Deciding What to do with Inheritance

The_Gatsby

So basically my grandfather died last year and in the will I was, along with the 5 other grandchildren, left the house. It sold a few months ago and now I have about £14,000 sitting in a bank in England.

My question is what should I do with it? I would like to make the money grow but I'm not quite sure how to go about it. My parents think I should invest in government bonds as they are a relatively risk free investment. from my understanding of it, the longer you leave the money invested, the higher interest rate you get. For example, 5 years @5%, 7 years at 7% and so on. I wanted to try and invest in something a bit riskier but that might make my money grow faster. I'm only 21 so my parents don't really agree with this. However, at the end of the day the money is mine to use how I see fit.

I'm pretty new to all of this and have never had a large enough sum of money to warrant even thinking about something like this. What do you think would be a good option for me?

Thanks for any help

Fitz123

Have you any debts like car loan, credit card etc. If so clear those first as you are highly unlikely to earn a better rate of return after tax on investments than the interest you are paying on these loans. It's good to have a clean slate with no personal debt before investing.

If that's a no, you are only 21. Have you gone to college, or completed courses that would benefit you ? if not, that money might pay some of your way through college if you couldn't in the past. Investing in yourself or your education may help you get a better job etc, and more money through salary increases in the future.

Once those are checked off, there are many quality shares or funds that track stock indexes (ETF) that may allow a higher return over time than bonds. Given your age, they are something that I would look into. I would look into these in preference to government bonds or saving products at your age, if you are willing to invest the money for a 5 + year period, and can handle fluctuations in the value of your investment without panicking.

The_Gatsby

I don't have any personal debt and am already in college so I won't be needing it for that. Can you give some links or names of these shares or funds that track stock indexes. I am new to the world of investment and am not how they work so would like to do some research on it.

Value Hunter

Whatever you do avoid government bonds, the return you'll be getting is shockingly low vs the risk invoved

my my my

give the money to nieces / nephews

The_Gatsby

Value Hunter wrote: »

Whatever you do avoid government bonds, the return you'll be getting is shockingly low vs the risk invoved

I was under the impression that they were risk free?

spideog7

Someone wiser than me might be able to give you more detail but I'm pretty sure you'll be liable for tax on the inheritance, don't forget that.

gordongekko

Are you based in Ireland or the UK?

The_Gatsby

I'm based in Ireland. The money came from the sale of a house that was in the UK. It's currently sitting in a UK bank account.

gordongekko

If it was me I would keep €4000 for a hell of a summer holiday and the balance would go into a rabodirect account but that's just me.

Value Hunter

The_Gatsby wrote: »

I was under the impression that they were risk free?

Nope far from it, just look at people who bought Greek government bonds

http://www.reuters.com/article/2012/02/21/uk-greece-banks-idUSTRE81K18O20120221

keeponhurling

gordongekko wrote: »

If it was me I would keep €4000 for a hell of a summer holiday and the balance would go into a rabodirect account but that's just me.

Why rabodirect? it seems that their interest rates are quite low, lower than say PTSB.

Foreign banks operating in Ireland are still operating under irish laws.

gordongekko

keeponhurling wrote: »

Why rabodirect? it seems that their interest rates are quite low, lower than say PTSB.

Foreign banks operating in Ireland are still operating under irish laws.

The op wanted the option to invest in something with a little more risk and rabo allows you to invest in funds. That was the reason I mentioned them rather than for their deposit rates.

arrowloopboy

The_Gatsby wrote: »

So basically my grandfather died last year and in the will I was, along with the 5 other grandchildren, left the house. It sold a few months ago and now I have about £14,000 sitting in a bank in England.

My question is what should I do with it? I would like to make the money grow but I'm not quite sure how to go about it. My parents think I should invest in government bonds as they are a relatively risk free investment. from my understanding of it, the longer you leave the money invested, the higher interest rate you get. For example, 5 years @5%, 7 years at 7% and so on. I wanted to try and invest in something a bit riskier but that might make my money grow faster. I'm only 21 so my parents don't really agree with this. However, at the end of the day the money is mine to use how I see fit.

I'm pretty new to all of this and have never had a large enough sum of money to warrant even thinking about something like this. What do you think would be a good option for me?

Thanks for any help

This might seem a little irresponsible ,but get yourself to Heathrow,get 4K in cash converted into $6000,direct flight to LasVegas,drink,ride and gamble for a week:eek:,bring a friend,the memories will last a lifetime,a great investment.
Buy a few books when you get home,educate yourself ,invest for yourself

simongurnick

Try to develop a diversified portfolio. And remember, diversified doesn't mean having lots of different stocks, it means different asset classes.
Putting a portion in government bonds may not be the worst idea. They are not risk free. Nothing is. But consider the situation, Ireland has bent over backwards to honour it's debt and today alone Moody's has upgraded their outlook on our debt.
For the rest of your inheritance, figure out how much risk you are comfortable with and then invest accordingly. ETF's are good way to be diversified as you can invest in commodities or small/mid/large caps or emerging markets etc.

If you want to do some general research on these principals just search "asset allocation" on google. Investopedia is also a good website for building knowledge.

If you can open an online account with one of the US brokers (again just google search) they will have a lot of educational resources on their website free of charge.

Good luck!