Investing £200K for an income?? Please help

claretmatt

For some people gaining a sound knowledge of finance comes easy, but for others they may struggle.

If its only a £7k investment into an ISA then some people will be happy to stock pick, but expecting this guy whose knowledge he admits is limited to do all the work himself is a bit too much. Especially when this is the biggest investment he is going to make.

He could easily go out and buy some investments directly and still not have any idea on tax and trust planning and then 5, 10, 15 years down the line he could find out its too late to change the situation.

Anyway good luck MattyD, the bottom line is that you've got £200,000 which is great and a new baby coming. You must be smiling from ear to ear

EdInvestor

whiteflag wrote:

So we can take it that you cant back up your claims of £40k commission over 10 years!.

Just go to the FSA site and do some simple arithmetic on the average charges with Matty's fund size - the charges are around 20-25% of total fund over 10 years.

That's why I said investment bonds are the worst - with pensions they take around 25 years to extract 25% of your total fund, with investment bonds they get the money in 10.

:mad:

whiteflag_3

EdInvestor wrote:

Just go to the FSA site and do some simple arithmetic on the average charges with Matty's fund size - the charges are around 20-25% of total fund over 10 years.

That's why I said investment bonds are the worst - with pensions they take around 25 years to extract 25% of your total fund, with investment bonds they get the money in 10.

:mad:[/QUO

Id love to do the arithmetic but I cant find the commission column on the FSA website


No wonder the OP is getting confused -

Ed- if you mean charges say charges

if you mean commission say commission

please please please try and help other posters by making it clear what you are talking about.
Stop talking about commission when you are talking about charges. Ive read enough posts on this board to know that DH, Oceanblue etc have tried to educate on the difference between the two.

Mattyd_3

claretmatt wrote:

For some people gaining a sound knowledge of finance comes easy, but for others they may struggle.

If its only a £7k investment into an ISA then some people will be happy to stock pick, but expecting this guy whose knowledge he admits is limited to do all the work himself is a bit too much. Especially when this is the biggest investment he is going to make.

He could easily go out and buy some investments directly and still not have any idea on tax and trust planning and then 5, 10, 15 years down the line he could find out its too late to change the situation.

Anyway good luck MattyD, the bottom line is that you've got £200,000 which is great and a new baby coming. You must be smiling from ear to ear

This sums it up really :T

I dont mind doing some research but what I want to avoid is messing this up and loosing everything.

And yes I am smiling from ear to ear at the moment and thats just from expecting our baby :j The money I wish I didnt have to deal with but I do. :rolleyes:

Ill keep posting ideas in here until I make a decision so I can receive feedback from you guys :T

[Deleted User]

Mattyd have confidence in being your own advisor. I have gone down that route and am now in the process of organising enhanced protection on a pension pot that we are expecting to grow substantially over the next 18 years.

Don`t ever forget if you involve IFAs, that there is no such thing as a free lunch. You sound petty astute and willing and eager to learn. Finding the best home for your money is not rocket science. I suggest that you spread your pot around and also seriously consider a High yielding portfolio of solid blue chips as suggested by edinvestor. That is what we will be doing with a portion of our sipp pension (but I have to say that I am waiting until there has been a significant ftse 100 retracement from the resistance level of 6000. )

whiteflag_3

EdInvestor wrote:

I guess it might be helpful to plan backwards from the time you will be entering the workforce again and your mortgage will no longer be subject to redemption penalties.

Let's say that at that point, you will decide to use half the money, that's 100k, to reduce the mortgage. You don;t want to put that money at risk, so for now, it should be spread around a few of the best high interest rate deals you can find for the period, some of which might lock the money up, no problem. You ought to be able to get 4% net on that, that's 4000 pounds a year, 333 per month.

So now we have 100k to invest, that's a bit less intimidating, let's put 25k of that into another high interest rate account for an emergency fund. That leaves us with 75k.

Now between you, you and your wife can put 14k in equity ISAs and if you move immediately, you could get 28k in right away, this year's and next years.

Open the accounts at a discount broker like https://www.cavendishonline.co.uk or https://www.hargreaveslansdown.co.uk, we can work out what to put in them later, but let's assume it will be equity income funds. Income will be 4-5% if you hunt around.

Equity income fund list

That leaves you with 47k.

I would suggest that a chunk of that - say 30k - could go into commercial property funds which should give a yield of around 5%.THere's a good selection from the big insurance company providers here among the investment trusts.

For the remainder you might like to put a toe in the water with shares and buy yourself a small High Yield Portfolio, 1k a share, 15 overall, all blue chip household name companies with good yields. This should provide you with a tax free income of 5% and is a low risk way of investing in shares.

You should get an income of 4.5-5% from the investment suggestions plus capital growth as well,all going well.

Ed - in the light of whats gone before on this thread I think this post is disgraceful :mad:

EdInvestor

whiteflag wrote:

Ed - in the light of whats gone before on this thread I think this post is disgraceful :mad:

Really? To be honest, I thought the earlier suggestions of the IFAs to Matty were pretty disgraceful.

In his first post he says:

What I would like to come out of university with is as much of the 200K as possible left. Our current expendature is in the region of £2200 amonth so I will need an income of as close £1000 as possible. The most important thing for the three of us is to minimise the use of the £200k. Also I really dont want to messs this up.

What this says to me is that he wants to minimise risk of loss to his capital and use as little of it as possible while obtaining as near as possible to the income stated.

Yet it's been suggested he puts nearly 90% of his capital into a bond invested in risk-based assets. A 7% return has been mentioned so this must be so.

How can that be suitable to his needs?

Mattyd_3

I dont want to cause an arguement

I am a great believer in any advice is good advice its only bad if you decide to take it :rolleyes: So please keep all suggestions coming. I am learning all the time Have done alot of reading this morning so the fog is lifting :j Am understanding all the risk figure that funds quote and now know where to look etc.

EdInvestor

Don't worry Mattyd,this is an ongoing debate

Well done on the DYOR front.

Definitely worth doing when you've got 200k hanging around the house.

Do try to get 14k into those maxi ISAs though - you've only got three days to do it before the deadline expires. :eek:

You don't have to invest the money at this point, just get the accounts opened, one each for you and your wife.

These will be valuable for life.

Mattyd_3

So I only have to open them now?