Best use of a windfall?
Discussion
Hi all,
I know there are a lot of people on here who have a lot of wealth and experience of investing etc. So though this would be a good place to ask for some advice/opinions.
Sadly due to my Grandad passing away this year I will be getting an inheritance of roughly 50k fairly soon. I earn ok money currently and with my partner we manage to save money and have a life after bills although most seems to be going into fixing up our house (which was a project) which is almost done.
Basically I don’t want to squander the money and want to use it well, it’s tempting to go buy a used Porsche but I know I should be sensible?! Basically I want a fairly low risk way of investing the money, even if the rewards aren’t as high as they could be.
I have considered a buy to let mortgage on another property, but as far as I see it, I will struggle to make that work with all the extra stamp duty, fees etc.
Essentially for me it’s a lot of money so don’t want to waste it, especially as my grandad was always sensible with money despite never earning a massive wage.
Thanks in advance.
I know there are a lot of people on here who have a lot of wealth and experience of investing etc. So though this would be a good place to ask for some advice/opinions.
Sadly due to my Grandad passing away this year I will be getting an inheritance of roughly 50k fairly soon. I earn ok money currently and with my partner we manage to save money and have a life after bills although most seems to be going into fixing up our house (which was a project) which is almost done.
Basically I don’t want to squander the money and want to use it well, it’s tempting to go buy a used Porsche but I know I should be sensible?! Basically I want a fairly low risk way of investing the money, even if the rewards aren’t as high as they could be.
I have considered a buy to let mortgage on another property, but as far as I see it, I will struggle to make that work with all the extra stamp duty, fees etc.
Essentially for me it’s a lot of money so don’t want to waste it, especially as my grandad was always sensible with money despite never earning a massive wage.
Thanks in advance.
Hi Dean
Sorry to hear about your Grandad.
A good starting point may be as simple as paying down and mortgage on your home. You don't get a much more secure investment than that.
If you don't have a mortgage then pensions and ISAs could be a consideration, investing in cautious or defensive funds.
Sorry to hear about your Grandad.
A good starting point may be as simple as paying down and mortgage on your home. You don't get a much more secure investment than that.
If you don't have a mortgage then pensions and ISAs could be a consideration, investing in cautious or defensive funds.
Thanks all for the responses!
To clarify a few points that might help:
I have a mortgage
I am 30
I have a minor amount on a loan outstanding but should be clear by the time I receive any funds.
As mentioned we manage to save every month but as we have almost finished renovating our house the savings are looking slightly light.
To clarify a few points that might help:
I have a mortgage
I am 30
I have a minor amount on a loan outstanding but should be clear by the time I receive any funds.
As mentioned we manage to save every month but as we have almost finished renovating our house the savings are looking slightly light.
This will sound incredibly cynical, and I apologise for this but if you're not married and the house is in joint names and you separate after having used the 50k towards the mortgage she will get half of it. It's something to consider and inevitably what your Grandfather would've thought.
Just a thought, cheers.
Just a thought, cheers.
Keep a chunk of it in an easily accessible "rainy day fund"/ Say 4 months of your current take home pay, just in case you ever need it. It can still be held in an interest earning vehicle such as an ISA or bank account, but if the worst ever happened and you were out of work for a period, you will be very relieved that you have actual cash to hand to cover the mortgage payments, food, bills etc.
I have no idea (nor do I want to know) how big your mortgage is, but paying some of that down as well is a good idea.
Rich
I have no idea (nor do I want to know) how big your mortgage is, but paying some of that down as well is a good idea.
Rich
As you are 30 then I presume you will be working for another 25 years. As such I would invest all of it.
A low cost investment such as a S&S ISA. I use Vanguard - others are available.
I would go for something fire and forget, a fund of funds so to speak. For me that would be VLS.
You can put £20k in now and another £20k in April. Then bung the last 10k into the ISA in 2021.
Then ignore it (being sensible that is i.e don't log into the account daily etc). Don't be tempted to sell during market dips or peaks. Play the long game. Once you are older say into your late 40s you might need to consider moving out of the markets but that's a conversation for 15+ years time.
Only you know your personal circs though. If you plan to move or perhaps change jobs or have kids (assuming none) then things can easily change!
All IMHO. IANAFA.
A low cost investment such as a S&S ISA. I use Vanguard - others are available.
I would go for something fire and forget, a fund of funds so to speak. For me that would be VLS.
You can put £20k in now and another £20k in April. Then bung the last 10k into the ISA in 2021.
Then ignore it (being sensible that is i.e don't log into the account daily etc). Don't be tempted to sell during market dips or peaks. Play the long game. Once you are older say into your late 40s you might need to consider moving out of the markets but that's a conversation for 15+ years time.
Only you know your personal circs though. If you plan to move or perhaps change jobs or have kids (assuming none) then things can easily change!
All IMHO. IANAFA.
Some good sensible comments here. If you felt like being less sensible, then using half of it to purchase a classic might not be crazy.
Solid cars from prestige marques like a Merc R107 300SL, Bentley Turbo R, or Porsche 996 Turbo are unlikely to to do down in value, and are not a bad place to keep the ‘emergency fund’ whilst it’s not being used.
Solid cars from prestige marques like a Merc R107 300SL, Bentley Turbo R, or Porsche 996 Turbo are unlikely to to do down in value, and are not a bad place to keep the ‘emergency fund’ whilst it’s not being used.
Rich135 said:
Keep a chunk of it in an easily accessible "rainy day fund"/ Say 4 months of your current take home pay, just in case you ever need it. It can still be held in an interest earning vehicle such as an ISA or bank account, but if the worst ever happened and you were out of work for a period, you will be very relieved that you have actual cash to hand to cover the mortgage payments, food, bills etc.
I have no idea (nor do I want to know) how big your mortgage is, but paying some of that down as well is a good idea.
Rich
This is a very sound idea. So many people are one pay cheque away from meltdown. If you can keep a buffer in a savings account just in case you're out of work, you've bought some time and breathing space. I have no idea (nor do I want to know) how big your mortgage is, but paying some of that down as well is a good idea.
Rich
As for the rest of the money, there are some sound investment types on ph so I'd listen to them before me. I'd buy a camper van and another luxury watch
toon10 said:
Rich135 said:
Keep a chunk of it in an easily accessible "rainy day fund"/ Say 4 months of your current take home pay, just in case you ever need it. It can still be held in an interest earning vehicle such as an ISA or bank account, but if the worst ever happened and you were out of work for a period, you will be very relieved that you have actual cash to hand to cover the mortgage payments, food, bills etc.
I have no idea (nor do I want to know) how big your mortgage is, but paying some of that down as well is a good idea.
Rich
This is a very sound idea. So many people are one pay cheque away from meltdown. If you can keep a buffer in a savings account just in case you're out of work, you've bought some time and breathing space. I have no idea (nor do I want to know) how big your mortgage is, but paying some of that down as well is a good idea.
Rich
As for the rest of the money, there are some sound investment types on ph so I'd listen to them before me. I'd buy a camper van and another luxury watch
But for anyone who is PAYE then I would keep EF to a minimum.
Lets say you put £9k to one side as an EF in a normal account. Over 20 years assuming 4% return you are losing out on £10,000+ of interest.
If the SHTF you can normally pull money out of an ISA in a few working days. Also reduces temptation to spend it!!
If in a similar situation, I would consider putting it into the mortgage or pension, subject to no other outstanding loans.
The mortgage will make life easier now, by either reducing your monthly outgoings, or meaning you pay it off even sooner.
Depending on your personal situation, putting it into your pension will have potentially quite large and beneficial tax implications. For the most efficient way to get it into a pension and receive the best tax benefit, you might need to speak to a proper accountant.
The mortgage will make life easier now, by either reducing your monthly outgoings, or meaning you pay it off even sooner.
Depending on your personal situation, putting it into your pension will have potentially quite large and beneficial tax implications. For the most efficient way to get it into a pension and receive the best tax benefit, you might need to speak to a proper accountant.
Depending on how many of these life milestones may apply to you, then you might just consider to put it savings for the time being and access when needed over the next few years:
Wedding - £10k+
Having children - Nursery is between 6k - 9k/year + all the extras they need like clothes etc. I'd say till they're at school budget about £900 - £1000/month
Holidays - ? These can be pretty expensive
Trying to find the money for these milestones as well as living day to day can be a challenge, having that money there to pay for the milestones would make day to day living much easier.
Of course if none of those milestones apply to you then seek the investment advice from the other users.
Wedding - £10k+
Having children - Nursery is between 6k - 9k/year + all the extras they need like clothes etc. I'd say till they're at school budget about £900 - £1000/month
Holidays - ? These can be pretty expensive
Trying to find the money for these milestones as well as living day to day can be a challenge, having that money there to pay for the milestones would make day to day living much easier.
Of course if none of those milestones apply to you then seek the investment advice from the other users.
I recently paid off the balance of my mortgage, the admin charge for paying off the whole thing wasn't very much (I was out of my fixed rate term though), so well worth looking in to.
If you don't already have a decent pension butting some in one might be a good idea. Big advantage of the pension is that the government pays in the tax you've already paid on the money, so if you're a basic rate tax payer they're putting in an extra 25% or so.
If you don't already have a decent pension butting some in one might be a good idea. Big advantage of the pension is that the government pays in the tax you've already paid on the money, so if you're a basic rate tax payer they're putting in an extra 25% or so.
I wouldn't put in to a pension - why tie it up for 25 years?
I wouldn't put in to the mortgage either I dont think - too tied up and inaccessible, unless you are on an offset one so can access easily.
I'd put at least a full years allowance in an ISA and just forget about it. Maybe do two years worth and put the rest in the mortgage. That way you have a very health £40k+ quietly accumulating and it is accessible if you need it.
I'm assuming you dont have much other savings so this would give you a nice cushion.
I wouldn't put in to the mortgage either I dont think - too tied up and inaccessible, unless you are on an offset one so can access easily.
I'd put at least a full years allowance in an ISA and just forget about it. Maybe do two years worth and put the rest in the mortgage. That way you have a very health £40k+ quietly accumulating and it is accessible if you need it.
I'm assuming you dont have much other savings so this would give you a nice cushion.
NorthDave said:
I wouldn't put in to the mortgage either I dont think - too tied up and inaccessible, unless you are on an offset one so can access easily.
That's precisely the point: pay off some of the mortgage (generally the biggest liability that most people have - partners and children excepted 
).NorthDave said:
I'd put at least a full years allowance in an ISA and just forget about it. Maybe do two years worth and put the rest in the mortgage. That way you have a very health £40k+ quietly accumulating and it is accessible if you need it.
Accessible but not generating anything given cash interest rates. Although not a bad idea if you are not psychologically ready to invest in the market just yet. If you are, I'd chime in with a Vanguard LS passive index tracker (equity / bond ratio 50/50 for now - can be amended later), but I'd drip-feed over the course of a year to avoid market timing issues i.e. dependent on whether you believe that market prices are frothy, and want a degree of insulation from any potential economic slowdown.The fund is still accessible, but over the long-term (10+ plus, ideally decades) should provide a little nest-egg.
An idea could be:
£10k rainy day (cash fund)
£20k mortgage
£20k S&S ISA fund
The above distributions can be altered how you see fit. That said, nowt wrong with paying off a bit of the mortgage IMO.
putonghua73 said:
stuff.
You seem to be agreeing with me and also disagreeing with me?A mortgage is most peoples biggest debt but the OP should be aware that any money he puts in to it will reduce his outgoings but he might not be able to get it back quickly or at all. If things go badly at any point the bank might simply refuse to lend it him back. Might be a problem or might not.
I also meant to use his ISA allowances to buy funds, not cash ISAs.
We are basically saying the same and it just comes down to the OP to work out his levels.
Sorry for your loss.
Some wise words here, & I would siphon some (probably most) into an ISA for future use: on that, I would spread it out on a monthly basis to avoid suffering should the market plunge a month after popping it all in (VLS is a good shout, although I would personally use the IM sticky and pick something there!).....
...but....
I would also budget up to 10% to fritter on something to make you remember your Grandad.
Whether that is an item (I would avoid a vehicle, just because they generally depreciate and end up costing you more....perhaps a nice watch, or as you are doing your house, a luxury piece of art of some sort) or holiday or experience.
Did he travel anywhere exotic you could visit, or even not exotic....maybe a romantic weekend to wherever he had his honeymoon, for example (might be Blackpool or Skegness for all I know!)....I think that memory would stay with you for years to come, & make you smile.
Some wise words here, & I would siphon some (probably most) into an ISA for future use: on that, I would spread it out on a monthly basis to avoid suffering should the market plunge a month after popping it all in (VLS is a good shout, although I would personally use the IM sticky and pick something there!).....
...but....
I would also budget up to 10% to fritter on something to make you remember your Grandad.
Whether that is an item (I would avoid a vehicle, just because they generally depreciate and end up costing you more....perhaps a nice watch, or as you are doing your house, a luxury piece of art of some sort) or holiday or experience.
Did he travel anywhere exotic you could visit, or even not exotic....maybe a romantic weekend to wherever he had his honeymoon, for example (might be Blackpool or Skegness for all I know!)....I think that memory would stay with you for years to come, & make you smile.
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