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Ask the Expert: I’ve had a £100,000 windfall. What do I do?

PUBLISHED: 12:39 21 April 2017 | UPDATED: 12:39 21 April 2017

Carl Lamb, managing director of Almary Green. Picture: Almary Green.

Carl Lamb, managing director of Almary Green. Picture: Almary Green.

Archant

CARL LAMB of Almary Green offers his advice.

Q. I’ve just inherited £100,000 from my father but am really not sure what to do with the money.

I have a mortgage of £250,000 on my house so could use it to pay some of that off, but my partner says I’d be better off putting it into my pension fund.

I’m not sure I want to lock all that money away in my pension when I might want to splash out on a new car or move house at some stage.

I’m aged 45 and we have enough income for our needs and still save a little each month. What should I do?

A. There really isn’t a straight-forward answer to this; there are so many questions that I would need to ask before coming up with any kind of recommendation.

My advice will depend on factors such as your income(s), expenditure, savings and family circumstances as well as important questions such as how you view risk when it comes to your finances.

Certainly reducing your mortgage could potentially be a suitable option as that will enable you to cut your spending – so enabling you to save for special purchases or increase your mortgage again later if you move house.

On the other hand, building up a pension pot for your retirement is also a very valid planning measure for you to undertake as you will get tax relief on any contribution you make into your pension fund, increasing the value of the contribution.

Once you reach the minimum retirement age, you will be able to access your pension savings as and when you wish, subject to any tax on the withdrawals, so that will give you some flexibility on spending the money then onwards.

It’s worth noting that there is a limit on how much you can put into your pension fund in any tax year and get tax relief. This is currently set at £40,000.

Frankly, I think my answer has to be that you should ask a financial adviser to look at the bigger picture and put together a financial plan that meets your objectives.

This is an opportunity for you to sit down and work out what your financial priorities are for the years ahead and to put together a plan that enables you to achieve them.

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