No idea what to do with ~£50k

[Japveesix]

After some relatives died we've inherited some money and are not really sure what to do with it.

For some detail (not sure what's helpful but just some general background).

I'm 39, girlfriend and I are both in approx. £25-30kpa jobs. We have a house in Bristol worth close to £300k with about £130k mortgage left

We now have over £100k in the bank and quite honestly we're not financially savvy and don't really know what the best thing to do with it is.

We are looking at a single story extension, maybe up to £30k, plus some other house improvements in the next few years.

This would likely still leave us £50k odd (likely more) that will be sat in an account making nothing for however many years until we move. Looking to move in 5+ years so our son can go to a half decent secondary.

I'm not totally stupid and realise there are no get rich quick schemes, and also aware that I'm not rich and can't afford to lose money on high-risk investment.

So:

- should we just get a financial advisor to tell us what to do
- should we just pay off a lump sum of our mortgage, or up payments until it's all gone?
- should we look to move sooner rather than later and stick the money into a new house?
- bung it all in various ISAs?
- spend hours every day fiddling with stock and shares and hope to get rich?
- buy a Ferrari?

Just looking for some general thoughts and sensible suggestions really from anyone who knows what they're talking about!

Happy to provide any other useful details.

Thanks in advance for any useful 'get rich quick' ideas.

[Austin_Metro]

My immediate thought was to move sooner rather than later. But if you can make some additional value by upgrading your present place first, I’d do that.

Might be trickier at the moment with higher build costs though.

[Burwood]

Bung what you don't need into ISA wrappers. 20k per year is the allowance. Plenty of great funds out there. It would be completely crazy to leave it in a bank account or buy bonds at your age.

[pingu393]

If you can draw money out of your mortgage (offset mortgage), put any spare in there. Interest not paid is as good as money earned .

[MG CHRIS]

Put a chunk in a index fund with vanguard or similar leave it alone or just drop feed it and when you retire you will have a nice lump sum. Returns on s&p500 is something like 10% per year averaging.

[Rick101]

Japveesix said:

- buy a Ferrari?

This is the only thing that would come to my mind.
If petrol flows through your veins you shouldn't have cash in the bank. It should quickly be withdrawn for cars and car parts.
All for investment when the prices go up, obviously.

[Jawls]

The first question would be whether you’d need the 50k for your move in 5 years. Or, to put it bluntly, if that 50k became 30k or 40k, would that torpedo a move?

If you need the 50k and can’t take a loss, that rules out investments (investments aren’t inconsistent with an ISA. An ISA is just a wrapper). But given you’ve got 170k of equity in the current house, that strikes me as unlikely unless the place you’d want to buy is absolutely mega money.

Personally, I wouldn’t want to hold cash equivalents of that amount for 5 years. Would I invest for 5 years the exact same way I’d invest for 20 years? Nope. But I’d still likely invest in your scenario.

[Japveesix]

Austin_Metro said:

My immediate thought was to move sooner rather than later. But if you can make some additional value by upgrading your present place first, I’d do that.

Might be trickier at the moment with higher build costs though.

Yeah, I do wish we'd done it pre pandemic really as I imagine we'll have a long wait just to get anyone in and then an extra X thousand on top as well with current material costs etc.

[alfaman]

Use it to set up 1 or 2 franchise gyms.

Maybe with some co investors

(I do work for a large franchise gym biz... A lot of our franchisees do very well..it's a very solid business model)

[Japveesix]

Jawls said:

The first question would be whether you’d need the 50k for your move in 5 years. Or, to put it bluntly, if that 50k became 30k or 40k, would that torpedo a move?

If you need the 50k and can’t take a loss, that rules out investments (investments aren’t inconsistent with an ISA. An ISA is just a wrapper). But given you’ve got 170k of equity in the current house, that strikes me as unlikely unless the place you’d want to buy is absolutely mega money.

Personally, I wouldn’t want to hold cash equivalents of that amount for 5 years. Would I invest for 5 years the exact same way I’d invest for 20 years? Nope. But I’d still likely invest in your scenario.

Thanks, useful advice.

We can't afford to lose money really. I doubt either of us will ever be high earners and equally we won't have massive pensions. Safe investments only I guess, at least for the bulk of it.

Sticking it in ISAs is likely the most straightforward solution, with no risk attached. And that's probably what we'll do if we can't think of anything cleverer!

[pingu393]

Japveesix said:

Jawls said:

The first question would be whether you’d need the 50k for your move in 5 years. Or, to put it bluntly, if that 50k became 30k or 40k, would that torpedo a move?

If you need the 50k and can’t take a loss, that rules out investments (investments aren’t inconsistent with an ISA. An ISA is just a wrapper). But given you’ve got 170k of equity in the current house, that strikes me as unlikely unless the place you’d want to buy is absolutely mega money.

Personally, I wouldn’t want to hold cash equivalents of that amount for 5 years. Would I invest for 5 years the exact same way I’d invest for 20 years? Nope. But I’d still likely invest in your scenario.

Thanks, useful advice.

We can't afford to lose money really. I doubt either of us will ever be high earners and equally we won't have massive pensions. Safe investments only I guess, at least for the bulk of it.

Sticking it in ISAs is likely the most straightforward solution, with no risk attached. And that's probably what we'll do if we can't think of anything cleverer!

Hence, my point about reducing the mortgage.

Is your mortgage rate more than your ISA rate? If so, put the money in the mortgage.

But ONLY if you can get it out again.

[Japveesix]

pingu393 said:

Hence, my point about reducing the mortgage.

Is your mortgage rate more than your ISA rate? If so, put the money in the mortgage.

But ONLY if you can get it out again.

I see what you mean, a very logical way of looking at it.

I guess if we put it into Stocks and Shares ISA then with luck we'd be looking at 8% a year or so? The FTSE 100 tracker supposedly returns that sort of amount on average.

Is this a fairly safe and sensible option over somewhere between 5-10 years?

[Jawls]

Japveesix said:

pingu393 said:

Hence, my point about reducing the mortgage.

Is your mortgage rate more than your ISA rate? If so, put the money in the mortgage.

But ONLY if you can get it out again.

I see what you mean, a very logical way of looking at it.

I guess if we put it into Stocks and Shares ISA then with luck we'd be looking at 8% a year or so? The FTSE 100 tracker supposedly returns that sort of amount on average.

Is this a fairly safe and sensible option over somewhere between 5-10 years?

Personally I’d want to be globally diversified instead of just in the FTSE (which is overweight certain sectors. Basically you’re taking a huge exposure to mega cap energy, mining, finance).

But again, there is risk of loss. Suppose the dot.com bubble or similar happens again, just before you need to buy your new house. That’s why the question of whether the house purchase depends on getting the full 50k back is so important. If you go all in on equities, you need to be able to weather a downturn.

(Also depends on your personal response to risk. There’s a value to being able to sleep at night)

Edited by Jawls on Saturday 6th November 15:38

[Jiebo]

If you go down the global equity tracker lane (dont just put it in FTSE), don’t put £50k in at once. Drip feed £2k a month for the next 24 months.

Prices are exceptionally high against almost every historical metric. That doesn’t mean it will crash, or even if it does it doesn’t mean it will be a massive correction. But dollar cost averaging will protect you against the correction that many are expecting shortly.

I’m starting to understand what decentralised finance will do to the world, so I’d also put 5% of that into bitcoin and ethereum for a 10 year hold. But you may not feel comfortable with this given the lack of regulation.

[Jiebo]

Jawls said:

Personally I’d want to be globally diversified instead of just in the FTSE (which is overweight certain sectors. Basically you’re taking a huge exposure to mega cap energy, mining, finance).

But again, there is risk of loss. Suppose the dot.com bubble or similar happens again, just before you need to buy your new house. That’s why the question of whether the house purchase depends on getting the full 50k back is so important. If you go all in on equities, you need to be able to weather a downturn.

(Also depends on your personal response to risk. There’s a value to being able to sleep at night)

Edited by Jawls on Saturday 6th November 15:38

Dot.com bubble is already happening with crypto alternative currencies. I’ve cleared 300-500% by buying hype tokens in weeks. It’s madness, and most of these coins are garbage, just like most of the companies during the dot.com times.

Arguably US tech stocks (e.g. Tesla).

[bitchstewie]

Japveesix said:

Thanks, useful advice.

We can't afford to lose money really. I doubt either of us will ever be high earners and equally we won't have massive pensions. Safe investments only I guess, at least for the bulk of it.

Sticking it in ISAs is likely the most straightforward solution, with no risk attached. And that's probably what we'll do if we can't think of anything cleverer!

If you put £50K in "something" do you want to be absolutely sure that when you go back to it there will still be £50K or can you tolerate some downside to potentially make something on the upside?

Investing takes time and basically no risk usually = no reward.

If you can't afford to lose it consider very carefully if a savings product would be better.

If you're looking at stocks and shares wondering where to start take a look on Monevator and also look at Vanguard LifeStrategy and also articles and videos by Lars Kroijer as a decent place to start.

[Jiebo]

bhstewie said:

If you put £50K in "something" do you want to be absolutely sure that when you go back to it there will still be £50K or can you tolerate some downside to potentially make something on the upside?

Investing takes time and basically no risk usually = no reward.

If you can't afford to lose it consider very carefully if a savings product would be better.

If you're looking at stocks and shares wondering where to start take a look on Monevator and also look at Vanguard LifeStrategy and also articles and videos by Lars Kroijer as a decent place to start.

Also check out PensionCraft on YouTube. His content is really excellent, and its crazy that more people dont know about it!

[pingu393]

Japveesix said:

pingu393 said:

Hence, my point about reducing the mortgage.

Is your mortgage rate more than your ISA rate? If so, put the money in the mortgage.

But ONLY if you can get it out again.

I see what you mean, a very logical way of looking at it.

I guess if we put it into Stocks and Shares ISA then with luck we'd be looking at 8% a year or so? The FTSE 100 tracker supposedly returns that sort of amount on average.

Is this a fairly safe and sensible option over somewhere between 5-10 years?

Not my place to say, as I'm just a random guy on t'interweb, and investments can go down as well as up. I can only tell you what I did...

I had an inheritance last year...

I have an offset mortgage. I keep that running at around £0. On average, I pay about £0.50 in interest a month, but I have instant access to tens of thousands at mortgage interest rate.
I use a credit card, but always pay off in full, so no interest to pay there.
I max out my SIPP pension contributions (I pay in 80% of my gross salary and HMRC pays the rest). I'm over 55, so I can withdraw from my pension if I need to.
I max out my ISA contribution (£20k)
The rest goes into the GIA.

My investments are now worth 110% of what they were 11 months ago (but some of that is money that was contributed by HMRC). The actual investment growth has been around 7.5%. A big gain was made from a COVID recovery fund, so you can't expect the same every year.


If you want to invest in an S+S ISA, check out this thread and contact them for more info (especially Nik or Coops)
https://www.pistonheads.com/gassing/topic.asp?h=0&...

[Condi]

Jiebo said:

Dot.com bubble is already happening with crypto alternative currencies. I’ve cleared 300-500% by buying hype tokens in weeks. It’s madness, and most of these coins are garbage, just like most of the companies during the dot.com times.

Arguably US tech stocks (e.g. Tesla).

Its funny that you have an investment strategy relying on other people being idiots and buying garbage. You may as well go to the casino, at least that has free drinks and pretty croupiers.

Someone who wants to use their £50k for a house in 4 years time would be ill advised to gamble with alt coins, they have only a slightly higher chance of finishing with £100k than £0k.

[bitchstewie]

Jiebo said:

Also check out PensionCraft on YouTube. His content is really excellent, and its crazy that more people dont know about it!

Yes for some reason I just can't gel with him plus I always assume he's focused just on pensions.

Think of it this way as well OP with £50K it's worth a couple of days learning.

Sadly you're in a weird place where £50K is a lot of money to you but isn't to an IFA.