Advice needed on lump sum investment.

portlandboy

Hi,
I am about to sell a flat I inherited about 18 months ago. I expect to see around £107000 after E/A costs etc. I would like to put the money towards another property in the future so I would be happy to have the money somewhere with a 30 or 60 day notice for withdrawls. I don't expect to have to use any of the money until I find a suitable property.

I am married, so we could open an account each to protect the majority of the sum under the government rules. We each have an old ISA with a small sum in which really need transfering and each have an investment ISA which were taken out last year with £7100 in each. We have no mortgage or debts outstanding so there's nothing needing to be paid off (I can't believe we're in such a fortunate position and having to ask such questions!).
But what to do with the sale money when it arrives?

Thanks in advance...

dunstonh

You should forget lump sum investments then as they are long term and you need the money on call (unless you are particularly high risk and experienced with investing).

You should stick with savings.

portlandboy

dunstonh wrote: »

You should forget lump sum investments then as they are long term and you need the money on call (unless you are particularly high risk and experienced with investing).

You should stick with savings.

Thanks for that. Is there any one place that offers a better rate than the others? They all seem to be offering much the same as I see it.

But could I get a better return (and less hassle) by investing as opposed to buying again to let? I've been letting the flat with a monthly income of about £500 after costs and would expect to see a similar return on another property, so I guess an investment would need to offer above 5% (based on the figure of £107000 I expect to see from the sale).

Is that correct or even likely?
Thanks

dunstonh

But could I get a better return (and less hassle) by investing as opposed to buying again to let?

Yes you could do. However, you could get less. Investments returns are always an unknown and what happens if you want to access the money when its not a good time for the investment?

I've been letting the flat with a monthly income of about £500 after costs and would expect to see a similar return on another property, so I guess an investment would need to offer above 5% (based on the figure of £107000 I expect to see from the sale).

You would expect all but the more conservative investments to beat that over the long term but in short term periods they could lose money or return less. This is why when investing you say its for the long term as you average out those ups and downs. If you have a short term you may get lucky and only have a good year. Or you may be unlucky and see a minus 25% year. If you accept that risk then its ok but for most consumers, its not worth the risk.

portlandboy

That sounds quite interesting really. I would like to think that I could put the whole sum away, see some interest come in regularly, and still have the lump left for later years and retirement (about 15 years away). So I'll look into getting advice for a long-term investment.
Letting is fine if you have the right tenant but if the return is as good from an investment, why have the worry of having to deal with the problems of property and tenants?
Thanks for your help.

Jody50

Hi Portland Boy,
I am with Dunston, do not risk for under two years unless you can afford to loose up to 40%. Safe is good.