Investing advice/opinion?

I realise this is such an open ended question and when I say advice I understand its just an opinion, I realise the dangers & pitfalls I’m a very cautious person, I was just wondering what others might look at in our position.

My wife & I have come into some inheritance and we are trying to think the best way to invest, I’ve just turned 60 with 3 small pensions, my wife is only 57 with a government pension (education), only paying in about 15 years so again not huge. We are going to see a pensions advisor who can also possibly advise us of how best to go ahead & apart from placing lump sums into our pensions. managing the money for investment income.

I have a Freetrade account with 10k Stocks & shares ISA I’ve been dabbling with for the past year & a bit but it’s a different ball game to investing for our future :slight_smile: Although I have read a few posts on people managing large investments themselves. Then there is property etc etc. Just wondered what advice people here might say? We also have ISA’s we have maxed this year & will again after April.

Apart from the bulk of inheritance money to invest we still have a mortgage to settle.

We have a mortgage of 43k, with 4 years left to go, it would cost us 3k to settle the balance , so we was thinking rather than pay it all off now can we invest the money & pay off the maximum each year till we can settle the final amount without a repayment charge or fee’s, the bank still get interest but at least we can minimise the cost.

We worked out paying off 10% per year until 2025 we can reduce it to £31700, the interest during that time will cost us £2273. However if we invest the £43k in a fixed interest account for 4 years it could earn more or less the same amount if not more. (top current 3 years fixed is 1.9%).

We’d have to juggle money a bit as we would need on average £4k per year to overpay the mortgage but that’s only the next 4 years. even if I put those amounts in 1, 2 & 3 years fixed we would be left with £30k to lock away for 4 years.

Does this make sense? What stock options might be a better bet with low risk?

One question I was wondering if interest rates are to go up this year is it sensible to lock away so much money for 4 years? ( 3 years was same value as 4 as far as I could currently find) or gamble with 1 or 2 years fixed hoping to switch to a higher one next year? Best 2 year was 1.6% (thats still higher than our mortgage interest.

It does mean waiting another 4 years to pay it off but the money will be committed to it and it’ll hopefully save us around £3k …

Appreciate any thoughts, I tried to keep it short, hopefully that all makes sense, especially on where best possibilities to invest.

Thanks

Seek the advice of a professional wealth manager.

If I were you i’d just use the lump sum to pay off the mortgage and then you are ‘debt free’.

Celebrate that your mortgage has been paid off - then use the additional income (i.e what you would normally pay towards your mortgage) each month to live a nice life. Enjoy your money you have worked for! :smiley:

What are you investing for? Is it for yourself or is it for children etc?

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Conversely I wouldn’t pay the mortgage off early, but seek professional advice.

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Without knowing all the information, about both of your working situations and your current investment position, it is difficult to give detailed advice.

I would consider the following :-

Basically it depends on how much you have inherited and your current financial position.

The mortgage - however you mention £3k to settle the balance…if this is some sort of early repayment charge…if so I probably would leave the mortgage to take its normal course.

Having said that what is the interest rate on the mortgage (rhetorical question)…it is a standard rate then I would probably leave but if you are paying a high rate it might be beneficial to take the hit on the £3k fee. I would get the calculator out. As you state you maybe able to earn more with the investment than what you are paying for your mortgage.

I agree see at least one financial advisor maybe two to get a balance position.

Remember investments (stocks and shares), go up and down…

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The early repayment charge on the mortgage is more than it’s going to cost in interest over the next 4 years. not worth paying it off yet, you won’t save anything. But presumably you want to pay it off at the end of the 4 years. Stock are a bit of a gamble if you have a short investment horizon. the traditional advice is to look more at Bonds/ Bond etfs as you get closer to retirement. I’m no expert on this though, don’t listen to me :smiley:
I’m actually coming up to the end of a fixed rate mortgage deal this year, and I have enough in my stocks and shares ISA to pay off the balance. While leaving the money in stocks may work out the best option if markets continue to drift up, I’m seriously considering selling some and paying off the mortgage just for the peace of mind of being 100% debt free

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Thanks so much for the reply MJRInvests, I was going to put “or sod the money pay it off NOW” (thats what my wife said) & it is an attractive idea as I hate debts and the thought of no mortgage is so appealing :slight_smile:
But the ER charge of £2500 and the extra 550 in charges put me off, so I thought if I just invest that money I could save that extra £3k in 4 years, well that was my thinking I could be wrong.

We want to invest for our future, I mean I’m 60 so it’s not that distant :slight_smile: we haven’t got huge pensions so wondered if we could invest to draw an income of sorts. It’s going to be about 300k after we have paid off the mortgage.

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Boomish

wrighpd

1m

Thanks for the reply wrighpd, your right a bit impossible to comment I didn’t want to waffle on with too much detail, however you are correct, it’s a fairly low fixed rate of 1.49% £2500 ER plus charges £550 basically the incentives to take out the mortgage claimed back, it was the best I could get at the time. I did think shares maybe too risky, but at least a locked away high rate savings account of 1.9 would pay the mortgage interest and save the charges. At least thanks for confirming I’m more or less on the right track, I’ll get some advice.

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DaveDave SmithFounding Member

Exactly our thoughts Dave, peace of mind with no mortgage would be nice, I’ve no experience on Bonds ETF’s etc, but I know what they are, yes thats what I think we will look with a finance advisor for the remainder of the inheritance ,

@Boomish your short-term investment time-frame of 4 years before withdrawing to pay off the mortgage does make me feel uneasy. Investments can go up and down, and in the short-term its really luck of the draw for this.

As @Dave says, bonds will probably be your best option if you go down this route, but the yield on bonds at the moment is much lower than inflation, so in effect you are losing purchasing power to inflation?

You say that after paying off the mortgage you will be left with £300,000. That is more than enough from an investment perspective, so yes I’d be tempted to say ‘sod it’ and take the ‘relatively’ small hit of ~£3000 (relatively small compared to your lump sum) and pay off the mortgage - just for peace of mind that you will be debt free.

Then, you have £300,000 to spend however you want (investments, enjoy life etc).

However, this inheritance is a large value - I am just a 28 year old novice investor with limited knowledge of mortgages. This is just my gut feeling.

You should definitely seek professional advice!

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I personally wouldn’t pay off the mortgage early. The early repayment fees defeat the purpose.

Best setting our in your head what you want to achieve, when and what money you need for it. What obligations you have, what income (guaranteed and variable). A professional could help with that.

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HI @Boomish - I was in a similar position a few years ago where there are lots of options available (slightly overwhelming), but was determined to a) make the most of the windfall b) make an informed investment choice based on personal knowledge.

It may well make sense to have an initial consultation with at least two wealth advisors about your retirement position, but make sure they are independent (e.g. take a fee for service rather than commission for products). But remember, no one cares more about your money than you…

Needless to say, avoid anyone wanting to charge ongoing fees (% of portfolio or retainer); plain daylight robbery!

Ultimately, I found JL Collins an excellent source which synthesises much of the best investment thinking. It was a gamechanger for me on how to manage a sizable portfolio and feel confident in my choices (despite it being US centric - you can apply the principles anywhere). Be warned though - it’s hard to shake the bug of trying to ‘pick winners’! :joy:

Anyhow - hope that helps!

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Many thanks jgd78 really appreciate the advice, any reason why not to go with wealth advisers that take commission I presumed they all did?
I’ll check out JLCollins, I would like to make some long term low risk investments myself I’ve done ok so far on Freetrade. Bit scary when it’s a lot of money though :slight_smile:

Hi there.
I work as a paraplanner for an IFA. Happy to put you in touch if you want a second opinion or want to talk to a regulated adviser. If not, not a problem at all.
As always, lots of this information is very useful, but I tend to find that so many angles and opinions tend to reduce the efficacy of the information being given. Good luck in whatever you decide.

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I may be overly cynical, but I line up over here on investment advisors.

If you dislike taking the word of someone on the ‘interwebs’, always prudent, I would also recommend you read Chapter 12 of John Bogle’s book “The Little Book of Common Sense Investing”. Apart from founding Vanguard, Bogle quotes dozens of reputable financial experts on investing…

He is politer than JL Collins on ‘helpers’, but in his words: “I endorse the idea that for many—indeed, most—investors, financial advisers may provide valuable services in helping to give you peace of mind; in helping you establish a sensible portfolio that matches your appetite for reward and your tolerance for risk; in helping you deal with the complexities, nuances, and tax implications of investing in mutual funds; and in helping you stay the course in troubled seas. But the evidence I’ve presented so far strongly confirms my original hypothesis that, as vital as those services may be, advisers as a group cannot be credibly relied upon to add value by selecting funds that will beat the market.”

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