Help with inheritance please!!!

Janeybabey83

Hi

My mum has recently inherited £100 000 from my Grandfathers estate. She wants to aside £30 000 for home improvements but the rest she would like to put into savings accounts for retirement funds.

Short term shes not sure about putting the money into any risky places ie shares/bonds but would like to see the money earning the highest interest.

I have read the savings article and her and my father have taken out ISAs but im now a bit confused as to the next step...are regular savings accounts appropriate for the rest of her cash?? Can these be opened with a large sum??

Sorry if this is a bit of a dumb question but it all seems so confusing and i really dont want her to mismanage this money!!

I quite often look on these boards and you all seem lovely and helpfull so thanks in anticipation for any advice you may have!!

Janey

margaretclare

Hello Janey

I like Martin's 'savings fountain' idea - cash ISA first then look at other savings accounts, looking for the best deal. I've actually done that for the coming tax year - am maxing out my cash ISA but then also paying into a regular saver.

Martin recommended the Yorkshire Building Society - have a look: www.ybs.co.uk I'm not sure about putting in a large sum rather than starting a regular saver, but they're very easy to deal with if your Mum gave them a phone call (the people at YBS, I mean!)

I can understand your mum doesn't want to put her money anywhere risky - after all, this may be the last 'windfall' she'll ever get, and who knows what she may need in years to come. So I would suggest, be careful of anything with the word 'bond' attached to it, especially if there is a warning 'you may not get back as much as you put in'.

HTH

Janeybabey83

Thanks for the advice, i def agree with the bond thing!!!

Think i will have another look at that article and get her to call some of them for advice, shes not the best with the internet and you cant beat speaking to an actual person!!

Janey

jem16

Janeybabey83 wrote: »

Hi

My mum has recently inherited £100 000 from my Grandfathers estate. She wants to aside £30 000 for home improvements but the rest she would like to put into savings accounts for retirement funds.

Depending on your mum's age, svaings accounts will not necessarily be the best place for retirement funds. I'm guessing from your username that you are 24/25 so mum could be in early fifties or even younger.

Short term shes not sure about putting the money into any risky places ie shares/bonds but would like to see the money earning the highest interest.

Cash is not without risk either. Over the years inflation will pay a big part in eating away the value of that cash. If mum then starts using it in retirement it will diminish even quicker.

Investing the £70k would be better over the long term and would allow for capital growth as well as taking an income in retirement.

Perhaps better to see an IFA for help with the best thing to do with this money.

Aegis

If this is for retirement then it would be a very good idea to go and see an Independent Financial Adviser specialising in pensions. If your mother earns money at the moment (which I'm assuming she does because of the retirement goal) she can put up to her gross annual earnings into a pension and will receive additional contributions in the form of income tax rebate on the full amount (i.e. 22% if she's a basic rate taxpayer and 40% total if she's a higher rate taxpayer). Once the money is into the pension plan, there are a number of options, which an IFA can talk you through and match to your risk profile. However, even if the money goes into a cash fund of some sort within the pension plan, the initial surge in value would normally take years to build up in such a safe account.

Definitely worth considering if she's looking to retire with this money.

Janeybabey83

Bang on with my age!! Sadly turned 25 last week!!

A friend of a friend whos an IFA came around to see her but recommended something which would tie up all the money, she'd like to keep some as instant access. I think at the moment with the financial world being a bit shakey she thought it might be best to keep it safe rather than risking it but i do see your point about inflation.

Its so hard to know what to do for the best so thanks for all this everyone!!

jem16

Janeybabey83 wrote: »

Bang on with my age!! Sadly turned 25 last week!!

A friend of a friend whos an IFA came around to see her but recommended something which would tie up all the money, she'd like to keep some as instant access.

Tell the IFA what you want and ask for a plan around that.

I think at the moment with the financial world being a bit shakey she thought it might be best to keep it safe rather than risking it but i do see your point about inflation.

It could also be seen that prices are lower than they were over the last year so now could be a good time to invest. However risk is a sliding scale - you don't have to jump in at the deep end. There are investments which don't have to be in the stockmarket.

Janeybabey83

Shes actually just said shes seen another financial advisor from the bamk who recommended the same sort of bonds...like you say, she needs to go to see one and tell them what she wants rather than them try and sell things to her!

margaretclare

Janeybabey83 wrote: »

She's actually just said she's seen another financial advisor from the bank who recommended the same sort of bonds...like you say, she needs to go to see one and tell them what she wants rather than them try and sell things to her!

Financial advisors from the bank are NOT the same as independent financial advisors! At the bank, whichever one it is, they are limited to selling the bank's products. An IFA is different. He or she will look at the whole picture (your Mum's total finances), scan the whole market, and come up with what he/she thinks is a good deal.

Hope I don't come across as plugging the Yorkshire Building Society, but I'm on their customer advisory panel (LOL). They are one of the older type of BS i.e they're mutual, not a bank which has shareholders. A mutual BS like the Yorkshire has members, not shareholders. That said, it's your Mum's decision entirely. She should be allowed to decide, not be 'sold' something.

What Aegis suggests is really good. In fact, anyone can put money into a pension fund up to age 75 and get the taxman's contribution added to it, whatever that is going to be now with the new tax rates.

HTH

jem16

Janeybabey83 wrote: »

Shes actually just said shes seen another financial advisor from the bamk who recommended the same sort of bonds...like you say, she needs to go to see one and tell them what she wants rather than them try and sell things to her!

As margaretclare says the bank's adviser is not an IFA - more like a glorified salesman. You will end up with something that earns the salesman a lot of money and does very little for your mum.

Please, please stay away from the bank for investment advice.

CLAPTON

use maximum amount in cash ISAs.. 3k each this year and another 3,600 after 6th april
put some in best saving rate instant access a/c (internet is probably best rates but look at the tables)
put some in government index linked savings up to 15k in each issue.. at least you get a return ahead of inflation