Don't waste your windfall

MILLIONS of Britons will enjoy financial windfalls in the years ahead, in the shape of inheritances, bonuses or gifts from older family members.

- By Harvey Jones

In what is dubbed the Great Wealth Transfer, an estimated £5.5trillion is set to pass between the generations in the next 25 years.

A large chunk of this will come from inheritances, via family homes and assets such as ISAs and pensions.

Growing numbers are passing on wealth while alive, to help children and grandchildren get on in life, while trying to avoid a big inheritance tax bill. Windfalls should never be wasted, but without careful planning it’s easily done, said Ed Monk, associate director at Fidelity International.

Fidelity asked 1,000 UK investors what they would do with a £50,000 windfall. On average, people said they would spend £3,500 clearing their debts and would set aside another £15,000 to spend and have some fun.

Of the remaining £31,500, they would put £17,500 in the bank, and invest £17,000 in the stock market.