Where should i invest £300K

baldbloke_2

nickyhutch wrote:

No, but I have an uncle in Nigeria who needs a british bank account..........

:-0

Strangely enough I think he sent me an email.

It sounded genuine. I sent him my details. What could go wrong ...?

baldbloke_2

dunstonh wrote:

Including other sectors doesnt increase risk unless you start putting heavy percentages into them. The increased diversification also reduces risk a little and there are other low risk sectors you havent included.

For example, I risk rate portfolios on a "score" of 1 to 10. A risk 4 portfolio would have the following spread:
UK Fixed Interest 30.00%
International Fixed Interest 15.00%
Property 25.00%
UK Equity 10.00%
North American 5.00%
European 5.00%
Japanese 3.00%
Far East Ex Japan 2.00%
Emerging Market Equity 2.00%
Global Specialist 3.00%

It would have annual rebalancing as well to ensure that spread is maintained.

This thread has produced a level of detail that hasn't often been offered. Many thanks for the specifics.

fatpoo

£300k is a reasonable amount of money to be investing so it may be wise to sit down with someone to do a proper Risk Assessment exercise and tailor an investment portfolio which is ideally suited to your attitude towards risk and reward, this will give you a more scientific Asset Allocation. Fund picking in general is fine but they do keep bangin' on about Asset Allocation and how much it accounts for performance etc.

dunstonh

This thread has produced a level of detail that hasn't often been offered. Many thanks for the specifics.

Its a snippet but its not the full story. i.e. what is a risk 4 portfolio compared to the others. What volatility within the funds and what sub sectors do you pick.

Plus the asset allocation gets updated quarterly from data provided by watson wyatt.

Chrismaths

cheerfulcat - assuming a 5% yield on fixed interest, 4.5% yield on property, 3.5% yield on UK equity and 2% yield on Euro equity, that's a portfolio yield of about 3.8%, which isn't too shabby. Ed's low-medium yields 4% - not too much difference there.

cheerfulcat

Thanks for that, Chrismaths. Fixed interest forms a large part of the portfolio and I really do believe that it is higher risk than equity income right now. Bonds yields are so low; I would be wary of rises in interest rates pushing them higher. I could be completely wrong, of course.

dunstonh

cheerfulcat wrote:

dh, the OP stated that an income was required from this investment; this is why I ( and presumably why Ed ) suggested equity income and property. I suppose that you could argue that your selection of funds could be held in an insurance bond but we don't really want to go down that road again, do we?

ISAs and UTs/Oeics allow a fixed regular withdrawal. If the portfolio is built to average 6-10% p.a. then making a fixed withdrawal totalling 5% per annum is fine. Plus there can be tax advantages that way.

There is no need to just look at the natural income.

baldbloke_2

dunstonh wrote:

Its a snippet but its not the full story. i.e. what is a risk 4 portfolio compared to the others. What volatility within the funds and what sub sectors do you pick.

Plus the asset allocation gets updated quarterly from data provided by watson wyatt.

Quite true. But there are few things in life as reassuring to the novice as a LIST - which shows - however inaccurately - how the informed mind is working. It provides a great basis for further research within a framework.

And no-one is holding you to ransom to justify your helpful advice and suggested range of investments - honest!

EdInvestor

OK now getting back to the original query, to wit how to invest a lump sum for income, let's look at that, the income.

I had a trawl down the Equity Income fund list, and one that stands out on the income front is Neptune Income A with a yield of 5%. From what is shown, there is no special increase in risk to get this higher yield , the share allocation is basic big blue chip high yield.

Remember that there is no tax to pay on the fund income for a basic rate taxpayer - whereas 5% interest on cash will attract a 20% tax charge.

So you can expect a 5% income payment into your bank account from this fund, while the capital remains invested and keeps growing.

There is no need to worry too much about the ups and downs of the fund value with this strategy: you are concerned about a stable income.Dividends on shares have a long history of being more stable than interest rates - the share price may wobble, but the income rarely varies.

So this is a "sleep at night" share strategy.

dunstonh

OK now getting back to the original query, to wit how to invest a lump sum for income, let's look at that, the income.

It hasnt got off subject at any point.

There is no need to worry too much about the ups and downs of the fund value with this strategy: you are concerned about a stable income.Dividends on shares have a long history of being more stable than interest rates - the share price may wobble, but the income rarely varies.

Not much worry with the asset allocated portfolio either. Had you invested in June 2001 before the 2001/2 stockmarket crash, that asset allocated portfolio the worst year performance would have been down 0.9%. Less than the second spread that you suggested Ed. It would have averaged 10.9% a year comfortably allowing a regular withdrawal on a monthly basis.