What to do with 60K?

v_2 · 31 July 2006 at 5:27PM

Hi

My parents have £60K - inherited from a relative over a year ago, which they don't know what to do with. They stuck it in a Standard Life savings account at the time and have just left it like that.

They now would like to do something better with it and see a higher return.

I would say they are looking for a lower-to-medium risk investment which can see the cash untouched for at least 3years.

They have been considering 'buying-to-let' but no very little on the subject, except for friends who have got involved in this type of thing.

Any advice would be greatly appreciated! thanks.

EdInvestor · 31 July 2006 at 5:48PM

Perhaps a selection of commercial property unit trusts would suit them?They are low to mendium risk,with steady returns, latterly rather high as capital values have boomed in recent years.This is underpinned by solid rental returns around 6-7%, better than BTL.

List here

The Morley ( Norwich Union) New Star and Skandia funds tend to be popular as they pay out higher income than the others.

Property funds can go in an ISA now, so be sure to use their two annual allowances, 7k each.

Also be sure to invest through a discount broker so as to get the initial charges (usually 5%) rebated to you.

https://www.hargreaveslansdown.co.uk
https://www.chartwell-investment.co.uk
https://www.bestinvest.co.uk

are a few worth checking out.

monkeydust_2 · 31 July 2006 at 6:48PM

depends how active they want to be with the investment, i.e. buy-to-let as well as providing a return on your capital is also an experience in itself - do they want this? If they simply just want to push it aside and leave it then a fund as EdInvestor pointed out is not a bad way.

fish10 · 31 July 2006 at 7:08PM

Hi v_2,

I'm a fellow newbie, who started a thread a few days ago on whether or not to put £4K in an investment ISA. As I have, like your parents, inherited a much larger sum of money, the thread developed into a lot of advice with regards the whole. A lot of help received from Edinvestor. I thought I'd join in here, as the thread title is much more appropriate.

I've been doing a bit of research on funds and fund managers and come up with some names based on about 50% mainstream UK FTSE big/med. , 25% commercial property funds, 10% higher risk small co.s or foreign shares and the rest cash - this was advised for a cautious investor.
This is what I've come up with so far:

AXA Framlington Equity Income UK Equity Income Funds
Invesco Perpetual income " "
New Star Commercial Property funds
Jupitor Monthly Income UK Equity & Bond
Old Mutual UK Select Smaller Co.s UK smaller companies
Merril Lynch " " "
I'm a complete novice with this and wonder if Ed or any other experienced investors could tell me if I'm at least on the right track! Note, I haven't come up with any bonds or foreign share funds; for the high risk element I quite fancy gold - Merril Lynch or JPM Natural Resources?
All advice appreciated.

Thanks
fish10 " " "

EdInvestor · 31 July 2006 at 7:37PM

fish10 wrote:

AXA Framlington Equity Income UK Equity Income Funds
Invesco Perpetual income " "

Well done fish10.

Two very good picks there run by top name fund managers George Luckraft and Neil Woodford. These two funds are also complementary, because although in the same category, the managers choose very different shares.

Here's the AXA Framlington fund. Have a look at his top ten holdings and then compare with the Invesco Perpetual one.

New Star Commercial Property funds

That's fine - the Morley (Norwich Union) fund is also popular.

Back ground to fish10's investment decisions and an asset allocation calculator are on this thread

EdInvestor · 31 July 2006 at 7:58PM

For the remaining 10% not quite sure whether you want to put all of it in the small cap funds, both of which are good choices, or all of it in the commodities funds, ditto.

You seem to have quickly got the hang of picking funds, fish10.

Also wasn't quite clear about the Jupiter one, where have you slotted that in?

fish10 · 31 July 2006 at 7:59PM

Thanks Ed,

Any comment on the rest? Do you think I need to do a bit more research on smaller companies?
Hope this is of some use to you too V_2!
fish10

PabloNeruda · 31 July 2006 at 8:01PM

v_2 wrote:

Hi

My parents have £60K - inherited from a relative over a year ago, which they don't know what to do with. They stuck it in a Standard Life savings account at the time and have just left it like that.

They now would like to do something better with it and see a higher return.

I would say they are looking for a lower-to-medium risk investment which can see the cash untouched for at least 3years.

They have been considering 'buying-to-let' but no very little on the subject, except for friends who have got involved in this type of thing.

Any advice would be greatly appreciated! thanks.

Give it to me to look after. I'll take good care of it, I promise.

EdInvestor · 31 July 2006 at 8:14PM

Fish10

Just one thing about the Jupiter funds: there are 2 good ones at the same company, nos 21 and 22 on this list.

The one you've chosen is a "fund of funds", that is, the fund manager invests in other people's funds. The other one invests directly in bonds and shares. It has done better over 5 years, but the FoF has done better more recently.

One problem I feel with FoFs is the charges - you are paying 2 sets of them, one for the main fund, and another layer for the ones it is investing in. That means the FoF fund has to work harder to get better performance than the ordinary fund.

Just something to be aware of.

fish10 · 31 July 2006 at 8:53PM

Thank you (again) Ed, I hadn't spotted that it was the F of F one I'd written down. You and Cheerfulcat have advised me before on the double charge, which I had meant to avoid.
I put the Jupiter one in for the 'Bond' element. I did take a look at the bonds and they didn't look too impressive!
fish10

EdInvestor · 1 August 2006 at 8:14AM

Another problem with the fund is that it seems to have only 10% invested in bonds - probably because they are not performing too well these days

So it's really another equity fund, and you already hav chosen two top performers there.

To really understand what it's doing you would need to look at what the underlying 10(!) funds are invested in. :rolleyes: It seems to me this is far too time consuming for the investor doing his own research.

You really want to be able to pop in and check your investments occasionally, just to confirm that the same fund manager is still in charge and the investment profile remains more or less the same.It's extremely difficult to do this with FoFs,and given the added charges, IMHO they're not worth the trouble.

If you're doing your own asset allocation, I am inclined to avoid mixed/ and managed funds with more than the one asset class in them.This is because the freedom these funds give to the manager to switch asset classes, while useful to the investor who hands over all responsibility to the manager, will have the opposite affect on you, just getting your percentages out of whack, without you realising.

Here's a thought: are you perhaps a little more adventurous than you thought, now you look into it a bit? Would it be appropriate to adjust your allocation so that you have 10% in the small cap funds AND 10% in the commodities funds?

This would mean reducing the amount in commercial property to 15% or reducing the amount in cash

So your list would look something like this:

Mainstream equity income funds 50%
Comm property 15%-20%
Small caps 10%
Commods 10%
Cash 10-15%

Am I right in thinking you have additional quite large sums of cash on deposit outside this investment pot ?

What to do with 60K?

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