What would you do with £100,000?

Two out of three (69 per cent) retirees expect to leave their children a financial inheritance with an average value of £101,818.52 and according to the latest research from SunLife, 87 per cent of us would save more than half (£55,994) of it.

A third of us would pay off debt

If given £100k, most of us would spend a significant chunk with more than three quarters of those surveyed saying they would spend around £20k (£19,568) of the total amount using the cash for holidays, home improvements and a new car.

Around a third said they would use the money to pay off debt; on average we would spend around a quarter of the money paying off our mortgages (£19,860) and other debts (£4,577).

Ian Cooper at SunLife says: "It's encouraging to see that if we were in the lucky positon to inherit, or perhaps win a large amount of cash, most of us would do the sensible thing – pay off debts and save.

"You will rarely be able to earn more on your savings than you will pay on your borrowings, so paying off debts before saving is a good rule of thumb. However, you don’t want to be in a situation where you have no savings at all to fall back on, and, as long as you are keeping up with your mortgage payments and credit card bills it is fine to save and have some debt," he adds.

Savings rates have been low for more than six years now, so Ian suggests that one of the best options for now are stocks and shares ISAs - tax-efficient investment accounts. "The phrase 'stocks and shares' can be intimidating for those who know little about investing, however, investments don't have to be complicated; there are plenty of stocks and shares ISAs out there for people looking to beat cash," he says.

The annual ISA allowance for 2015/16 is £15,240, and you can pay this into a stocks and shares ISA, a Cash ISA or a combination, and you pay no Income Tax on the interest or dividends you receive from an ISAs and any profits from investments (other than tax on dividends from UK shares) are free of Capital Gains Tax.

  • There are more money-saving tips in every issue of Yours magazine, out every fortnight on a Tuesday.