The inheritance

Two hundred thousand pounds lands in Ruth's account at sixty-two and everybody has an opinion: clear the mortgage, top up the pension, fill the ISA. The same woman and the same money, planned three ways, to see which advice was worth taking.

Appreciating Asset Liability Earned Income Passive Income Tax Efficient Capital Gains Retirement Planning Home Ownership Windfall

Employment

Windfalls

Property

ISA

Investments

Savings Account

Expenses

Put it into the pension

3 Goals

Give up as much salary as the pension can take for the five years to sixty-seven, and live on the inheritance while you do.

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Employment

Windfalls

Property

ISA

Investments

Savings Account

Expenses

Clear the mortgage

3 Goals

Pay the outstanding balance off the month the money lands, then let the freed payment build up.

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Employment

Windfalls

Property

ISA

Investments

Savings Account

Expenses

Fill the ISA

3 Goals

Shelter what the yearly limit allows and hold the rest in a general investment account until it can follow.

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Put it into the pension

Clear the mortgage

Living on the inheritance and sending the salary to the pension instead leaves Ruth ~£185.4k better off than paying the mortgage off with it.

Put it into the pension

Fill the ISA

Filling the ISA is the other thing everybody suggests, and routing the money through the pension leaves Ruth ~£195k ahead of that too.