Suggestions - What to do with a decent sum of money ?

dinners

dinners

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Phil
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Had a bit of a windfall a few days ago and other than moving it out of my everyday bank account we're a bit puzzled as to what to do with it or how to make it work best for us.

Clearing a few debts is top of the list to reduce monthly outgoings but beyond that I've never really given it much thought.

The bank called asking if we'd like an appointment to dicuss our options but they're obviously just wanting to push whatever options they have to offer.

We'll be getting some impartial / independent advice in due course but I thought I'd ask on here on the off chance that others have been in a similar situation or are perhaps savvy in terms sensible things to consider ?
 
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Pay off anything that is costing you interest ie credit cards, loans.
Without prying too much have you got a mortgage and if so look into paying off a bit?
Maybe consider putting some into Premium Bonds, ( I know there is no guarantee of a win but a friend of mine has £30k in bonds, his maximum, and he wins something almost every month).
Consider an ISA or 2, not a huge return but its better than nothing.
If I had enough I would definately consider buying another property.
Is your pension ok or would it be worth topping it up?

All are things that I would personally consider but I am no expert and would be looking for some INDEPENDENT financial advice.

Andy
 
Clear ALL debts!

Check any offered accounts carefully, comparing interest rates with inflation. At the moment, saving money is (in real terms) costing about 3.5% PA... An ISA will probably offer a better return (or at least a less bad loss!) but there's a limit on its size.

As suggested, a few quids' worth of Premium bonds isn't a bad idea, the money should be safe there and any wins are a nice bonus.

In the New Year, I'm going to start looking for some precious metal bars - they seem to do pretty well most of the time but prices at the moment are a bit high for a buyer.

Also as suggested above, get some proper advice from a professional.
 
Do take up the bank's offer, the advice will not only push their products, but yes they are salesmen getting commission for any bonds or whatever they sell.
It's wise to split a substantial sum.
You can get reasonable interest rates if you commit it for a few years, but note such things will often have a setup fee which should you change your mind in year one could mean you get back less than put in.
If you haven't got an ISA they are about the best thing to start now and add to annually, with no restrictions if you suddenly need the money back for a major purchase.
 
I would say donate it to the wenger out foundation I plan to set up!

If not, I agree with others, pay off debts. Start with anything like credit cards, then loans, then mortgage depending on size of windfall. If big enough maybe a nice treat too, like a good holiday.
 
Based on a 2.5% interest rate : Knocking 20k off an outstanding mortgage of £125k with 20 years left to run will save you an additional 11k of interest. Even more interesting if your mortgage allows you to take payment holidays, in car you need breathing space in the future.


Pension is important as well and having a few k in an an isa as an emergency fund is a very warm feeling indeed.

But most of all get debt free, it's a great feeling.
 
Obvious things to do is clear all debts that are costing you money, already been mentioned here. Depending on the size of your windfall, if you have any left over keep it safely banked till you decide what to do with it.

I have a friend of a friend who got a decent sized pay off, he paid of all his debts then stuck the rest in two unconnected banks. This is just in case the bank should go under, only one account is covered should things go bad.

He was saying he did not manage to find anything that paid a decent rate, other than an ISA. It is pretty hard to find anyone who pays a decent rate of interest on your money banked with them. I think those days have gone!

PS He did also say this does cause a problem among his friends and family, as the amount of times he gets asked to lend money. A refusal turns people against you, not always wise to tell mates and distant family.
 
Depends on the sum.

First thing is to clear all debts and look at ways to reduce all monthly outgoings. This includes the obvious such as credit cards, mortgage but also things that need capital investment. Have you an old bolier, need to replace windows & doors, insulation, low energy bulbs etc.

Once you've done that, put the same payments away in savings every month as you are used to paying that amount. Then you'll have savings aside for other things in the future.

Lastly - do you have a family? Treat them all to a memorable holiday as these are priceles. Look at something like the Adventure Company http://www.adventurecompany.co.uk/
or if you don't fancy abroad, you can rent lighthouses, castles and other interesting properties reasonably cheaply in the UK. Or in France you can stay in tree houses, chateaus etc
 
Walking into the building society with a cheque to pay off the entire mortgage many years ago was one of the greatest feelings ever and saved us mega-bucks in interest, not to mention the possibility of an endowment mortgage disaster!
Get debt-free, stay debt-free as your 1st priority ... we've never looked back.
 
Nod said:
In the New Year, I'm going to start looking for some precious metal bars - they seem to do pretty well most of the time but prices at the moment are a bit high for a buyer.
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Sounds like you are going on a treasure hunt. I have always like the idea of owning a gold bar, I do like the word Ingot :)

I heard a friend of a friend mention he was thinking of investing in gold,and that got me thinking. But I wonder what prices are like at the moment? Oh and I wonder how you buy it, I assume even the smallest bit you could buy would be expensive.

I may be able to afford an ingot bar of lead, but there again that's not precious metal :cool:
 
Most areas covered already.

Definitely pay off debts that are costing you a lot.

If you have a mortgage it may also be worth paying it off, or reducing it. However, if the interest rate is low paying it off may not be that advantageous.

Investing in property and selling on or renting it out for a while could be a better use of the money.

Quite a few NS&I investments do not offer great interest but there are sometimes attractive longer term investments available.

http://www.nsandi.com/

Also have a look at this one

http://www.moneysavingexpert.com/savings/best-financial-advisers#what

Dave
 
Pay off all your debts first, obviously. I wouldn't go near gold at the moment as prices have been in speculative bubble for a long time already.

I also would not invest in property as I have a personal moral objection to turning homes for living in into vehicles for the wealthy to profit at the expense of the less well off (main reason I will probably never go back)....but that's a personal opinion, from a purely logical point of view property has traditionally been a sound investment. We are in somewhat uncharted waters in the world economy at the moment so I wouldn't take any 'traditional' advice as gospel for that matter.

Buy yourself a present too, money's no good when you're dead.
 
As others have said pay off debt. A mortgage may seem cheap but £100 000 at 1% over 20 years will cost you £22 000 in interest, only worth keeping if you can get a better interest rate, after tax, on any money you invest.
Next is decide what to treat yourselves to - you do not have to spend much just get something you always wanted or go somewhere for a holiday.
Get investment advice from the bank and others, remember all advisors will be charging soon. As Motley Fool used to say - all Financial Advisors should be called Financial Salespeople, ask them what their commission is on any advice and if they will share some of it with you!.
Any investment should take into account how old you are, your attitude to risk, whether you will need a certain sum at a specified date etc.
Pensions and ISA's give you tax relief and they are just "wrappers" that you put around an investment so they can include anything.
The normal advice is that the younger you are the more you can invest in higher interest, higher risk things, as you get nearer to retirement it is best to transfer to lower interest, lower risk investments.
Money Saving Expert is a good start and Fidelity's site has some good tools and advice, as do others such as L&G. You do not have to invest with them, just read the articles and use the tools.
 
If your going to see a financial advisor then see an independent one, not the banks one. The ones that work for the bank will offer you the best product that their particular bank has to offer, an independent one will offer a whole market solution.

if your buying metals then buy Silver, the Chinese have developed a superconductor that uses silver and the price is bound to rise further. In any case, the price of silver has outperformed gold for the last few years.

Most importantly, get debt free. Interest on interest is the biggest evil in finance.
 
Unless you're one of these people that passionately hate them (or are in a listed/traditional building), consider getting the house kitted out with solar power.

Buy them outright, rather than enter into a roof leasing scheme, so that you get maximum returns.
Look into replacing your lighting with LEDs too.

6 or 7 years and it will have paid itself off, and you'll be saving yourself money for the next 30+ years.
 
Nod said:
Clear ALL debts!

Check any offered accounts carefully, comparing interest rates with inflation. At the moment, saving money is (in real terms) costing about 3.5% PA... An ISA will probably offer a better return (or at least a less bad loss!) but there's a limit on its size.

As suggested, a few quids' worth of Premium bonds isn't a bad idea, the money should be safe there and any wins are a nice bonus.

In the New Year, I'm going to start looking for some precious metal bars - they seem to do pretty well most of the time but prices at the moment are a bit high for a buyer.

Also as suggested above, get some proper advice from a professional.
Click to expand...

I've been into bullion for a while but recently I switched to holding it electronically because I wanted to trade it more than just hold for long term appreciation. If you're buying physical then www.bullionbypost.com is the best company in the UK, for a secure electronic option try www.bullionvault.com. The premium on physical is a massive put off because when you buy you pay the premium but if you sell, the most you'll get is 98% of the spot price.

Gold just had a big pullback recently, so might be a good time to get some.
 
OP, be very careful when speaking with an IFA, the old school trust based business is long gone. Most will be angling to sell you an investment product that may or may not suit your needs. Very rarely will an IFA advise you to put it into a savings account as there's no commission for them.

You need to ask yourself the following questions:

1. What are your lifestyle objectives for the short, medium and long term
2. Do you have any debts that need clearing
3. What will be your employment status going forward
4. What regular financial commitments do you need to maintain
5. What retirement provisions have you got already
6. How much money can you stand to lose without significantly impacting your lifestyle and ability to meet ongoing commitments
7. How would you describe your general attitude to risk

Might be a long winded but I hope this helps. I've got a good few years experience in this field and happy to answer any questions.
 
Many thanks for taking the time to reply - there's a few things there to mull over prior to getting independent advice.

We're lucky in that the remaining mortgage is almost gone anyway. That said what's left of the mortgage along with a couple of credit cards will be cleared before we consider what best to do with the bulk of it.

In terms of risk - I think we're more inclined to go with a steady low risk approach rather than a higher risk but possibly harder working option if that makes sense.
 
With pension changes in my company recently I sought financial advice and had a long chat with a very nice advisor (one-man-band). He was honest about the types of advice and just as anyone else, has bills to pay.

I said that I wanted completely independent advice, up front, and was clear about the fact that I was not likely to purchase any of their offerings. I then asked to pay for their time (for example an hourly rate) so that their income is not from commission, but a standard charge out rate. That way - the FA got his money and I got impartial advice.

Ian.
 
If you're interested I've can pass you details of my Nigerian contact who is going to transform my little next egg into a fortune. Bloody lucky that he emailed me out of the blue, but who knows when Lady Luck is going to visit.
 
hsuffyan said:
OP, be very careful when speaking with an IFA, the old school trust based business is long gone. Most will be angling to sell you an investment product that may or may not suit your needs. Very rarely will an IFA advise you to put it into a savings account as there's no commission for them.

You need to ask yourself the following questions:

1. What are your lifestyle objectives for the short, medium and long term
2. Do you have any debts that need clearing
3. What will be your employment status going forward
4. What regular financial commitments do you need to maintain
5. What retirement provisions have you got already
6. How much money can you stand to lose without significantly impacting your lifestyle and ability to meet ongoing commitments
7. How would you describe your general attitude to risk

Might be a long winded but I hope this helps. I've got a good few years experience in this field and happy to answer any questions.
Click to expand...

Things are changing on the financial advisor front and from January they will not get commission on investments and pensions

http://www.fsa.gov.uk/consumerinformation/product_news/saving_investments/changes-financial-advice

This in theory should make things more transparent as you will be charged a fee and the choice of product will not be influenced by how much commission is being paid.
 
Ricardodaforce said:
If you're interested I've can pass you details of my Nigerian contact who is going to transform my little next egg into a fortune. Bloody lucky that he emailed me out of the blue, but who knows when Lady Luck is going to visit.
Click to expand...

Sounds like a plan :D
 
As others have said: pay off debts first, they cost you real money. We managed to pay off our mortgage early and subsequent events have made us very grateful we did.
Premium Bonds are quite good if you have the full 30k and are a higher rate tax payer.

Hubby and I no longer trust IFA's and the like, as advice from previous ones has in the long run proved poor, if not disastrous.
 
After remaining mortgage and other debts (credit card and a small loan) are cleared it should still be a six figure sum.
 
2nd hand (3 year old) Jag XF - my best (OK, favourite; not so good as an investment!) way of spending some excess funds!
 
I could be mean and say dead parents...
 
I can't offer any further advice than that which you have already received....However I would like to say congrats on your windfall!
 
Craig1912 said:
Things are changing on the financial advisor front and from January they will not get commission on investments and pensions

http://www.fsa.gov.uk/consumerinformation/product_news/saving_investments/changes-financial-advice

This in theory should make things more transparent as you will be charged a fee and the choice of product will not be influenced by how much commission is being paid.
Click to expand...

Yep, very familiar with RDR, but advisors can still offer in house products and be paid upfront fees as opposed to rebates.
 
Ricardodaforce said:
If you're interested I've can pass you details of my Nigerian contact who is going to transform my little next egg into a fortune. Bloody lucky that he emailed me out of the blue, but who knows when Lady Luck is going to visit.
Click to expand...

I also just transferred money over to my 'good friend', he's been ill for ages, but seems a solid return on these Nigerian puffer jackets....just got to wait now.....
 
If it were me, I'd spend a fair chunk of it on drink, drugs and hookers. The rest I'd just fritter away.
 
dinners said:
After remaining mortgage and other debts (credit card and a small loan) are cleared it should still be a six figure sum.
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Just wondering, are you looking for any new mates? I could give you some brill ideas how to spend all that dosh ;)
 
If you have kids, and do not have something set-up already, a trust of sorts for when they reach 18/21 etc - if you're interested I'll let you know the scheme we (well my parents) set-up for our little one. Can only be redeemed at 18 but completely tax free I believe.
 
hsuffyan said:
Yep, very familiar with RDR, but advisors can still offer in house products and be paid upfront fees as opposed to rebates.
Click to expand...

There is no such thing as in house products from a true "Independent" advisor.
 
Craig1912 said:
There is no such thing as in house products from a true "Independent" advisor.
Click to expand...

You'd think that ;)
 
congrats phil... assuming the circumstances weren't too upsetting.
If it were me I wouldn't be within a million miles of a high street bank. There really is no value in any of their products and it's all based on high volume at low margins (bit like most high street stores) - but I can't believe they weren't knocking on your door on xmas morning to get their mitts on your dough :gag:

I've invested with Jupiter trusts for years and they've always performed massively higher than any high street bank... a quick google for best performing trusts (over 5/10/15 years) will show this. After all, it's results that matter, not promises.

If it were me, I wouldn't be too fussed about doing anything just yet as everyone is so cautious and it looks like you can just sit tight for a bit without needing it bring in big returns just yet.
 
leftcurl said:
congrats phil... assuming the circumstances weren't too upsetting.
If it were me I wouldn't be within a million miles of a high street bank.
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It's to do with my wife's family (not parents though) but has taken a year or so to be sorted out. The only reason it went into my bank account was because the lawyer needed to transfer things that way. It's been moved now though as I was wasn't comfortable having it sitting in the account that I carry a bank card for or do online shopping etc.

akr said:
If you have kids, and do not have something set-up already, a trust of sorts for when they reach 18/21 etc - if you're interested I'll let you know the scheme we (well my parents) set-up for our little one. Can only be redeemed at 18 but completely tax free I believe.
Click to expand...

3 kids (4th is due any time now) - we're also looking into options for them as they each got their own individual windfall.
 
dinners said:
It's to do with my wife's family (not parents though) but has taken a year or so to be sorted out. The only reason it went into my bank account was because the lawyer needed to transfer things that way. It's been moved now though as I was wasn't comfortable having it sitting in the account that I carry a bank card for or do online shopping etc.

3 kids (4th is due any time now) - we're also looking into options for them as they each got their own individual windfall.
Click to expand...

If you are looking longer term for the kids you really need to invest in equities. We have two bonds for our kids that were done when their grandad gave them some money. it saying bonds are the best thing but equities will get you more growth than a savings account etc. You really need to take professional advice.
 
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