How best to use my £273,500 inheritance?

Direct_talker

I’ve recently received an inheritance of £273,500, which is currently sitting in my current account earning zero interest.

My initial thought was to put it into an easy-access, high-interest account with monthly interest payouts. Unfortunately, such accounts don’t seem to exist. I’ve found a few online options (e.g. CHASE), but as they’re not high street names, I’m a bit nervous about them.

My situation:

·         I’m 55, married.

·         £47,000 outstanding on our mortgage.

·         House valued at around £600,000.

·         No other debts.

·         £50,000 in Premium Bonds.

·         £62,000 (current value) in inherited shares.

We’d like to keep the inheritance easily accessible, as we plan to move and may need to use some of it to top up for the type of property my husband wants (ideally with about 2 acres of land).

I’ve also thought about buying a property for my daughter to rent from us (using her Local Housing Allowance via Universal Credit), but I’m aware there are a lot of potential pitfalls with buy-to-let.

Given my family history — few living much beyond retirement age — I’m not keen to put it straight into my pension. I’d rather view our home as our retirement savings. Ideally, I’d like to invest the inheritance so that it generates a monthly income, which could allow me to cut down my working hours or even stop working altogether.

Any advice, ideas, or personal experiences would be much appreciated.

Ayr_Rage

CHASE is one of the biggest banks around !

martinbainbridge1975

I would see a financial adviser with that amount of money, to make sure you look at all your available tax breaks

jimjames

Move it to an interest paying account asap. By my calcs you're missing out on nearly £40 a day by having it in an account paying no interest.

Lots of recent threads about inheritances so have a look and there might be suggestions that are suitable for you too.

david29dpo

You would just short of £1000 a month with that amount, I get 4.8% with coventry BS paid monthly into my current account

jaypers

1) While you decide, open up a number of easy access accounts so it’s getting some interest. You’ll get a red card on here leaving it in a current account. Don’t have more than £85k per person per financial institution.
2) Pay off any unsecured debt if it isn’t interest free.
3) Talk to an advisor. 

david29dpo

In my opinion, i would not pay good money to an advisor.
Your case is quite simple
Look at this site for the best rates. Its a money saving site after all!!
 

eskbanker

Direct_talker said:

·         I’m 55, married.

[...]

We’d like to keep the inheritance easily accessible, as we plan to move and may need to use some of it to top up for the type of property my husband wants (ideally with about 2 acres of land).

[...]

Given my family history — few living much beyond retirement age — I’m not keen to put it straight into my pension. I’d rather view our home as our retirement savings.

I do understand that many are able and willing to downsize in retirement in order to free up capital, but if you're 55 and now planning to invest significantly into a larger property, how long do you anticipate living there for?

EthicsGradient

The MSE page on savings accounts lists those that are "well-known names". eg Cahoot is part of Santander, which is a large Spanish bank that bought Abbey National. As pointed out, "Chase" is JPMorgan Chase, a huge American bank. Virgin Money is now part of Nationwide BS.
Best savings accounts: 5% easy access or 4.52% fixed rate
As jimjames says, you're missing out on daily interest already - £273k at 4% is about £30/day (before tax - a basic rate taxpayer gets £1,000 tax-free, and a higher rate payer £500).

n15h

Do you know when you're planning to move? If it's within the next 5 years, its likely to be less riskier to not invest the money, and may be look at fixed rate or easy access savings. Investing is more for the long-term - an old saying goes if you can't invest for 10 years, don't even look at investments for 10 minutes. Don't take that literally, but just have a real think about whether you can accept the volatility/risk that investing brings e.g., what would you do if your investment lost 20% in the next 12-24 months and how would it impact your plans?

Other things to consider:
Have you got an emergency fund and is this still right or needs revisiting?
Have you used your ISA allowances?
Is the rate of interest on your mortgage higher than your savings rate - have you considered overpaying or paying off the mortgage?
Why no to a pension? Pensions are accessible from age 55 and provide tax relief on contributions. You could be missing out on 20% tax relief, increasing to 40% if you're a higher rate tax payer.
How much could your next property and the one for your daughter cost? Will the inheritance cover some of these costs or do you plan on re-mortgaging - if so, what deposits/costs are you looking at?
Do you want to keep some of the inheritance aside to spend and enjoy life if you're concerned about family mortality e.g., go on holiday, upgrade car, gift to family members?

The above is some food for thought - I'm sure more wiser forum members will give guidance.

El_Torro

While I agree with those who say you should see an IFA I fear they might not tell you what you want to hear, or at least not give you advice that you will follow. An IFA makes their money from you investing in the stock market, if you don't intend to do this then there's not much point in speaking to one. 

My immediate term suggestion is to move the money to NS&I. The interest rate isn't great but all the money is protected (which isn't the case in a private bank). If you want to play around with regular savers, high interest savings accounts and Cash ISAs to earn more interest you can worry about that later. The immediate goal should be to put your money where it is protected and earning some interest.