How to safely invest £150K

en8wall

Hi
Following the recent death of a close relative I have approx £150k to invest. I'm 40, married with one young child and mortgage free.
I'm looking for advice on how to invest this money with little to no risk and ideally receive a monthly income although this is not essential as i work.
Any tips please?

Jonbvn

Save or invest?

getzegold

Noticed the yield on gov bonds? why are they so low? because many investors are more concerned with the return of their money rather than the returns on their money. They're worried about counterparty risk. that if they invest in a stock or company it may default and take their cash with them. (like Connaught)There's no where safe to put your money except gov bonds(if you believe govs can't default) or things that you own like land or commodities. I wouldn't even trust a bank. did you know that if you put 150k in a bank it technically ceases to be your money? you've lent it to the bank to do what it wants with and all you get is a monthly statement which is an IOU of what they owe you. Thats why they pay you interest, its the interest your get for lending them your money. So they just add your IOU to the other stinking piles of Trillions of IOUs they owe everybody else and meanwhile, ofcourse, your money buys less and less everyday through inflation. Invest safely? good luck on that one.

theGrinch

boring, but pay off any debts you have first as the interest you pay will surely ouweigh the income you make.

slinga

It's a difficult one really.
If you haven't invested before then I'd go the safe route.
£50k in the AA at 4% ish
£21k in LTSB Vantage at 4% ish
If/when NSI Index Linked come back then another £30k in there
The rest in a 3% ish Bond.

You might take £10k and place that in say Hargreaves Lansdown as an ISA.
I'd choose Fidelity Special Situations as a starter.
Each year add another £10K to the ISA.
Or you might choose a slightly riskier but 'better' ISA such as Fidelity South East Asia. Of course you know the stuff about risk and your investments can go down as well as up.

But before you do anything read up on here and elsewhere.
Take your time no need to rush, a few months will make little difference and you'll feel more confident. You never know we might get the second down leg of the double dip within a year and then if you haven't invested you'll be in for a much better ride: on the other hand the double dip might never happen.

Myself when I was in a similar situation 12 years ago I went to a well known IFA, big company. For me it was a bad idea and only just recovering from the bad info they gave me. I may well have been unlucky with my choice of IFA.

Dunstonh on here is an IFA I think and I always read his advice.

I wonder what he'd say about my suggestions above:D

For every post you'll have a different suggestion

Whatever. Read my signature below.

en8wall

Thanks for the comments so far.

Ideally save i suppose.

Slinga, when you say AA do you mean Automobile Assoc? at 4%?

Baldur

en8wall wrote: »

.....when you say AA do you mean Automobile Assoc? at 4%?

Their 3-year fixed rate account offers 4.10% and offers FSCS protection, whereas the slightly higher rate (4.15%) offered by Bank of Cyprus is only covered by the Cypriot scheme - see http://www.theaa.com/savings/fixed-rate-savings-accounts-products.html

The deposit taker for AA financial products is Birmingham Midshires.

hethmar

I think slinga does mean Automobile association (not alchies anonymous ). Have a look at their website


AA Internet 5 Year Fixed Rate Savings Account Interest rates (AERs) 4.55% AER fixed for five years

dunstonh

I'm looking for advice on how to invest this money with little to no risk and ideally receive a monthly income although this is not essential as i work.

In which case there is no such option (if no risk is wanted). You suggest you dont want investment risk. However, with a monthly income you would be leaving yourself option to shortfall risk and inflation risk. If you drew the interest, you would be guaranteeing a capital loss in real terms. in 10 years time that £150k would have the spending power of about £97500. The income it pays will be lower in real terms too.

Basically, there is no risk free option when it comes to income. Risk is not on/off, its a sliding scale. You dont need to go gung ho up the scale but sticking at the bottom end can be more damaging than moving slightly up it.

MrBeans

Funny thing, risk.

I reckon people often assess risk with hindsight. The chap who went to an IFA and invested in something that tanked will say he made a high risk investment. The chap who goes to an IFA and invests in something that does well will probably say he made a very sound and sensible choice. You might have thought a few years ago that investing in a big, safe bank like RBS wasn't a huge risk, but with hindsight...! And that does illustrate why investing in a single company's shares is probably not a good idea.

As the wise dunstonh says, there is no such thing as no risk. If you invest in a cash account and we get deflation over the next 20 years, you might do quite well. But if we get rampant inflation at some point over the next 20 years, your cash becomes worth diddly-squat. So what's the risk of investing in cash? Ask me in 20 years time!

Ditto stock market investment. Historically over say a 20 year period a well-spread stock market investment has done better than most other things, but over the next 20 years, who knows.

Also depends on your tax position. If you're a higher rate taxpayer then investing for capital growth rather than income (which you don't need anyway) may be the better option. So an emerging markets fund that pays little income but could give good capital growth may be an option. But clearly it's "high risk". But risk runs both ways: there a risk your investment could halve but also a risk it could double.

Maybe it comes down to what would cause you sleepless nights. If seeing an investment fall by 20% would cause you angst then the stock market may not be for you. If a 20% loss would be like water off a duck's back - you shrug in the knowledge/hope it'll probably recover - maybe a share-based fund is for you after all.

Also, whatever you invest in (cash, unit trusts, investment trusts, etc), move £10,200 into an ISA every year so gradually your £150K becomes free of higher rate income tax and CGT.

Loughton_Monkey

en8wall wrote: »

Hi
Following the recent death of a close relative I have approx £150k to invest. I'm 40, married with one young child and mortgage free.
I'm looking for advice on how to invest this money with little to no risk and ideally receive a monthly income although this is not essential as i work.
Any tips please?

You've had plenty of suggestions so far.

I was struck, in particular, by the words "receive a monthly income".

The implication of this would be that (a) you tend to spend all the money you currently earn, and (b) at the age of 40, you are already starting to dip into 'savings'.

I strongly feel you would regret this. The vast majority of people do not get such a windfall, with the result that they must save a significant amount throughout working life to ensure good income after retirement. This means living within one's means.

Far better, I feel, is - by all means take out £10K and have a good 'splash' like a good holiday, or do up that kitchen etc. But after that, try to think of it as: "I now have savings of £140K. Not bad for my age, but I need much more if I am going to continue my current lifestyle after I retire.... so I need to start working out how much more I need to add to it before then...."

Personally, I would then do a number of things with it.

1. Make a 'dump in' to pension to get a 25% free 'boost' from the Government.
2. Fill up my ISA allowances, and continue to do so...
3. Shove some it is "Safe" longer term bonds 3/4 years to get 4%-ish returns.
4. But a bit into best "Instant" accounts for emergencies [If you do all the Vantage/Santander/Halifax etc. tricks (see posts ad-infinitum) you can average 3.2%-ish with a bit of work].