Investments for elderly people

framer

My mother is 94, has sold her bungalow and moved into rented accommodation. She has £400,000 to invest.

A "financial advisor" is recommending her to put it in bonds, unit trusts and fixed interest. At her age, such investments don't seem appropriate. I have always considered them suitable for 5+ years.

My thoughts are for lump sum cash a/c's. Safe, secure with no risk of loss of capital. O.K. not very exciting but then she doesn't want excitement.

Any thoughts would be welcome.

Lokolo

Was the financial advisor an IFA or a bank? If she wants no capital loss not sure why she was recommended unit trusts and bonds

Also bare in mind that she is over her threshold for inheritence tax (which is currently £325k) <-- see below reply

If she wants 100% secure capital she could look at NS&I stuff, although the rate are pretty dire? WIth that amount she would have to split it between 8 banking insitutions to get 100% safe otherwise.

dzug1

Lokolo wrote: »

Also bear in mind that she is over her threshold for inheritence tax (which is currently £325)

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Not necessarily - depends on what happened to her husband's estate

Lokolo

dzug1 wrote: »

not necessarily - depends on what happened to her husband's estate

........

Aegis

framer wrote: »

My mother is 94, has sold her bungalow and moved into rented accommodation. She has £400,000 to invest.

A "financial advisor" is recommending her to put it in bonds, unit trusts and fixed interest. At her age, such investments don't seem appropriate. I have always considered them suitable for 5+ years.

Within the right wrapper some investments might be appropriate to preserve capital value against inflation, but this strikes me as a very strange recommendation for someone of her age with that much money! Unless she lives another 15 years or more she could take a pretty high income out of that capital sum every year and still wouldn't run out.

I'm guessing that she's speaking to a bank or something, because this strikes me as a very bizarre bit of advice for someone who's that age and not looking for excitement.

My thoughts are for lump sum cash a/c's. Safe, secure with no risk of loss of capital. O.K. not very exciting but then she doesn't want excitement.

Sounds like she's speaking to a salesman rather than a decent adviser...

Now, she has some potential inheritance tax issues that might be partly mitigated through careful use of an investment bond or a trust arrangement, but there's certainly no reason to throw £400k into investments at her age...

I would suggest that you mention to her that you'd be happy to go along to a future meeting to make sure that everything's above board.

D1zzy

If she is over the IHT theshold (though if her husbands free allowance was not used, she could potenially have £650,00 tax free allowance) - she should think about giving some away. If she dies within 7 years some of it will still need to be included for IHT calcs - but its a sliding scale depending on how long she lives.

(my MIL is now in a care home and 4/20 residents are over 100 !!!)

greenface

framer wrote: »

My mother is 94, has sold her bungalow and moved into rented accommodation. She has £400,000 to invest.



Any thoughts would be welcome.

Is she married :cool::D is she lookin

Primrose

I would be very mistrustful of any financial advisor who recommended these kinds of investments for somebody of your mother's age. It does rather sound as if the advice was coming from a bank and not from an adviser who was truly independent. Only you know the state of your mother's health at the moment but it's obviously conceivable that she could need to move into care home accommdation at some point in the future, where she would be needing to withdraw a regular income to pay for fees, so tying up this money in investments which are not easily accessible does not seem sensible to me, even though I can understand the need to protect the value of her savings against inflation. With the stockmarket being so uncertain at the moment, there's a high risk she could lose a large chunk of her money in a short space of time. I'd look for another truly independent financial advisor and sit in on the discussions to ensure that she's not conned into something she (and you) feel uncomfortable with. If you decide to stay liquid in cash, be aware of the £50,000 compensation limit and check the table in the Are Your Savings Safe? section on here (http://www.moneysavingexpert.com/savings/safe-savings#whatcounts) to ensure you don't double up in institutions that share the same banking registration.

Jake'sGran

I have been giving more away in my cash gifts in recent times because of the possibility of inheritance tax. As already mentioned your Mum would have to live another seven years for this to be tax effective. Like your Mum I don't want excitement either although I do buy shares, unit trust etc. although with no advice from a financial adviser. There are always Premium Bonds but the returns are very poor. I do use fixed rate cash accounts but this will increase her capital a little. There is always the possibility of a change of government and I think the Conservatives have said they would abolish Inheritance Tax.

Its a problem really but one that many would like to have.

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Robert_Sterling

There are several bonds which allow you to take money out 4 times a year.

E.G. Manchester B S pays 3.31%

£50,000 in there and then take out £12,500 every three months for a year.

Then put six lots of about £50,000 into one or two year bonds


On £400,000 you could expect to aggregate more than £12,000 gross

at current interest rates.