Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@. Skimlinks & other affiliated links are turned on

Search
  • FIRST POST
    • misja
    • By misja 13th Jan 18, 10:54 AM
    • 7Posts
    • 1Thanks
    misja
    How to make the most of a 50k gift
    • #1
    • 13th Jan 18, 10:54 AM
    How to make the most of a 50k gift 13th Jan 18 at 10:54 AM
    I will be receiving a 50k gift from my parents, and would like advice on how to get the most out of it. Here is my situation.

    - I'm married, in my mid-thirties with 2 kids
    - I live in a modest 180k house and plan to upgrade in the next 5 years (I will own about 100k after mortgage)
    - I have little pension, so want to invest in something long term
    - I make enough to live a comfortable lifestyle

    Many thanks
Page 1
    • xylophone
    • By xylophone 13th Jan 18, 11:43 AM
    • 25,597 Posts
    • 15,123 Thanks
    xylophone
    • #2
    • 13th Jan 18, 11:43 AM
    • #2
    • 13th Jan 18, 11:43 AM
    I have little pension, so want to invest in something long term
    - I make enough to live a comfortable lifestyle
    What is your employment situation?

    Do you have an emergency fund?

    What is the interest rate on your mortgage?
    • eskbanker
    • By eskbanker 13th Jan 18, 11:44 AM
    • 7,446 Posts
    • 8,027 Thanks
    eskbanker
    • #3
    • 13th Jan 18, 11:44 AM
    • #3
    • 13th Jan 18, 11:44 AM
    Pension seems the obvious place to allocate at least some of that windfall (more into your employer scheme or starting a personal one), but paying off a chunk of your mortgage may make sense, depending on how your interest rate compares with what you'd earn elsewhere.

    You could start a Lifetime ISA (with one of the S&S providers) and/or invest in other S&S ISA products if you're looking for long-term growth, once you have an adequate emergency fund in cash form.

    And/or JISAs for the kids, etc....
    • IanSt
    • By IanSt 13th Jan 18, 11:45 AM
    • 260 Posts
    • 194 Thanks
    IanSt
    • #4
    • 13th Jan 18, 11:45 AM
    • #4
    • 13th Jan 18, 11:45 AM
    In your shoes I'd first make sure that I had 6 months salary in cash savings somewhere as an emergency fund for any unexpected eventualities.

    Then unless there were any others calls on the money that you could see coming in the next 5 years I'd look to invest the rest - there are many threads on here about first time investing so have a search through. Basically most people would likely suggest to invest via globally diverse tracker funds.
    • misja
    • By misja 13th Jan 18, 12:08 PM
    • 7 Posts
    • 1 Thanks
    misja
    • #5
    • 13th Jan 18, 12:08 PM
    • #5
    • 13th Jan 18, 12:08 PM
    I'm in full time employment
    I have about 1k in savings
    Mortgage rate is 1.97% fixed for another 4 years

    What about buying a flat? Is real estate worth it anymore?
    • Thrugelmir
    • By Thrugelmir 13th Jan 18, 12:15 PM
    • 58,972 Posts
    • 52,292 Thanks
    Thrugelmir
    • #6
    • 13th Jan 18, 12:15 PM
    • #6
    • 13th Jan 18, 12:15 PM
    If you plan to move house in the next 5 years. Then overpaying the mortgage seems a good use of part of the money.

    Before a BTL secure good pensions first for yourself and your wife.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • enthusiasticsaver
    • By enthusiasticsaver 13th Jan 18, 12:24 PM
    • 6,614 Posts
    • 13,917 Thanks
    enthusiasticsaver
    • #7
    • 13th Jan 18, 12:24 PM
    • #7
    • 13th Jan 18, 12:24 PM
    I would do a combination of things. Do you have an employers pension and is there an option to invest further in that? I think I would also make a lump sum reduction on the mortgage as even though 1.97% is low it is higher than most savings accounts. You will probably be restricted to no more than 10% overpayment each year.

    Investing in a stocks and shares isa may also be worth exploring.
    Debt free and mortgage free and early retiree. Living the dream

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages and Endowments, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com
    • xylophone
    • By xylophone 13th Jan 18, 12:51 PM
    • 25,597 Posts
    • 15,123 Thanks
    xylophone
    • #8
    • 13th Jan 18, 12:51 PM
    • #8
    • 13th Jan 18, 12:51 PM
    I'm in full time employment
    What is the pension provision?

    I have about 1k in savings
    Because the bulk of savings is held in the name of a non-earning/lower earning spouse?

    If not, then you need to start building that emergency fund - aim at six months' expenses.

    You might make a capital repayment of part of the mortgage and put the money saved into your emergency fund.

    You and your wife between you might use Nationwide Flexdirect current accounts/Flexclusive regular saver/ TSB plus current accounts/ Tesco current accounts...
    • xylophone
    • By xylophone 13th Jan 18, 12:55 PM
    • 25,597 Posts
    • 15,123 Thanks
    xylophone
    • #9
    • 13th Jan 18, 12:55 PM
    • #9
    • 13th Jan 18, 12:55 PM
    And

    Have you and your wife made wills? Specified guardianship provision for your children? Both taken out life assurance to repay the mortgage and provide in the case of death while your children are dependent on you?
    • misja
    • By misja 13th Jan 18, 1:02 PM
    • 7 Posts
    • 1 Thanks
    misja
    Thanks for the advice, I'm not financially minded naturally, so this all very welcome.

    My pension is handled by my employer, and I pay roughly 250pm into it, but they only match the absolute minimum they have to.

    I surmised myself that a flat might bring the biggest returns, being that is essentially mostly paid for by someone else, a mortgage covered by rent. We were thinking modestly, just as a way of locking away capital until the kids are at university.

    Investing in stocks and shares do interest me but honestly I'm not sure I have the time for it.

    Globally diverse tracker funds sound interesting, what are they?
    • Thrugelmir
    • By Thrugelmir 13th Jan 18, 1:14 PM
    • 58,972 Posts
    • 52,292 Thanks
    Thrugelmir
    I surmised myself that a flat might bring the biggest returns, being that is essentially mostly paid for by someone else, a mortgage covered by rent.
    Originally posted by misja
    Majority of gain in letting a mortgaged property comes from the increase in value in the property. Not from the income. The question that you need to consider is whether the rent is sufficent to cover maintenance costs, service charges, tax and void periods, still leaving enough to repay the mortgage.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • kidmugsy
    • By kidmugsy 13th Jan 18, 2:50 PM
    • 10,891 Posts
    • 7,442 Thanks
    kidmugsy
    Do you pay higher rate income tax?
    Free the dunston one next time too.
    • misja
    • By misja 13th Jan 18, 3:09 PM
    • 7 Posts
    • 1 Thanks
    misja
    No, I'm on basic rate
    • Audaxer
    • By Audaxer 13th Jan 18, 3:47 PM
    • 1,082 Posts
    • 636 Thanks
    Audaxer
    I surmised myself that a flat might bring the biggest returns, being that is essentially mostly paid for by someone else, a mortgage covered by rent. We were thinking modestly, just as a way of locking away capital until the kids are at university.

    Investing in stocks and shares do interest me but honestly I'm not sure I have the time for it.

    Globally diverse tracker funds sound interesting, what are they?
    Originally posted by misja
    A buy to let flat is likely to take up more of your time and be more risky than investing in stocks and shares. Globally diverse low cost multi asset funds are a good place to start. One example you could have a look at are Vanguard LifeStrategy funds which are very popular on this forum, and come with different percentages of equities and bonds to suit your risk level. You can also learn a lot about starting investing on sites like Monevator.
    • Robin9
    • By Robin9 13th Jan 18, 3:51 PM
    • 2,669 Posts
    • 1,745 Thanks
    Robin9
    Does your wife have a pension ?
    Never pay on an estimated bill
    • misja
    • By misja 13th Jan 18, 4:41 PM
    • 7 Posts
    • 1 Thanks
    misja
    No, Robin9 not yet.

    Audaxer, that's an interesting pov. Have you had experience with such things?

    If I was to place a 25% deposit into a flat and sell it 20 years later with rent having covered the mortgage, its value would have hopefully grown with inflation, meaning I've made an asset from just a deposit.

    This is my current train of thought, although I will definitely check out the Vanguard option too.
    • Audaxer
    • By Audaxer 13th Jan 18, 5:09 PM
    • 1,082 Posts
    • 636 Thanks
    Audaxer
    Audaxer, that's an interesting pov. Have you had experience with such things?
    Originally posted by misja
    Yes, I've learned a lot through this forum, Monevator and other such sites in the last year. I'm retired but have just started investing seriously in the past year as I was getting poor returns from Cash ISAs.

    There will be equity crashes when the equity part of your investments could fall by up to 50%, but if you have 60% equities and 40% bonds that is a 30% drop overall. The loss only crystallises if you panic and sell when you see the value of your investments falling. If you stay the course, the investments should recover and in the long term your investments will give you better returns than holding it as cash savings, which will depreciate in value due to inflation.

    You may do better investing in a buy to let, but you may not, and you could have problems with tenants, repairs, falling house prices etc.
    • TBC15
    • By TBC15 13th Jan 18, 5:18 PM
    • 495 Posts
    • 251 Thanks
    TBC15
    No, Robin9 not yet.

    Audaxer, that's an interesting pov. Have you had experience with such things?

    If I was to place a 25% deposit into a flat and sell it 20 years later with rent having covered the mortgage, its value would have hopefully grown with inflation, meaning I've made an asset from just a deposit.

    This is my current train of thought, although I will definitely check out the Vanguard option too.
    Originally posted by misja
    You will get hammered for capital gains tax.
    • misja
    • By misja 13th Jan 18, 5:25 PM
    • 7 Posts
    • 1 Thanks
    misja
    Well if the rule is to spread the risk, then perhaps a combination of both is best.

    Any links of good posts for vanguard beginners?

    Thanks!
    • Thrugelmir
    • By Thrugelmir 13th Jan 18, 5:28 PM
    • 58,972 Posts
    • 52,292 Thanks
    Thrugelmir
    If I was to place a 25% deposit into a flat and sell it 20 years later with rent having covered the mortgage, its value would have hopefully grown with inflation, meaning I've made an asset from just a deposit.
    Originally posted by misja
    Sounds easy in principle. Trouble is the reality isn't for many people. Nor does the value of property have any correlation to inflation. Remember you'll be running a business. Tenants come in all kinds.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

1,926Posts Today

6,756Users online

Martin's Twitter
  • Ah these care free days of watching #ENG score 5 goals in the first half of a World Cup match. It reminds me of... Never.

  • Then it should be. It's not some accident. It's deliberate grappling https://t.co/UxVTuUSNio

  • Penalty yes but time someone was sent off for these wrestling moves #WorldCup

  • Follow Martin