How to invest £80,000

mutter

I am about to inherit around £100,000 and have spent many sleepless nights wondering what to do with it.
I'm the sort of person who's never had any spare cash lying around, so there's a few things I'd like to do with part of it, but I'd like to make the rest work for me.

I'm 49, and I do have a works pension scheme, but I'm hoping my inheritence will help to provide a more comfortable retirement, so I'd be quite happy for say, £50,000 to be tied up for ten years or so, and £30,000 to be invested in such a way that I would be able to access it sooner if required.

Any ideas would be very much appreciated.

Cautious_Investor_3

Hi

You sound as though you want to split the money between "savings" and "investments".

Savings being money held on deposit, 100% capital guarantee (providing you work within the Financial Services Compensation Scheme limits) but with relatively low returns.

Investments being held in other asset classes, generally equities, fixed interest (gilts and corporate bonds) or property funds. For the longer term, value will fluctuate, you could lose money, but hopefully in the long run gain a better return than you do from your savings.

You can probably sort the savings side of things easily enough yourself by reference to a best buy table / s, take a look at this link:

http://www.!!!!!!.uk/free-services/best-buy-savings-accounts/

With regard to the investment side of things, I would chat to an IFA. Get a recommendation from friends or family, or use a site such as www.unbiased.co.uk to find one. If you are investing £50,000 via the IFA they will probably throw in some savings advice for nothing.

I hope this helps.

The Cautious Investor

moose88_2

start a business, something you can see yourself doing for the rest of your life. maybe like a small cafe or restaurant. Simple, but effective. Heck you could even buy a decent sized corner shop or grocery store, that would make you between 30-80k (profit) a year (depending on size) and you could pass it on to future generations. But of course it isn't for everyone.

jimjames

moose88 wrote: »

start a business, something you can see yourself doing for the rest of your life. maybe like a small cafe or restaurant. Simple, but effective. Heck you could even buy a decent sized corner shop or grocery store, that would make you between 30-80k (profit) a year (depending on size) and you could pass it on to future generations. But of course it isn't for everyone.

Are these numbers from personal experience? I find it very hard to believe that a corner shop would currently be making £80k profit particularly at the moment when so many are closing and under such pressure from supermarkets.

As you say it isn't for everyone and compared to investments I think there is far more risk in buying a small business and then looking to sell for a profit at some future time.

WHITEVANMAN

moose88 wrote: »

start a business, something you can see yourself doing for the rest of your life. maybe like a small cafe or restaurant. Simple, but effective. Heck you could even buy a decent sized corner shop or grocery store, that would make you between 30-80k (profit) a year (depending on size) and you could pass it on to future generations. But of course it isn't for everyone.

Quite possibly the most irresponsible piece of advice ive read. :eek:
Starting a business like a cafe or restaurant in a time where public spending is going to be declining for a good few years at least is not sensible.
Many well established are already feeling the squeeze.

£80k profit would would likely require a T/O of over £300k in even the most profitable of the business you mention!

Primrose

moose88 wrote: »

start a business, maybe like a small cafe or restaurant. Simple, but effective. Heck you could even buy a decent sized corner shop or grocery store, that would make you between 30-80k (profit) a year (depending on size) and you could pass it on to future generations. QUOTE]

This is just about the last thing I would do with the money. The future of corner shops and small grocery stores is indeed bleak at the moment. They are being forced to pay higher and higher business rates for the property and the likes of St. Tesco are ruthlessly forcing them out of business all over the country. I recommend having a hard think about how you want to handle your future life, when you want to retire, whether it would be in your interest to reduce your mortgage, your future health prospects and once you've got a clearer idea of what kind of financial backups you want in place, fix an appointment with an independent financial advisor. But don't necessarily go with the first one you meet. Have an exploratory meeting first to try and assess whether you're going to feel comfortable with them.

jimjames

WHITEVANMAN wrote: »

£80k profit would would likely require a T/O of over £300k in even the most profitable of the business you mention!

Which would require close on to £1000 a day takings. Thats a lot of pints of milk or newspapers especially if the markup is less than 30%, in which case you'd need more turnover.

If you aren't happy making your own decision or are unsure of the best route re pensions/ISA/cash etc then definitely speak to a fee based IFA so the commission does not cloud any recommendations. There may be options you haven't even considered that could be particularly relevant to your situation.

mutter

Hi all,
Thank you for the advice so far.
I hope we don't get too sidetracked by the suggestion of opening a cafe or shop as though it seems like a nice idea, I've seen them come and I've seen them go in my local area, and it's not something I could get excited or passionate about, so I doubt if I'd do any better than they did.
Also, I'd need to give up work to do it, and if I did that, I'd have to factor in the loss of my salary.
I'd always expected to work till I got my State Pension (which for me will be age 66) but it would be nice to think I could either retire earlier or perhaps go part time.

How do I find and independent Independent Financial Advisor?

padington

mutter wrote: »

How do I find and independent Independent Financial Advisor?

http://www.unbiased.co.uk/

Loughton_Monkey

£50K exposed to 'funds' [equities and bonds etc.] and £30K kept in 'Cash' investments sounds about right to me. The £50K 'issue' is that you do need to consider it (as you do I think) a 10 year deal, since otherwise it becomes rather more of a 'risk'. The £30K 'issue' is more the problem of cash interest rates not keeping up with inflation. But make sure you're 'happy' with this split from day 1.

So as to the £50K, you need to think either in terms of Pension or ISA. Both are usually invested in a mix of 'funds' and [in 'round figures'] you can buy very similar funds in either 'wrapper' (pension or Stocks & Shares ISA). Hence both could show very similar capital growth. But they are very much different on tax treatment, flexibility, and annual limits. So make sure these are explained fully.

You cannot put the whole lot into ISA in one tax year anyway (nor pension probably, depending upon your earnings). So you'll probably end up putting a bit into each. If, for example, you wanted it all in ISA, then with only £10.2K a year, it would take 5 tax years (or less if you can put some in spouse name.). However, you can still put it in similar funds outside ISA and 'drip feed' it in without tax issues (because of generous Capital Gains limits) - unless the growth rate were to be extremely good!

Ironically, you may find your £30K 'Cash' rather more difficult. Drip feeding to Cash Isa would be advisable - except that with £5,100 annual limit, this also reduces what you can put in your Stocks & Shares ISA (Above). Also, you'll have 'decisions' as to truly instant access, or say, 3 or 5 year fixed rate bonds. You will probably have to move 'instant' money around at least annually to get 'best rates'.

But see an IFA.

DiggerUK

A bereavement and an inheritance is a bitter sweet experience, hope you are coping well.

An amount under 100K will be easy for you to handle yourself. The only person guaranteed a return if you go with an IFA, is the IFA.
Beating inflation is something savings rates are not doing at the moment, with the protection limit at 85k you will need a couple of short term accounts before taking a final decision.

As you are looking at the long term then consider gold, it will not end up as a Woolworth's piece of worthless paper. You can also put what is known as 'paper gold', or gold companies stock in an S&S ISA if physical gold is not what you want.

You should also be looking to get rid of debts if they are costing you more than what you could get in return. Plus you would have extra spare cash.
Best of fortune.