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How to safely invest a lump sum
giffnockhibee
Posts: 26 Forumite
A relation of mine, who is wheelchair-bound has a bond for between £200,000 and £300,000 maturing in the next couple of months.
The plan is to invest in 1-year fixed rate bonds only, but to split up the money 5 or 6 ways so that it is fully covered by the FSCS.
It will not be possible for this person to do much, if any, travelling to set up accounts, so we are looking at postal or online.
Plans, please?
Giffnockhibee
The plan is to invest in 1-year fixed rate bonds only, but to split up the money 5 or 6 ways so that it is fully covered by the FSCS.
It will not be possible for this person to do much, if any, travelling to set up accounts, so we are looking at postal or online.
Plans, please?
Giffnockhibee
0
Comments
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For reference, thats not investing. Thats saving.
What are the requirements for the money? (interest to be paid out, held in the account etc)?
Why are they not considering investments with some of the money?I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
The person is over 80, is risk-averse, and may require to meet nursing home costs at some unknown point.
The interest is not required for day-to-day living expenses.0 -
At present Newcastle BS 5-year Bond Issue 2 will pay AER 4.25% annual (AER 4.07% monthly) on £50,000. Funds can be withdrawn at 120 days notice without penalty.
http://www.newcastle.co.uk/savings/Five-Year-Bond-2
However you are asking for advice about what to do in a couple of month's time. No one knows what choices will be available then. The above account is unlikely to be.0 -
I was just coming into to say what Alanq said - so echoing this. Joint account can invest 100k and get 4.5%.
The best rate out there is bank of Baroda, offering 4.9% fix for 5 years.
Personally I would go for: -
£50k - the AA savings, instant access - 2.8% (which is as good as a rate for 1 year fix)
£50k - Newcastle - 4.25% with access, 4 month notice
£50k - Bank of Baroda - 4.9% 5 year fix but unable to get access
£50k - Coventry BS - 3.7% 2 year fix, no access.
Remainder - keep on instant access in 2 accounts for emergencies given the age.
This gives you a decent range in my eyes - just remember not to lock away too much in case you need it suddenly - as I am finding out care homes for the elderly are unbelievably expensive.
defo don't invest - at 80 who needs the risk and worry.0 -
defo don't invest - at 80 who needs the risk and worry.
Actually quite a few. Investing doesnt mean you have to go gung ho up the risk scale but there are many options that can include investments with higher yields/income with capital security options in place.
For those wanting in income, investments could actually have less risk than using savings accounts.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
Actually quite a few. Investing doesnt mean you have to go gung ho up the risk scale but there are many options that can include investments with higher yields/income with capital security options in place.
For those wanting in income, investments could actually have less risk than using savings accounts.
I think we will have to agree to disagree
. I personally cannot see why anyone at 80 or over would want to do anything other than put money into a form of savings account. 0 -
I personally cannot see why anyone at 80 or over would want to do anything other than put money into a form of savings account.
Not everyone at 80 is senile.
Interest rates are dire but low risk investments are still yielding over 5%.
Cash is subject shortfall risk and inflation risk. So, its not risk free anyway.
Capital guarantees can exist on investments (like capital guarantee on death).
Tax can come into play.
Some investments are not included in the local authority care means test.
Certainly you would be more careful and considered but to rule out investments at 80 regardless of reason is wrong.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
Not everyone at 80 is senile.
Interest rates are dire but low risk investments are still yielding over 5%.
Cash is subject shortfall risk and inflation risk. So, its not risk free anyway.
Capital guarantees can exist on investments (like capital guarantee on death).
Tax can come into play.
Some investments are not included in the local authority care means test.
Certainly you would be more careful and considered but to rule out investments at 80 regardless of reason is wrong.
Did I mention people over 80 were senile? no. I think you need read posts better.
I am simply saying over 80 most people want simplicity. Investing at that age to me is wrong.0 -
Rob_192, here's a list of funds sorted by yield (interest and dividends combined).
Funds like Artemis High Income (8.3%), Newton Higher Income (7.3%), Invesco Perpetual Monthly Income Plus (7%) and Invesco Pepetual High Income (3.9) are commonly recommended as part of low to medium risk mixtures, with the proportions of each and in cash determining the overall risk (up and down movement) level. Both capital value and yield vary.
If there's a willingness to see part of the mixture of ways of using the money have the capital value move up and down by 10% or so, better 20% or so, then it's possible to get better returns than savings accounts. But it does take being willing to accept some capital value variation.
If the local authority means test isn't a concern, the first step could well be buying some of those within a stocks and shares ISA, where there's no extra tax to pay on the income. Repeat each year until death or a need to spend the money.0
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