Where should I invest my inheritance?

Smiling man using notebook and calculator to manage home budget

Ask the expert at Smith & Pinching about financial planning and investments - Credit: Getty Images/iStockphoto

I’ve recently inherited £250,000 from the sale of my late father’s house. I’m planning to use £50,000 of it to pay off my mortgage but would like to invest the rest safely for a few years and then have lots of holidays when I retire, as well as help the grandchildren when they buy their first homes. Where would be the best place to invest it?

Jeremy Woodruff, Director and Chartered Financial Planner with Smith & Pinching

Jeremy Woodruff, Director and Chartered Financial Planner with Smith & Pinching - Credit: Smith & Pinching

Jeremy Woodruff of Smith & Pinching responds:

This is a question that can’t be answered in a simple way. I can’t tell you where to invest your money without understanding all about your financial situation and your investment goals.

There is a process that Chartered Financial Planners go through before giving any kind of recommendation. It involves finding out about you and your financial circumstances, your objectives for the short, medium and long term, and assessing your attitude to investment risk. We would look at your current retirement planning including what lifestyle you aspire to when you retire. We’d explore how you are saving for a pension and the value of your existing pension savings. We’d check out the value and performance of any other investments or savings you hold.

We would need to look at any opportunities you may have to add to your pension from your inheritance to enhance your potential retirement income, exploring any unused annual contribution allowances and the value of any tax relief that might be obtained. In addition, we would look at your future plans for your grandchildren and any other non-regular expenditure to understand the timing and values you have in mind.

Once we have the full picture, then we can put together a financial plan that will optimise the growth potential of the money you invest, in tandem with protecting its value at the various points at which you want to take money out. It’s a delicate balance and one that must both reflect your attitude to investment risk and deliver the performance needed.

The truth is that a diverse portfolio of investments – perhaps both inside and outside a pension wrapper – is the best option for most people. Not putting all your eggs in one basket works as well today as it has ever done. The important thing is to have a diverse portfolio that ticks all the boxes for you in terms of investment risk and potential gains to meet your investment goals. I strongly recommend that you take independent financial advice to ensure that your portfolio does just that.

Any opinions expressed in this article do not constitute advice. The value of an investment and the income from it could go down as well as up. The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.

For more information, please visit www.smith-pinching.co.uk