Inheritance

Dreaming_of_holidays

Hi, I have recently inherited £120.000. I live with my partner, not married, and we have 2 children early 20’s. I would like to be able to gift them some money ready for when they buy a house, around £10,000 each, they have also inherited some money too of £10,000 so they will have £20,000. With the rest of the money I would like to invest, save, paying minimal tax!! Also have around 8years left on mortgage. Recommendations please. Thank you 

El_Torro

A good way to invest is either in an ISA or a pension. Pensions are more tax efficient but the benefit of ISAs is that you can access the money whenever you want. 

Can't say much more than that without knowing more about your personal situation. 

Do you live in a property you own? Do you have a mortgage? Investing will probably give you a better return than paying off the mortgage over the long term but you might want to do a combination of the two. 

Dreaming_of_holidays

Yes, I have a mortgage and a good nhs pension, so not sure about putting more into that 

Albermarle

With the rest of the money I would like to invest, save, paying minimal tax!! 

There is a saying often trotted out on this forum- ' Do not let the tax tail wag the investment dog'
In other words do not let a desire not to pay tax, affect your decision making too much.

So you should invest/save your money to get the best return. As an example 5% interest minus 20% tax is better than a 3 % return with no tax.

Otherwise with a NHS pension that part is largely sorted.
The key decision is do you want to save the money in a safe savings account, OR invest the money in the financial markets, OR pay off the mortgage.

It might not be the answer for you,but often the answer to these types of questions is to do a bit of everything.

Keep_pedalling

As you are concerned about tax, you should also be looking at your IHT position. As an unmarried couple you have no spousal exemption and if your estates exceeds £325k then the surviving partner is going to be worse off than a spouse or civil partner would be. 

Also rather than gifting to your children make a deed of variation to pass the £20k direct from the estate this will avoid it being subject to the 7 year rule.

Linton

In order to invest appropriately you need to have some time frames in mind as to why, when and how much you will want to spend.  Different time frames imply different types of investment.  For example

0-5 years-> cash or near to cash (savings accounts, PBs etc)
5-10 years-> mixed investments only taking a constrained amount of risk.
>10 years-> investing mainly in funds that hold large numbers of shares (equity). The prices can be volatile over shorter time periods.

Keeping your money in the corresponding ratios helps ensure that your returns are as large as reasonably possible whilst protecting your shorter term plans against the volatility of the stock market.