Total noob after advice on where to invest money

[Pig benis]

Hello all

My grandparent who isn't very well has gifted me some money, which was incredibly kind of her and I'm unsure of what to do with it.

I'm currently in a good financial situation, I have a great job, a totally manageable mortgage and my bills are very cheap. I would really like to invest the money I've received before I spend it on something stupid... like a car... Instead, I would like to pass this money onto my kids (still working on having them, boy oh boy is this the fun part).

I have looked at stocks and shares ISAs from the likes of Hargreaves and Lansdown and I've done my fair share of research into the ever so lovely 'compound interest'. A regular savings account is a no go as the return is so small (1-2% interest), even a regular ISA is max 3%, but I am totally over my head here and would really appreciate some advice.

I really do not know what to do and am seriously concerned that I might invest my money somewhere stupid and lose something from someone who I love the most.

Any help would be massively appreciated

Thank you
PB

[anonymous-user]

How about an offset mortgage.

Get a better return than basic savings and without risking your gift

[droopsnoot]

You could do worse than a read through various articles on www.monevator.com as that presents a variety of options. There's a fairly active "Savings and Investments" section on Money Saving Expert forums as well.

[Pig benis]

keirik said:

How about an offset mortgage.

Get a better return than basic savings and without risking your gift

I'm not sure what that is, but I will do some research. I have just signed the paperwork for another 2-year fix on my mortgage, so unlikely to change now without accruing fees. Oh also, my mortgage is 50-50 with my girlfriend and she isn't bothered about investing her money

Thanks for your reply

[Pig benis]

droopsnoot said:

You could do worse than a read through various articles on www.monevator.com as that presents a variety of options. There's a fairly active "Savings and Investments" section on Money Saving Expert forums as well.

Top tips, thank you. I will check both of these out

[Henners]

Be very much aware of things which look too good to be true. This thread gives some examples.

Feel free to post what you’re thinking of doing on here before going ahead

[Pig benis]

Henners said:

Be very much aware of things which look too good to be true. This thread gives some examples.

Feel free to post what you’re thinking of doing on here before going ahead

Jeez that is pretty scary. I will stick to the big name banks/investment funds and to make sure they are regulated by the FCA, also have FSCS protection.

Yes will do. I'd like to make a decision this week, but happy to take my time until I have found what will work for me

Thanks
PB

[Scootersp]

I think knowing the approx level might help some advise.

I am ultra cautious, it's certainly cost me money in real terms, but when it's a gift I feel not having any chance of losing a large chunk outweighs not making it grow so much.

You could put it in an ultra safe, bond, premium bonds etc and then perhaps await a market slump to invest in stocks? Or if it's quite a lot, do this mainly but max out your isa allowance each year, then you can have some potential for gains as well as safety. Any sort of ISA or bond setup at least means there is a process to get access to the money, it's not normally instant so prevents the random spend but is accessible in a few days if needed.

They say time in the market is more important than timing the market or something! so if you are thinking of unborn kids you are obviously thinking long term so from what I've read (I have no stocks and never have!) you "can't lose" (?) really by dropping it into some ISA/managed fund etc, but it may be worth less in 5 years, then double in 12 etc.

[RizzoTheRat]

If you don't need for a fair few years it might be worth considering pensions as the tax man also puts in the amount of tax you've already paid on it.

[JulianPH]

RizzoTheRat said:

If you don't need for a fair few years it might be worth considering pensions as the tax man also puts in the amount of tax you've already paid on it.

That is exactly what I was going to suggest.

Long term compound returns, tax relief added (even though no tax was paid on the gift), helps to fund the OPs retirement in later life and IHT free when leaving it to his future kids. It wins all round.

One not of caution, you mentions your grandparent was no well. In the sad event of her passing within the next 7 years there my be tax to pay on this gift. I won't go into more detail on this unless you consider it may be relevant.

[JapanRed]

Pig benis said:

Hello all

My grandparent who isn't very well has gifted me some money, which was incredibly kind of her and I'm unsure of what to do with it.

I'm currently in a good financial situation, I have a great job, a totally manageable mortgage and my bills are very cheap. I would really like to invest the money I've received before I spend it on something stupid... like a car... Instead, I would like to pass this money onto my kids (still working on having them, boy oh boy is this the fun part).

I have looked at stocks and shares ISAs from the likes of Hargreaves and Lansdown and I've done my fair share of research into the ever so lovely 'compound interest'. A regular savings account is a no go as the return is so small (1-2% interest), even a regular ISA is max 3%, but I am totally over my head here and would really appreciate some advice.

I really do not know what to do and am seriously concerned that I might invest my money somewhere stupid and lose something from someone who I love the most.

Any help would be massively appreciated

Thank you
PB

I’m new to investing too, since the birth of my daughter 15 months ago. I’m not an expert by any means but this is what I did.

You need to know your appetite for risk - places like Nutmeg have a free online tool to complete to determine this.

You also need to know your timescale. If you are likely to want the money within 5 years then people generally advise against the stock market. 10+ years is the sweet spot for stocks in my opinion. If you don’t want it until you retire then putting it in a pension has to be the best way I’d have thought. Roughly how much are we talking? You can put £40k per year into a pension before losing benefits/allowances (I believe you can pay more but lose out on allowances over £40k - you can also backdate 3 years so in theory could put £120k into pensions).

You mention that regular savings accounts get 1-2% and ISA’s a maximum of 3%. In my experience 3% at the minute isn’t a bad rate, what with Trump and Brexit etc etc.

Here’s what I did, on behalf of my daughter.
£500 upfront plus £50 per month into a level 10 (highest risk) Nutmeg account.
Plus £100 per month into a Halifax children’s saver paying 4.5% (you won’t be able to have this account without a child).

Edited by JapanRed on Monday 1st April 12:06

[samdale]

Seems I'm in a similar situation (and level of knowledge!) as you.

https://www.pistonheads.com/gassing/topic.asp?h=0&...

This sticky at the top of the finance section was a good read. Great advice and questions promptly answered. Very helpful people whether you choose one of their products or not. Lots of good Q & A in there already.

[Mr Pointy]

Pig benis said:

My grandparent who isn't very well has gifted me some money, which was incredibly kind of her and I'm unsure of what to do with it.

I'm currently in a good financial situation, I have a great job, a totally manageable mortgage and my bills are very cheap. I would really like to invest the money I've received before I spend it on something stupid... like a car... Instead, I would like to pass this money onto my kids (still working on having them, boy oh boy is this the fun part).

I have looked at stocks and shares ISAs from the likes of Hargreaves and Lansdown and I've done my fair share of research into the ever so lovely 'compound interest'. A regular savings account is a no go as the return is so small (1-2% interest), even a regular ISA is max 3%, but I am totally over my head here and would really appreciate some advice.

I really do not know what to do and am seriously concerned that I might invest my money somewhere stupid and lose something from someone who I love the most.

OP: You don't say how much you are looking to save/invest but your immediate decision is if you want to take advantage of this year's £20,000 ISA allowance, in which case you have only 4 days to get it done. If you do want to do this then you should be able to open up a Hargreaves Landsdown account in time & get the money into a Stocks & Share ISA. You don't have to pick which fund you want to invest in as it can sit in your account unallocated for now (or go for a Cash ISA). It's also not locked away as you can easily transfer elsewhere or withdraw it; the key is you lose this year's allowance if you don't use it. If you have more than £20k then you can pay in another £20k on April 6th.

In general pensions are tax efficient on the way in but lock up your money until you are 57 (or you die). ISAs are tax free on the way out & you can access the funds at any age. With fund/platform charges & inflation you need to be making 3 or 4% just to stand still. To make more than this you need to take risk & that means you may lose money over some periods.

Given you seem to be in a fortunate financial situation then if you have disposable income I'd suggest you think about consulting a proper advisor about what direction you should take with your finances. This not advice about which fund to put your money into - that's the last step. It's more about what your aims are (retire at 55?) what changes are likely (marriage/new house/kids) & how to spread your investments to achieve these goals. The hard bit is finding an advisor & you might start by posting here & hoping someone like Derek Chevalier responds with some pointers.

[JulianPH]

samdale said:

Seems I'm in a similar situation (and level of knowledge!) as you.

https://www.pistonheads.com/gassing/topic.asp?h=0&...

This sticky at the top of the finance section was a good read. Great advice and questions promptly answered. Very helpful people whether you choose one of their products or not. Lots of good Q & A in there already.

Thanks for that Sam!

[cylon]

Mr Pointy said:

the key is you lose this year's allowance if you don't use it. .

Sorry for the dumb question, but what do i lose? Say i have 10k sitting in my current acc, if i move this tomorrow to HL cash ISA, what allowance am i losing for this year, i have not made anything by moving 10k in.

I am having a blurry moment, hence asking..

[RizzoTheRat]

cylon said:

Sorry for the dumb question, but what do i lose? Say i have 10k sitting in my current acc, if i move this tomorrow to HL cash ISA, what allowance am i losing for this year, i have not made anything by moving 10k in.

I am having a blurry moment, hence asking..

You can only put 20k per year in in ISA, so if you have 40k in your account you can put 20k in now and 20k in next week, if you don't do the first 20k this week though you'll lose this years allowance and can transfer in 20k next week, but still be left with 20k in your current account. If you don't plan to put in more than 20k in the next year it's not a problems though as next years allowance will be enough.

[Mr Pointy]

cylon said:

Sorry for the dumb question, but what do i lose? Say i have 10k sitting in my current acc, if i move this tomorrow to HL cash ISA, what allowance am i losing for this year, i have not made anything by moving 10k in.

I am having a blurry moment, hence asking..

As said above you lose forever the ability to have £20k making tax-free gains (or losses of course, nothing is guaranteed). An ISA is often a very appropriate investment mechanism as it doesn't tie your money up but it's a case of use it or lose it each tax year.

[Freddy88FM]

I think you should buy a defender.

[GliderRider]

The big concern with stocks and shares, investment trusts, unit trusts, etc, whether in an ISA, SIPP or elsewhere, is how do you know if the one you are picking is any good? Since the OP has mentioned Hargreaves Lansdown, its worth pointing out that their website allows the performance of up to ten funds, unit trusts and shares to be compared against each other over differing periods of time. As the disclaimers always say, 'past performance may not be indicative of future results', however a nice steady climber is always a good start, and the steady climbers which consistently outperform the others are definitely worth finding!

To do a comparison on HL, this is what you do:

1. Select 'Funds' in the second line down from the top, third item in from the left.
2. Choose any fund, e.g. 'Baillie Gifford Global Discovery Inclusive - Class A - Accumulation'
3. Select the 'Charts & Performance' menu (just below the buying and selling prices)
4. On the right hand side below the chart, using the 'add to chart' start adding funds and shares you wish to compare
5. Once you have your list of up to ten funds, unit trusts and shares, you can change the time period to see the relative performances. I'm told 18 months is a good figure to use, although I'm sure other opinions will vary.

I don't know why this feature can only be accessed from funds and not shares, but that's the way it works.

[Derek Chevalier]

GliderRider said:

The big concern with stocks and shares, investment trusts, unit trusts, etc, whether in an ISA, SIPP or elsewhere, is how do you know if the one you are picking is any good?

I'm not convinced if looking at performance alone is going to give you what you want