200k

redwyno · 27 January 2007 at 5:01PM

i have 200k to invest and retire in 2 years where can i get the best monthly return or any other suggestions please:money:

dunstonh · 27 January 2007 at 5:26PM

investing for just 2 years is risky. Of course, if you are investing now in preparation for retirement and the same investment will continue beyond retirement, albeit perhaps tweaked then that is a different matter.

If it is going to be spent in 2 years though then you shouldn't invest but stick with savings accounts.

There are some benefits to some investment tax wrappers if you invest in a certain way just before retirement to help reduce the impact on things like pension credit, age 65 allowance and local authority care means test. If any of these are potentially applicable to you then it is important to make sure your investments don't inadvertently reduce or remove these benefits when all it takes is use of a different investment tax wrapper.

EdInvestor · 27 January 2007 at 5:32PM

redwyno wrote:

i have 200k to invest and retire in 2 years where can i get the best monthly return or any other suggestions please:money:

If you mean invest ( rather than save in a high interest account), perhaps you could give us some more info about your likely pension income (including state pension) and other savings.

Will you be a basic rate taxpayer when you retire? How old are you? Do you have a partner?

redwyno · 31 January 2007 at 3:43PM

ill be 63 in april my wife is 45 and working my pension will be state plus i have peps isas to the value of approx 30k i was thinking of something to give me a monthly income

cheerfulcat · 31 January 2007 at 3:58PM

Does your wife have her own financial arrangements? Sorry, not nosiness, it's just that if she doesn't have an income of her own you may need to think about looking for a good bit of growth on top of that income...

redwyno · 3 February 2007 at 12:09AM

only her wages and the house is paid for no debts everything we have we own if we cant pay cash we dont have it

EdInvestor · 3 February 2007 at 1:04PM

With 200k, you could look at 10k a year income without accessing the capital, and it will be helpful to invest for a long term rising income because inflation will eat into it and you are quite young, and your wife is very young.

Thus you should keep a portion in the less risky types of shares.

To invest this money for income, you primarily need to consider two issues:

1)Risk

How to invest the money for good returns with maximum safety. This is usually done via "asset allocation" where you invest some money in safer assets ( cash/bonds,property) and some in riskier assets (shares,commodities). The percentage for each group will affect the risk level overall.

This asset allocation calculator' is American, but it will give you an idea of how this works. Note that the US system is a bit different from ours - and the calculator omits property.We would include most property funds in the same category as bonds.Note also the wide variation in risk for different types of shares. ( eg big vs small companies, local vs foreign markets.).

2) The second key factor is tax wrappers. For a basic rate taxpayer, income from safe type assets ( cash/ bonds, property) is subject to 20% tax.However income from riskier investments like shares is effectively tax free.So this means you should use your PEPS and ISAs for these safer investments and then hold your riskier investments in shares and equity unit trusts directly, without using a tax wrapper initially. You should max out your 7k investment ISA every year ( start now and do another one in April.)

See what the asset allocator says and we can take it from there.

200k

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