If you inherited £20k, what would you do with it?

autumndays11

For context- when my Grandad passed, money from the sale of his house was put into a Trust, ready for me when I turned 21. I have used a large proportion of this money for a deposit on a house, and so I now have roughly £20k left over. I have an additional £5.5k invested into a Trading 212 Stocks ISA, investing into the Vanguard S&P and FTSE All-World accounts and I'm happy with my return so far. Then finally, after lending family members roughly £10k, I have £200 being paid back to me each month.

The ~£20k is currently sat in an easy access savings account that did have a 1 year bonus interest rate, but has since been reduced to roughly 1.75% and I know this could definitely be put in a better place (my £200/month loan return is also being paid into this account). 

My question to you is, if in a similar situation, what would you do with your money? Would you continue to invest in the Stocks ISA, invest in something different or move your money into a different savings account?

Any and all advise is really appreciated as, although I'm very new to learning about investments etc, I find this all very interesting and I'm keen to learn more!

Thanks!

El_Torro

Since you've bought a property you have already made one of the biggest expected expenditures of the coming years. Some thoughts:

Make sure you have enough money in cash as an emergency fund. This is typically recommended to be between 3 and 6 months worth of expenditure. This will help with unexpected outlays, like maintenance on your house or for living expenses if you lose your job. 

You could make some overpayments to your mortgage. This probably won't be as good a return as investing in the stock market but it's a reliable way to reduce (and even eliminate over time) your mortgage payments. 

Keep investing. Either in a Stocks & Shares ISA or in a pension. If you are 21 your retirement feels like it's a million years away, the sooner you start paying into a pension the easier it will be later though. Personally I wouldn't shove £20k into your pension, maybe just increase your pension contributions with your employer and use some of the £20k to top up your living expenses. 

A combination of making sure you have an adequate emergency fund, investing and mortgage overpayments might be the right answer for you.

dunstonh

If you inherited £20k, what would you do with it?

Repoint the cart lodge.

The problem with asking what we would do with it is that we are not you.  We all have our own objectives and needs.   You haven't mentioned yours.   This is a major omission when asking us about solutions.  So, what is this money for?

autumndays11

El_Torro said:

Since you've bought a property you have already made one of the biggest expected expenditures of the coming years. Some thoughts:

Make sure you have enough money in cash as an emergency fund. This is typically recommended to be between 3 and 6 months worth of expenditure. This will help with unexpected outlays, like maintenance on your house or for living expenses if you lose your job. 

You could make some overpayments to your mortgage. This probably won't be as good a return as investing in the stock market but it's a reliable way to reduce (and even eliminate over time) your mortgage payments. 

Keep investing. Either in a Stocks & Shares ISA or in a pension. If you are 21 your retirement feels like it's a million years away, the sooner you start paying into a pension the easier it will be later though. Personally I wouldn't shove £20k into your pension, maybe just increase your pension contributions with your employer and use some of the £20k to top up your living expenses. 

A combination of making sure you have an adequate emergency fund, investing and mortgage overpayments might be the right answer for you.

This is fantastic, thank you! I definitely agree with continuing to invest, although it of course comes with it's risks, it feels like a steady long term plan. You're right, retirement can feel like a while away and so I hadn't considered investing into my pension but it's certainly something I'm going to look into further. I think I need to consider how much I need in an emergency fund, research more into pension investments and then make a plan from there. Thanks again for the advice.

Eyeful

1. This is "how long is a pic bit of string questions" question.
We are all different, Ages, risk profiles, circumstances, etc.

2. As you are so young, some guide lines might help:
Live within your means.
Have an emergency fund to pay for broken boiler, car etc.
Use tax shelters wherever possible: Cash ISA's, Pensions, Stocks & Share ISA's.

3..Understand the difference between Saving & Investing:
(a) Savings: Means cash in a Bank or Building Society.
(b) Investing: Means putting your money at risk. Things like shares, bonds etc.
(c) Always check what FSCS protection you will have : https://www.fscs.org.uk/check/

4. Money you will need within 5 years should be in either 
(a) NS&I, with 100% protection, you are loaning money to the UK Government.
(b) Bank or Building Society on the FSCS list, where it will be protected up to £85,000.
(c) Best Rates:   https://moneyfactscompare.co.uk/savings-accounts/

5. Investing
(a) Money you know you will not touch for at least 10 years, consider investing.
(b) For very, very, long term investing use Pensions.
(c) Don't try to time the market.
(d) With investing, there will be market crashes, it comes with the territory. Don't jump ship which is what many newbies do.

(e) Academic research repeatedly shows that after charges/fess are taken into account, most active fund managers cannot beat a simple major world index like the FTSE All-World or MSCI World or ACWI

(f) These may be of interest to you:
https://monevator.com/passive-fund-of-funds-the-rivals/
https://monevator.com/best-global-tracker-funds/

autumndays11

dunstonh said:

If you inherited £20k, what would you do with it?

Repoint the cart lodge.

The problem with asking what we would do with it is that we are not you.  We all have our own objectives and needs.   You haven't mentioned yours.   This is a major omission when asking us about solutions.  So, what is this money for?

Apologies, this is my first entry into a forum so I wasn't sure how much detail would be necessary.
My main objective is long term, steady growth. I have a house and so the only other main thing I would potentially need to have money readily available for is a 'new' (cheap) car if mine broke down. I currently live alone and so a lot of my wage is spent on bills etc., leaving me with little spare at the end of the month out of my salary, so ideally I'd like these savings to do the hard work for me and grow in the background.
Hope that provides some more insight.

Beddie

Stick it in a good savings account (ISA if possible), handy money for any short term or emergency needs.

https://moneyfactscompare.co.uk/savings-accounts/easy-access-savings-accounts/?quick-links-first=false&product-favorites-first=false&sort-order=AER&sort-order-text=Rate

Maybe look at regular savers too, there's a very long thread about them on here! But they require more managing, so it's up to you if you think the slight gains are worth it.

IntegrityIntact

Well i think your question is great as it's open and invites a broader range of responses. I will answer literally, as in, regardless of anyone's situation, personally i would definitely BUY GOLD. In my opinion a LOW risk of losing and a HIGH risk of gaining at a rate way above what any bank can offer. Also if you buy in coins not only do you physically hold your asset but also have complete control and access to it - plus highly likely to increase in value.

jimexbox

Stick it in a SIPP, a global fund. Then forget about for decades, adding monthly if you can. 

Middle_of_the_Road

IntegrityIntact said:

Well i think your question is great as it's open and invites a broader range of responses. I will answer literally, as in, regardless of anyone's situation, personally i would definitely BUY GOLD. In my opinion a LOW risk of losing and a HIGH risk of gaining at a rate way above what any bank can offer. Also if you buy in coins not only do you physically hold your asset but also have complete control and access to it - plus highly likely to increase in value.

First point... Gold does not return an annual "rate" as a savings account would. 

Secondly, it's highly likely the price of gold will both increase...and decrease, but no-one can say when, and by how much.

Eyeful

IntegrityIntact said:

Well i think your question is great as it's open and invites a broader range of responses. I will answer literally, as in, regardless of anyone's situation, personally i would definitely BUY GOLD. In my opinion a LOW risk of losing and a HIGH risk of gaining at a rate way above what any bank can offer. Also if you buy in coins not only do you physically hold your asset but also have complete control and access to it - plus highly likely to increase in value.

 
1. You are supposed to buy  low and sell high. Gold Is now near the highest price its ever been.

2.  You have to pay to store it either in a secure vault or safe.

3. If you buy coins, someone somewhere will have your name and address, which makes you and your property a prime target for burglars and thieves. So now you might need to pay for insurance and burglar alarms.

4. Gold is a none productive asset and does not give you interest..

5. Investors typically buy gold during periods of economic uncertainty or geopolitical instability. 
When those pass, the gold price falls and may remain low for some time.

6. Consider some of the disadvantages of  gold before buying it.
Risk of theft
Storage Costs
No Passive Income
Dealers Premium
Transaction Costs
How pure is the gold?