Mother has £140,000 to invest

sambessey

Hi

My mum came into an inheritance of £140K about a year ago. It's just been sitting in an HSBC saver account and an ISA for the past year. What do you think would be a good way to invest it? She is going to be needing access to some of the money in 3-4 years as she wants to help my sister purchase a house in years to come.

She is thinking about seeing an IFA. Is this a good idea?


Thanks

amcluesent

>It's just been sitting...access to some of the money in 3-4 years<

Buy £30k of premium bonds now, it's easy to get your money out when needed. Your winnings would be tax free and you mught get one of the big prizes!

EdInvestor

If she needs it in 3 or 4 years she won't want to be taking any risk.She should choose a few of the best high interest accounts and spread it round them.

baldbloke_2

A combination of the above replies would seem to be a very sensible approach for a no-risk medium-term savings plan.

Divide it into 4 or 5 parts and invest as suggested. I always bang on about Fixed Rate Bonds from Building Societies etc being an excellent way to beat inflation and ensure your capital does grow a little - and I imagine you will find 3 or 4 offering around 4.75% to 5% within miutes of looking. Add in your £30k Premium Bonds and sit back and wait with a satisfied look on your face. And why not?!

dunstonh

No offence to the advice above. It could work out alright but it could also be completely wrong. We dont know the age of the mother, it could be there are pensions and other income and deposit based interest is reducing or wiping out the age allowance. Therefore anything deposit based for the whole amount is not appropriate.

I always bang on about Fixed Rate Bonds from Building Societies etc being an excellent way to beat inflation and ensure your capital does grow a little - and I imagine you will find 3 or 4 offering around 4.75% to 5% within miutes of looking.

And that is good? 4.75 minus 20% = 3.8%, only just above inflation. If age allowance is reduced then it reduces it further.

Add in your £30k Premium Bonds and sit back and wait with a satisfied look on your face.

I rarely come across anyone that is satisfied with premium bonds. Most of the time I spend taking the money out. If you want a gamble, invest the money correctly and get a better return. The improved income means you can buy lottery tickets if you still want a gamble. At least then you are only doing it on the surplus and not on the 30k.

There are a whole load of alternative products that could be suitable. Including some equity based ones with capital security and lock-in retained values for those of a cautious nature.

At this moment there are tens of thousands of products/options out there. We have had a bit of narrowing down but there is nowhere near enough for anyone to make any real suggestion.

Whilst the posters above mean well, they arent aware of options which may or may not be more suitable. For example, there is one high street name where you would have paid you 7.5% overnight just for putting the money with them and allowed you to invest the money with capital security and allow a full withdrawal after 5 years with absolutely no penalty (3 year version also available). That would have paid out over 6% in the last 12 months on top of that 7.5% with no tax to pay.

Is that suitable? maybe, maybe not but there isnt enough to say otherwise. The options mentioned in the posts above could be right or they could just increase the tax bill or waste it in a gamble that never pays of. Or you could beat the odds (which are higher than the national lottery) and win a jackpot prize.

If she wants ideas and opinions from people that dont know the facts, then fine. If she wants proper advice after facts are known, then she needs an IFA if she isnt prepared or in a position to do the research herself.

sambessey

Ok Thanks.

She is a high earner anyway, but has 3 dependent children. To be honest, she is not the best person when it comes to managing her finances so I will reccomment she sees an IFA.

Thanks again!

canny_yorkshireman_2

She is thinking about seeing an IFA. Is this a good idea?

As Dunstonh has elaboratly put it yes

Mikeyorks

Defer absolutely to the advice above from Dunstonh.

But don't forget to file an R85 to obtain gross interest if that's applicable? The ISA might suggest your Mum is in the tax arena - but it's no longer the indicator it used to be as ISA / Deposit rates have got closer.

I rarely come across anyone that is satisfied with premium bonds

One of those rare moments;) Had to put £60k in there (self + wife) a year ago - to keep it out of tax. The resultant 4.75% 'interest' (and, regrettably, no prize above £100) has only been bettered by our Stocks / Shares ISA.

baldbloke_2

I shall stick to asking questions in future rather than attempt to answer them.

I somehow never imagine that people with complex financial situations - high earners for example and/or with other monies already saved or invested - would be posting a one-paragraph question to a general advice forum.
I mistakenly assume they are simple folk like myself trying to find the best way of saving a modest sum for the medium term without involving the 'professionals' or incurring costs.

I am starting to think that all general questions should be answered with the simple & sensible advice to 'consult an IFA'.

amcluesent

>in 3-4 years as she wants to help my sister purchase a house<

You could invest to track the capital gains in housing, but protect against a crash by buying into a spread-bed on the house-price index.

dunstonh

I shall stick to asking questions in future rather than attempt to answer them.

No dont. It added to the debate and investing is very much about opinions. Often, things can be straight forward but with 13 or so different tax wrappers to invest in nowadays and each having pros and cons and possible knock on effects, larger amounts do often need more consideration.

Involving an IFA doenst need to cost a lot. You can get "new model" basis IFAs keeping only 1% of the intial commission. Yes, the "old model" basis ones still significantly outnumber the others but its not as expensive as it used to be.

One of those rare moments;) Had to put £60k in there (self + wife) a year ago - to keep it out of tax. The resultant 4.75% 'interest' (and, regrettably, no prize above £100) has only been bettered by our Stocks / Shares ISA.

Perhaps its a case of expectation. I mostly deal with investment portfolios and when returns tend to always average in excess of 10% p.a even for the cautious. When you get used to that sort of expectation you tend to look things like premium bonds as quite poor. However, someone with funds sitting in an ancient ex building society account earning 1% or lower a year would almost certainly see a boost using premium bonds.

>Most of the time I spend taking the money out<

The lure of commission is strong, eh? :-)

I'm a new model basis IFA. Initial commission doesnt interest me. Its the funds under management that do. £30k out of premium bonds would mean £300 and about 8 hours work. Hardly break even. My previous paragraph explains my views on premium bonds...... that said, £300 and £150 a year thereafter for giving good advice and earning more puts me and the client in a win-win situation