investing life insurance payout

towncalledmalice12

I have recently been widowed very suddenly at 54 .. my husband and I were not high earners and I only  have a small pension pot built up (I am a nurse), but we had good life insurance which has left me with 250k after all my debts and mortgage have been paid off. I need this to work for me to replace his income. I have already placed 50 in premium bonds and 20 in an ISA for this year. I will need a certain amount of available cash to help my 6 children as and when they need it but don't mind tying up a large amount for a reasonable period to get a decent return. I also wondered if it is worth putting money into a private pension pot on top of my work pension (I am only part time). I do fill out a self assesment tax return as I have a rental property but I only pay around 1k in tax on that. All and any advice would be very appreciated. 

Albermarle

Sorry to hear of your husband's untimely death. 

I only  have a small pension pot built up (I am a nurse), 
The NHS pension is very generous and often undervalued by the staff. Although you are only part time, you will still be building up a level of guaranteed income when you retire. Not sure if it is possible to buy more pension with a cash lump sum as I am not a NHS pension expert.

You could start a personal pension and add to that ( probably simpler than you imagine), but you are restricted to how much you can add each tax year, by your gross income figure.
So if you know your gross income ( before tax) and take off how much you contribute each year to the NHS pension.
Then multiply this figure by 0.8, and that is how much you can contribute to a personal pension.

Otherwise you probably have four basic choices for the rest.

Cash savings ( not in an ISA as you already have hit the £20K limit) You will probably have to pay some tax on the interest, but not all of it. Anyway interest minus tax is a lot better than no interest at all.

Investing - this is really only suitable for money you do not need for a few years at least. It is easier to do this via  Stocks and shares ISA, but you already used up the ISA allowance. 

Save/Invest in Children's accounts, if they are young enough. If they are older you could just give them some money?

Pay an Independent Financial advisor to help you out ( not necessarily recommending this , but it is an option)

kimwp

How much do you earn?

Linton

The first step I think is for you to think through why, how much, and when you want to use the cash. It would be sensible to have an estimate on how much annual income you will need in retirement for an acceptable standard of living.  It wont be carved in stone but will enable appropriate investments to be investigated...

For money needed in say the next 5 years: Keep in cash or PBs.

Money not needed for say >12 years: Payments into a private pension or extra into your work pension (if the terms are worthwhile) would be sensible. If you are a member of the NHS pension scheme you should find out what the options are.

If you plan to invest the money in say a private pension you should ensure that the investments are held in funds that are capable of giving you the returns you need.  If you invest too cautiously (eg solely in PBs or savings accounts) there is the risk that your returns wont be sufficient to match inflation. Over the longer time period the general rise in the investments should more than exceed inflation and any temporary falls that will occur with riskier investments based on share funds ("equity").

5-12 years: rather more tricky, possibly a mixture of the short and long term options and lower risk investment funds..

xylophone

https://www.nhsbsa.nhs.uk/member-hub/increasing-your-pension/additional-pension

may be worth a read.

towncalledmalice12

kimwp said:

How much do you earn?

Around 26k - but I don't work for the NHS, its a hospice so the pension is not as good. 

kimwp

towncalledmalice12 said:

kimwp said:

How much do you earn?

Around 26k - but I don't work for the NHS, its a hospice so the pension is not as good. 

Ah ok. I was thinking it might be low enough that the starter rate of savings might apply (larger amounts of interest on cash before being taxed on it)