What should I do with 150k

[crackadawn]

My dad sadly passed away earlier this year. I am an only child and he has left his house to me. Probate has just completed and I am putting the house up for sale which is worth about 150k.

i am self employed and dont have a pension.

i am wondering what to do with the money, everyone has an opinion investing / buy a rental / buy a business rental / put in pension.

I would really appreciate some advice.

I'd see an IFA and work through your options with them before making a decision. If you get any money beforehand, make sure you split it between two different banks so it's fully protected by the government.

Sorry for your loss. I’d definitely prioritise a lump sum into your pension, it’s tax efficient too.

Personally I would do a pension. I definitely wouldn’t do anything involving being a landlord, that imo is for people who have got everything else financially sorted first.

sorry to hear you’ve lost your dad. I hope you have someone you can lean on emotionally.

How old are you? In any event you should have a pension. However I’d spend up to 20% on some sort of keepsake to remember your dad. Maybe a really nice watch or piece of jewellery, although I bought a piano when my dad died.

Pension. Definitely not buy a house rental.

You do not need to see an IFA. They will sting you senseless on commission.
Get on the free Rebel Finance School to educate yourself.
Sort debt first (not inc mortgage in this though).
Build an emergency fund.
I'd personally take advantage of tax free wrappers first so ISA and a SIPP as you've no pension. The SIPP or self invested pension would be great as the government will stick on 20% if you're a lower rate tax payer.
Stay away from property.
You could feed £20k into your ISA the next few years or bung more in a SIPP.

Do you own your own house? You could consider paying down the mortgage if so. I would not get a buy to let. I think pension is best option but maybe also do something nice to remember your dad…. Maybe a holiday or whatever makes you happy.

Yes to this!

I inherited a property recently - I remortgaged it as it didn’t have a mortgage, I paid off my own mortgage and I rented out the inherited property. I didn’t want to rush into selling. I know people are saying not to do this, but with so many landlords selling the supply and demand situation has worked in my favour.

if you own the house outright letting it out may not be a bad idea. If it’s a modern property in good condition, let it out using an agent for a steady income. Use this for your monthly outgoings and reduce your earned income by putting more into a pension.

Are his only assets his house?

If you were thinking of BTL (wouldn't recommend with the renters rights act, but that's something else entirely), why wouldn't you just rent out his house rather than selling? It's fairly straightforward to have it simply transferred into your name. If you wanted to protect yourself a little more and were thinking of going into rental, you could have it transferred into a Ltd company where you are the only director. That separates out your personal income/finances from the BTL.

Personally though, don't go into rental. It's not the time.

Would this be enough to pay off your own mortgage? I'd do that first, then put your monthly mortgage payments that you'd be saving into pension which would lower your self employed tax bill.

I like the idea of renting the property out and getting yourself 5/6/700 extra a month for doing nothing!

£150000 could easily make a lot more than that properly invested with no stress.

Unfortunately, as a landlord, it's not 5/6/700 for doing nothing. It's extra expenses every month to maintain a house that the tenants can't be arsed to look after. If you get good tenants, that's great. If you get bad ones it's dreadful

In the last month I've just had £835 worth of costs on a house which was completely renovated 6 months ago and only brings in £925 of income per month. The tenants are looking after the house so badly, I'll be lucky by the time they move out to even get back what I paid, despite having invested a lot of money into completely modernising and renovating.

1. pay off any debt
2. build an emergency fund of 3-6 months of expenses
3. Put 20k into stocks and shares ISA ( vanguard is one option) each year for a few years
4. reduce tax bill by putting a % (15% is a good rule of thumb ) of earnings into pension and use some of this cash to make up the difference in your take home pay.

You can put a maximum of your entire annual income or £60k, whichever is lower into your pension so that's a good option, so you could do that with £120k of it by April next year, just put in the best paying instant access account until then, or perhaps buy premium bonds with £50k as the return is tax free, likely a good option if you are a higher rate tax payer.

The rest I would put £20k in a S&S ISA and £10k in cash, or use some to buy or do something to remember your DF by.

If you have a mortgage you could pay some off, but even at current interest rates, mortgages are cheap debt that are likely to cost less than investment returns over time.

As an aside, can you afford to pay into a pension out of income, even if its a relatively small amount of money?

Your housing situation is relevant. Do you live somewhere you want to stay forever and do you have a Mortgage or rent?

Everyone has an opinion.
I would really appreciate some advice.

Unfortunately @crackadawn all you will get here is more opinions. Advice is only possible if you share more about your personal situation. Hence some questions asked by PPs.

Sorry about your dad.

This is the way. IMO you don't really need an IFA for this amount, really.

As you are self employed I'd stick to the cautious end and keep 6 months expenses in cash (4.5% interest savings are about, or 5% on lower amounts).

I'd be most worried about the pension in your situation, so putting a decent chunk annually into pension would absolutely be a priority once you've filled your S&S ISA allowance for this year.

buy to let has flown the nest. Biggest waste of time and money ever, and a total ballache. You think you’re getting good money then you account for all the costs and repairs…. 0

i would invest in some kind of fund … find an ifa if you don’t feel confident navigating

This, although I’d put pension ahead of ISA. You don’t need an IFA.

Letting the house is likely to have lower returns than investing and comes with a lot more hassle. There’s a reason BTL landlords are getting out.