Interest from savings v Investment

Stavros_3

Ok, serious post and question. I have a major dilemma to consider. Mrs Stavros and myself are seeing a reputable firm of Wealth management IFA's next week, but I would be interested in your thoughts (i.e what would you do in my position). I have at present 6 figures in savings, by next July that will be in the region of 350k + as my fixed rate deposits mature. I have a choice of putting the lot in the best savings accounts rates that will be available or putting all or some of it to work in a 5 or so year investment plan with a fund manager. I have no debts, i.e mortgage paid off and maxed out with ISA's,
All serious answers appreciated if you were/are in that position, co's I'm having kittens considering my options, in light of the way the current economic market is going. Basically what I am asking is am I better with interest from savings or a growth plan, (I am in the medium risk category)

Lokolo

Why don't you do some in cash, some in investments?

Cannon_Fodder

spread it around.

you don't want all your eggs in one basket.

maximise tax efficiency.

depending on your tax rate, age and work situation, perhaps enhancing your pension should be considered.

Stavros_3

Thanks, At present, I have just retired and a 20% tax payer, on the 350k capital what would be a reasonable split/ratio of cash in savings and the amount to invest for growth

cheerfulcat

Hi, Stavros,

Stavros wrote: »

Ok, serious post and question. I have a major dilemma to consider. Mrs Stavros and myself are seeing a reputable firm of Wealth management IFA's next week, but I would be interested in your thoughts (i.e what would you do in my position). I have at present 6 figures in savings, by next July that will be in the region of 350k + as my fixed rate deposits mature. I have a choice of putting the lot in the best savings accounts rates that will be available or putting all or some of it to work in a 5 or so year investment plan with a fund manager. I have no debts, i.e mortgage paid off and maxed out with ISA's,
All serious answers appreciated if you were/are in that position, co's I'm having kittens considering my options, in light of the way the current economic market is going. Basically what I am asking is am I better with interest from savings or a growth plan, (I am in the medium risk category)

Nice dilemma to have all the same! Ultimately it has to be your choice how you split the money - equities have historically been the best place to be but that doesn't mean this will continue to be the case. However what is 100% certain is that if you keep your money in cash and spend the interest your capital will be badly eroded by inflation.

FWIW what I have done in is split my capital 50/40/10 between cash ( fixed term deposit accounts and index-linked certificates ), equities and corporate bonds/gilts, in that order. The money in equities is split 50/50 between growth and income with the growth portion in fairly speculative individual shares. About a quarter of the income from shares & interest from cash is re-invested.

I would say that it would be a good idea to decide before you see the IFA how much you want to keep in cash and stick to that - don't let him or her push you into investing more than you're comfortable with.

BTW, I don't like the sound of a five year investment plan - is this something the IFA has suggested?

Finally, you might find this post ( LINK ) of interest when deciding on a plan.

Stavros_3

cheerfulcat wrote: »

Hi, Stavros,
BTW, I don't like the sound of a five year investment plan - is this something the IFA has suggested?

No, that was what was in my mind as we are in our 50's

dunstonh

Investment is for life, not just for Christmas...or 5 years. If you work with time limited windows then there are not going to get the best out of your purchases. Some things will need tweaking periodically but other things can be put in place that will largely remain unchanged for the rest of your life potentially (i.e. fund supermarket or tax wrapper etc)

cheerfulcat

Ah, OK. Five years is really a very short time to be investing in equities - you really need to be looking longer term. Bear in mind that you could possibly need an income for the next 40-odd years!