How to invest £125,000?

Berkley111

I retire in a few months and I need to start making arrangements as to where to invest the lump sum part of my payout.

I will have no debts to pay off and my pension will be more than enough to pay my regular expenses and living costs. I would like to have 15-20k reasonably accessable, but the rest I am happy to make longer term investments with. The total amount to invest will be just over £125k.

It's likely I will seek professional advice on this, so if anyone has any tips on how to get the best advice and how much I should be looking to pay then feel free to throw that in too.

I realise you may need more information but I can't think of anything else...

Thanks!

a7man

If you dont think you will need it at all in your lifetime and have dependants/ beneficiaries you wish to have access to the money then it should be placed in trust (if your estate is above the IHT band). The 20k should be placed in an instant access account if you think you may need it in an emergency & also invested in low risk assets.

To be honest there are so many options & what you have said is too basic to provide any ideas relative to your situation. Longer term you will be looking at part equity investments, however this will depend on how much risk you wish to take. It aklso depends on what investments you have already.

Will you be a high rate tax payer in retirement? If so an investment bond may be a good option.

Berkley111

I'll be paying higher rate tax on my pension.

The money will be used eventually, I just don't know what for yet. Due to my age (50) I have plenty of time to figure that out.

No investments currently. Only thing I do is max out my (cash) ISA each year.

I would be willing to accept a reasonable amount of risk, but a somewhat diverse portfolio would be best i think?

Or I could just put it all on Red?

97trophy

How much risk are you willing to take?? 10%, 20% or 50%.

That's the first question you need to think about.

dunstonh

Do you need to take all the pension? (is it money purchase or final salary?)

Phased drawdown could be an option depending on the type of pension. This could reduce your tax liability. However, the options available based on what you have said so far are so wide that really any response could be a potential option.

Stavros_3

I think he's talking about his tax free lump sum. On reading your post, my advise would be to speak to an IFA, note INDEPENDENT and not one at a bank. He will be able to advise you on your best options depending on your exposure to risk. I was last year in a very similar position to you. I decided to come completely out of cash deposits because the writing was on the wall regarding saving rates plummeting. Through my IFA I have now gone with a well known Wealth management company and I am investing for 5+ years to maximise growth on my capital with a very diverse portfolio. To find an IFA in your area go to the link below and put your postcode in. Don't go with the first, get a couple of of IFA's round to have a chat with then make your decision. It costs nowt for them to come and see you. Good luck, and happy growth.
http://www.unbiased.co.uk/find-an-independent-financial-adviser/

a7man

A diversified portfolio will of course be best, however the proportions in each asset category will depend on your risk level and what the money is to be used for, the time frame etc.

Your best option is to find an IFA on unbiased.com, dont go to tied/ multi tied advisers. Your chosen investment strategy will depend on a lot of variables so its hard to push you in any direction really.

theGrinch

I can only echo whats been said already.

Your portfolio should be diversified as a stool with more than one leg is always better. Also you should review it from time to time as a portfolio should never be static. Your level of risk is important plus income vs growth. Finally, try to stick to things you know and understand.

In addition you should consider holding a fair chunk (30%) in cash (instant and notice.bonds) and as you are only 50, shares (15-30%) for the long term would be sensible; both trackers and a basket of companies. There are many other assets you could consider. If you want to have a little fun then consider a small amount 5% in an area that interests you such as collecting.

an IFA can tell you more about gold, gilts, tax implications etc.

soulsaver

Berkley111 wrote: »

I'll be paying higher rate tax on my pension.

The money will be used eventually, I just don't know what for yet. Due to my age (50) I have plenty of time to figure that out.

No investments currently. Only thing I do is max out my (cash) ISA each year.

I would be willing to accept a reasonable amount of risk, but a somewhat diverse portfolio would be best i think?

Or I could just put it all on Red?

Black, put it on black...