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How to Invest your Inheritance


Nobody likes to think about when the worst happens but the reality is that dealing with the death of a loved one is difficult enough. When you introduce the admin, mountains of paperwork and the challenge of understanding how to invest your inheritance, things can feel overwhelming.

Many people don’t even consider the idea of investing their inheritance until the time comes to potentially do so. But it’s important not to fritter away anything you do inherit because this can have a negative impact both practically and emotionally.

It’s important to respect both yourself and the person who has left you the funds when it comes to making your decisions.

Making a plan in advance will help you to identify and fulfil short- and long-term financial goals, working out what you want your life to look like at each stage.

Creating a picture of how you want your life and financial situation to look will help determine how best to invest your inheritance when the time comes.

According to the Office for National Statistics, the average inheritance is £11,000, peaking at £33,000 for those close to retirement. This could make all the difference for yourself and your family if you are careful with how you invest. So, what are your options?

Pay Off Debt

We would always advise being patient and taking your time with financial decision, especially when you are in the earlier stages of bereavement.

However, there are certainly some situations where the money is best spent, such as paying off outstanding debt that weighs heavy on your mind or has a particularly high interest rate.

You can also pay off a few of your mortgage payments or the whole lot, but this may only make sense if you are close to the end of term or, again, if you are paying a high rate of interest.

It’s best to seek the advice of an expert to make sure you won’t be subject to early repayments and to verify whether you might be better off investing the money for capital growth.

Invest in Property

There have been plenty of fears bandied around about the negative impact of Brexit – no-deal or otherwise – on the housing market. But buy-to-let still offers ripe opportunity for investors especially in the cities and towns across the Northern Powerhouse. This is a good option if generating an income is one of your investment goals.

In cities such as Leeds, Manchester and Edinburgh, there are major infrastructure investments being made with space created for new builds and buy to let investors.

The construction of the HS2 high-speed rail is also set to increase and expand demand for good quality housing and open up the market further to savvy buy to let investors.

By investing all or a portion of your inheritance into one or more buy to let properties, you will diversify your portfolio with a very current opportunity.

When it comes to finding a good mortgage, the market is extremely competitive and there are many low-cost, interest-only options available.

Investment Vehicles and Pensions

Depending on the level of inheritance and your personal circumstances, our financial planners may recommend that you invest your inheritance into specific investment vehicles. These will usually make far more of your money and increase your growth potential significantly compared to cash in the bank.

You can utilise your Isa allowance for ultimate tax efficiency. It might also make sense to invest in stocks and shares, take advantage of the new Lifetime Isa, the Innovative Finance Isa or a mixture of them all.

There is also the option to invest in ready-made portfolios made up of shares, bonds and other assets with opportunities to minimise risk by spreading across a range of platforms.

You might also wish to bulk up your pension with some of the inheritance money – with 25 per cent of your pension fund available as a tax-free lump sum after the age of 55, this can be a great way to protect your inheritance from tax and/or pass on wealth to your chosen beneficiaries through the pension fund.

Consider the Family

There are many layers to investing your inheritance if you are part of a married couple with or without children. Married couples might wish to consider joint investments in order to minimise both income and capital taxes.

When it comes to children, this depends on factors such as how much disposable income you have as well as the ages of your children, the stability of your current job role and so on.

You may wish to set up a junior ISA to leave a legacy for your children, a Lifetime ISA or a Help to Buy ISA to assist with a house deposit and get your children or grandchildren on the property ladder.

It’s important to consider whether you wish to retain some control over money with, for example, a discretionary trust. A financial planner can help you to work out the best options. You might also wish to consider setting up a pension fund for your dependents.

Take Expert Advice

Understanding how it is financially best to invest your inheritance as well as what makes sense for yourself and your goals is a complex challenge. It’s also important that you and your loved ones stay up to date on the latest inheritance tax regulations to ensure that you make informed decisions.

Our advisers will help guide you towards the most appropriate solutions for a tailored investment strategy with the appropriate level of risk and reward according to your preferences. We will also discuss additional options such as collective investments, donating to charity and giving gifts.

Our team at Vintage Wealth Management offer some of the best value in the business when it comes to financial planning, wealth and asset management.

Contact us today on 020 8371 3111 or email to learn more about the options available to invest your inheritance.