightly eg 5-10y a year for several years yet. So it may well last you, and if not then you have the same benefits that you would have relied on without this. 

Thanks for info ... My Rent tho is £250 a week ( £1,000 a Month ) .. which comes out at around £23,000 Needed ?
I suppose i could dip in, and use £8,000 a year shortfall ... only thing i see tho, is ill have say after 10 years £170,000, and interest will be obviously less than at start of lump sum ...... when i get my State Pension in 6 years time ( 2031 ) ... the interest wont pay my rent, so ill have to use the money even quicker

Whoa! I thought the original £300 figure you quoted was monthly. Thought that was quite cheap. If it's £250 per week, then that's £13k per year just in rent.

Even more reason to look at buying a property I think

Auti

But OP said it is sheltered housing so if buy a house he will no have the extras sheltered housing supplies. That is also why rent is higher?

moneytree999

Auti said:

But OP said it is sheltered housing so if buy a house he will no have the extras sheltered housing supplies. That is also why rent is higher?

This is CHEAP Rent, its discounted ! Unless i move to Isle Of Sheppey, I wont find 'Rent' or a House Cheaper

masonic

I think shared ownership was mentioned earlier in the thread, and there may be options for sheltered accommodation under that sort of arrangement to reduce the rent, but I think this is also a non-starter, as it leaves very little capital to deplete before the rent becomes a non-issue again.

So from my perspective, the higher risk strategy still has merit, as it gives a chance that the capital will last, whereas more conservative options see the money run out relatively quickly.

Or, just live your best life for the next few years and not worry too much about return on capital.