Well, in my opinion, cash is the biggest waste of capital, unless the friends are waiting to do something specifically with it.
They’ll either get an illness, die of boredom or just generally lose out to inflation.
Our thoughts entirely.
More cats perhaps? How is Mo these days?
Well, if I had nothing to do and 300k that I couldn’t think what to do, I would consider starting a cat sanctuary and save these beautiful beings.
I only have one cat, Mo. He’s everything to me. Here’s his bum a few days ago.
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A very fine bum! Great news that he’s OK!
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Warren Buffet suggests that if you’re not an avid investor who would be watching the markets continually, then just invest in a few Index Funds. Preferably ones with a decent yield. Vanguard comes to mind and they have a variety of funds, but there are many others.
Or you could join The Motley Fool for $99 a year and they have some excellent tried and true stock market advice.
Just some thots.
Oh, and sell the cats … 
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As I understand it, they can gift a child as much as they like, but if they die within seven years of gifting, then the sum will be added to their estate for the purpose of inheritance tax. So if they believe they’ll live for at least that time they can give them cash now. And if they were to die earlier, the children get the house anyway and if they have to pay some tax, it’s not really an issue.
If your friends really do have £300k in current accounts, they need to move the money asap. They can earn £1,000 in interest each year before paying tax, or if one of them is a 40% taxpayer then they can earn £500 in interest.
Remember that premium bonds are tax free, which makes the interest more valuable than the headline rate may suggest. Friends of ours have the full £50k each and win something every month.
If your friends don’t want to invest in equities etc then cash ISAs are a good idea. They can invest £20k each and the interest is tax free. Nationwide have a cash ISA paying 4.5%, so they could put £20k each into it today. Our friends have all their savings other than the premium bonds in cash ISAs. The Money Saving Expert website is a good place to look for details of best buy accounts and it’s worth a look. Our friends’ IASs are a mix of one, two and three years.
They shouldn’t have more than £85k in a single institution, in order to get government protection. That doesn’t apply to NS&I, which is government backed.
If their children have mortgages, or plan buy a house, one of the best things your friends could do is to give them a nice lump sum to either pay down the mortgage or to put down as a deposit.
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In the UK you can gift anyone what you like, there is no limit, there is no ‘gift’ tax (unless you create a CLT like gifting to trust for example).
The gift stays in your taxable estate on death for 7 years and is known as a PET (potentially exempt transfer). After three years the IHT rate of 40% reduces by 1/5th for the remainder of that 7 years (i.e. 32%, 24%, 16%, 8%).
Remember we all have a 325K IHT allowance and, for the present at least, up to £175K allowance from our house (or cash from sale of a house) if left to direct descendants.
Unused allowances are transferable between spouses on death. So most home owning, or former home owning married couples with kids have a £1M allowance between them, before tax is paid.
This is over and above the other little IHT allowances.
Pension funds do not count towards your taxable estate (though they have their own new allowances, which are easy to mitigate if you know how).
Life policies in trust are also outside your estate, which is very, very useful if your beneficiaries do have a tax bill that needs paying.
Edit: Should add that the allowance for your house starts tapering after your taxable estate is above £2M.
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One thing to bear in mind with premium bonds and ISA’s is that being sole accounts when one party dies the money doesn’t automatically pass to the benficiaryas it would for a joint account.
The process to obtain the money differs between institutions and they all seem to have different thresholds at which point they will require probate. Normally probate isn’t required if the estate is simple and is passing to the next of kin – i.e. spouse and there is a will in place.
The threshold for premium bonds is only £5000 so we’re wondering whether to move the money out over time into Isa’s and keep within the probate limits for each provider.
There doesn’t seem to be any consistency, Nationwide and Coventry are £50k, Skipton £30K for example.
A question if I may.
I am now working overseas in Saudi where there is zero tax. Can i cash in my pension whilst over here without incurring tax? And do I have to work over here for a certain amount of time before doing so. I know I will need to get advice from a registered professional before doing anything but I imagine the esteemed members on this forum have a wealth of knowledge that may help.
Thanks,
Nick
Thank you. That helps
My wife has used some of her pension funds to buy a 5 year annuity to cover her until state pension age. She is very comfortable with it, it gives some certainty, and removed some of her funds from risk. But it is only one bit of quite a big spreadsheet. We try to have a mix that gives us a balance of risk we are comfortable with. Everyone will be slightly different.
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Agreed… And ‘aim’ to survive the gift by seven years (PET), where maybe an identified sum, if surplus to requirements, can be used to avoid IHT, especially where an estate is close to the IHT threshold even with generous opportunity for RNRB to direct descendants. Added benefit (each to their own on this one) of passing on wealth during the donor’s lifetime at a time when perhaps it may benefit them more (house purchase or mortgage reduction), and give pleasure to the donor whilst still alive, than may be the case some indeterminate time in the future.
Not advice by any means, just a consideration that I am considering acting upon when that time comes for Mrs G and I (if we can still afford it!) and Mrs Reeves doesn’t “meddle” with the beneficial tax status of DC funds remaining outside estate for IHT purposes! 
but not holding breath on that one based on what I’ve noticed recently as regards current government attitudes to ‘non-workers’ (albeit significant contributors to society as past workers!) which is somewhat concerning.
Just my personal view and opinion currently - I hope it’s misplaced/proven wrong.
Apols, I see some similar advice on PETs, so hope not to duplicate but to the ‘friend’ it should be a serious consideration after taking some ideally independent financial advice as the assets are not insignificant and could be put to more financial efficient and effective use after assessing and taking into account the ‘friends” attitudes to risk, plans during retirement and liquidity needs. On balance a nice problem to have I would assume, just take time over the options available if that matters to said ‘friend’…
Aaaaand we’re back…
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What’s happened now? BTW, which indicies are best to watch?
All the drama from last Monday has disappeared in the space of a week…
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It’s a bit of a ‘merry go round’ isn’t it - so much speculation on timing the market (by short-term gamblers) plus automated selling creates ‘artificial’ opportunities and subsequent market ‘corrections’ that gives those of us investing for the longer term a few ‘eeby jeebies’ in the meantime, while whispering the respected mantra “that time in the market beats timing the market”. Hopefully, fundamentals hold up for a few years yet (not holding breath but fingers crossed!). 
Highly experienced Swing-traders would say that leaving money in the market for long periods and hoping for an up is gambling. They purchase solid, well-managed, companies that have cash surpluses, after doing a lot of research. As a rough example, they’ll buy 10k shares at $47 and then sell it as it tops $51 a week or two later and pocket $40k. If the markets crash overnight, no big deal to them. Far less exposure from a time element. They also have careful stop-losses entered, so it will sell if the low is breached. They aim for 2 good trades out of three, but usually do better.
I do not do this as it’s a full-time job. My money is where yours is, but I sometimes feel that we are the gamblers. However, if we buy good, solid companies, apparently the shares will almost always be higher, even thru a bad market time, in a seven year period. And probably even 5 years.
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