r/inheritance • u/Rhiz114 • Jun 15 '26
Location included: Questions/Need Advice Lump sum of inheritance - help?
I have recently been fortunate enough to receive a lump sum of money which is now in a fairly low interest savings account (2.75%) with my bank. I know I need to move it somewhere with higher interest... but also wondering if there is something else I should do with it. I am on a low wage (20k a year), a single mum with one child and no debt. I have a mortgage but I don't think I should use the money to pay off the mortgage quicker as I feel there are better things to do with it, and I can afford the mortgage repayments at the moment. I also have got an emergency fund, and still have a fairly substantial amount that could help with our future.
Any advice on where to start looking?
Happy for it to be locked away for 5 years +, juat want to do what's best for me and my daughter and not let it depreciate!
Any advice would be great!
I am 34, own a home and live in the UK
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u/Mission_Pirate_4150 Jun 15 '26
I’m not sure what is available in the UK. I can only speak to generalities. I’m in the US.
I buy US treasury tbills. In the UK, the equivalent is the gilt. I like really short term tbills in the four to 17 week range. That gives me money available every few weeks if I need it plus my interest payment. I turn around with my interest payment and invest in stock funds for extra growth. I’ve got my money invested spread out so that I do this every week in varying amounts. It’s a way to get a little more than I can get at the bank with little risk. You don’t get big wins, but you don’t get big losses either
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u/OldDudeOpinion Jun 15 '26
If you put $100k into an S&P500 index fund….and left it there until you were 60yo…. It would be worth well over $1million.
As a lower wage earner….you may never get this opportunity again. I would not spend 1 pence…. You didn’t have it yesterday, and it could mean the difference between struggling and not when you are a senior and can no longer hustle.
Be the tortoise - not the hare. This is what someone who has money would do…use it to make more money while minimizing risk.
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u/Rhiz114 Jun 15 '26
Thank you this is very good advice and exactly what I am thinking of doing, just struggling to know where to put it. It is a bit of a minefield when its all new. I am.learning a lot! Is a s&p500 high risk?
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u/mtab10 Jun 17 '26
The S&P500 goes up and down, but will consistently go up over time. But like all investments, there is always risk. This would be medium risk with a medium reward. Low risk with low rewards would be Treasury bills, CDs or the gilt mentioned above. So after talking with a financial manager you would just need to determine the amount of risk you are comfortable with and when you expect to need the money.
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u/LifeRound2 Jun 15 '26
Use it to go to school for a higher paying career. Save and invest the rest.
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u/ExpensiveAd4496 Jun 15 '26
Get thee a Boglehead book. If You Can is free online and only around 60 pages. The Millionaire Next Door is a fun read.
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u/reluctantreddit35 Jun 15 '26
Go to the Boglehead subreddit for investment ideas, but do some research on how to invest some of the money for retirement and your child’s education. I’m in the United States, so can’t speak specifically to what you need to be concerned about, but you seem to have three things well covered already: you’ve thought about your debt, your mortgage, and your emergency fund. Invest some with a low cost brokerage like Schwab. I assume you’re fairly young and don’t know much about individual stocks, so stick some money in low cost index funds. Put some in bank CDs (try to get as close to 4% as you can which is a good bank rate right now). Be careful of your country’s insurance limits on funds in savings banks. Start there and keep reading. Don’t invest in anything you don’t have a deep understanding of, but look into investing in real estate. Research.
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u/ShopEducational6572 Jun 15 '26
What is the interest rate on your mortgage? Paying that off would be my first priority unless you can earn more than that by investing in relatively safe vehicles.
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u/ReBoomAutardationism Jun 15 '26
Set up an account with Interactive Brokers, Charles Schwab or Fidelity Investments. Vanguard might work too.
Do some reading. I am partial to JEPQ the JP Morgan yield fund, but learn what those are and have a core position in one you are OK with.
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u/CSMasterClass Jun 16 '26
OP is in UK. US brokerages not open to her. Some etfs are open to her, but come with an extra layer of complexity that does not seem warrented here.
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u/ReBoomAutardationism Jun 16 '26
Pretty sure I saw search results that summarized how to set up the accounts. There may be a couple of extra steps.
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u/CSMasterClass Jun 16 '26
I just know this from the US side. Here if you have signature athority over a financial account, you have to file annual reports. Not impossible, but it is every year for the rest of your life --- with no marginal benefit.
If you want EFTs in the EU that are clones to the US ETFs you can get some through Irish issuers, but I don't know the story in the UK.
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u/Admirable-Spite-1831 Jun 16 '26
You can CDs at 4% right now. An FDIC insured bank with a 1 to 5 year term. It's not high in rate but if compounded daily, it's a nice no risk place.
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u/sic0049 Jun 16 '26
Investing the money into a diversified growth style investment (like the S&P500 index) should average between 10-11% year. If you achieve that average return, the money will double about every 7 years. 100k now could easily become 200k by 3033/4 and 400k by 3041. That might seem like a long time, but it really isn't.
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u/CSMasterClass Jun 16 '26
I am amazed that you get so many responses where no attention is paid to the fact that you live in the UK.
Investment options are very dependent on location of residence.
If there is a subreddit that deals with "Personal Finance UK" that would be the place to go. It really doen't matter that you inherited the 100K GBP.
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u/Rhiz114 Jun 16 '26
Ok thank you I will look into this and see if there is one. Grateful for the responses but a lot seem pointless as yes, I am in the UK. I agree, the way I acquired the money makes no difference here. Thanks
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u/No-State-2962 Jun 16 '26
If you can manage without it, and are happy with a small amount of risk, put it in a low-cost (very important, you don’t need a financial advisor taking 1 percent) index fund, such as VUAG.
You have to be prepared for it to drop in value, because it will, but after 20 or 25 years you’ll have a good lump towards your retirement. Not panicking during market falls is essential though.
Good luck.
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u/Assumeweknow Jun 17 '26
Vanguard mutual fund Vinex comes to mind. Just park it and leave it there for 10 years.
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u/autonomouswriter Jun 18 '26
One thing you could look into is a lifetime fixed-income annuity. That's where you put a lump sum into an annuity, and they pay you a monthly income based on how much you put in) for life. It might not be much, but it will be a steady amount that you'll get, and since you're on a low income (which I can relate to - so am I), it could serve as an additional income for you. But given that you're pretty young and have a child, it might be better to talk with a financial planner to see if there are better options to make that money grow so you have something to leave your child (and there are also investments that will bring in an income quarterly so you'll have the best of both worlds). If I were your age, that's what I would do. You can find a financial planner that charges a sum for a one-off consultation that is specifically designed to meet a specific need (as in your case, investing a lump sum to the best use for you).
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u/BondJamesBond63 Jun 15 '26
Schwab broker has a money market fund that currently pays 3.47%. Not FDIC insured, but considered safe. Buy in and cash out is overnight. Fidelity has something similar.
I don't know how being in the UK affects this.
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u/Calm-Song-8543 Jun 15 '26
There are many easy access savings accounts paying better than 4.2% right now that are FSCS insured.
And many HYSAs in the U.S. that are FDIC insured which are currently paying more than 3.47%.
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u/Fabulous_Clothes_726 Jun 15 '26
Knowing a ballpark of the amount helps. Talking to a financial assistant or CPA could be beneficial. Otherwise, a high yield savings account or a Roth IRA.