Help with investment from house sale

seven-day-weekend

We are thinking of 'trading down' on our Spanish home in the relatively near future. After all expenses, including buying a cheaper property, we should have at least £70,000 free.

We would like to invest this so that it makes as much for us as it is possible to do, but we would like to be able to access around £10k of it initially so we can go travelling (UK and Europe). We will want to be able to access all the money if necessary.

We don't want to take a lot of risk with it and are not bothered whether it is in euros or sterling.

We are almost 57 and 58, my husband already draws his teacher's pension and we will both have full State pensions at retirement age. I will also receive a small LA Pension at 65. We already have some savings in High Interest Bank accounts.

Any suggestions?

ReportInvestor

If you are living in the EuroZone then having a sterling account/investment will always carry some risk.

You could still invest in some equities a part of the portfolio.

Corporate Bonds and Commercial Property are usually the investments mentioned as slightly lower risk than equities, but neither particular likes interest rate rises.

Corporate Bonds' income can be tax free inside a shares ISA, and you and your wife have 2 x £4K allowances available assuming you have used your mini-cash ISA allowance for 2007/8.

seven-day-weekend

ReportInvestor wrote:

If you are living in the EuroZone then having a sterling account/investment will always carry some risk.

You could still invest in some equities a part of the portfolio.

Corporate Bonds and Commercial Property are usually the investments mentioned as slightly lower risk than equities, but neither particular likes interest rate rises.

Corporate Bonds' income can be tax free inside a shares ISA, and you and your wife have 2 x £4K allowances available assuming you have used your mini-cash ISA allowance for 2007/8.

I don't have a wife. I have a husband! :rotfl:

Thanks for your reply.....we'll probably be UK resident by then and the Spanish house will be a holiday home.

We do have ISAs but are not allowed to contribute to them as at the moment we are not UK resident.

cheerfulcat

seven-day-weekend wrote:

We would like to invest this so that it makes as much for us as it is possible to do, but we would like to be able to access around £10k of it initially so we can go travelling (UK and Europe). We will want to be able to access all the money if necessary.

We don't want to take a lot of risk with it and are not bothered whether it is in euros or sterling.

Given that you want access to the money and don't want to take risks I don't think that investment is really an option. Better to put the money into an instant access deposit account.

nick1234

Could maybe open up a high interest online account e.g. icici bank are currently giving over 5% interest on any amount and there are no charges/restrictions on what you can put in. Other online accounts will be as good.

EdInvestor

Hi 7DW

I'd be inclined to put it all in high interest accounts initially until you get settled back in the UK and sort out all your pensions/property etc.

It may well be sensible later to put some of the money in low-medium risk investments which provide income, such as commercial property funds and equity income funds, which would give the chance of increasing your fund and your income over the longer term.. I personally don't favour bonds, as they have more risk than cash, but produce little in the way of additional returns either on income or capital.

I would suggest you both use your 7k maxi (investment) ISA allowance when you return, which will get 28k protected over 2 years, leaving the rest in cash. You ought to be able to generate a 4.5-5% net income from that at an acceptable level of risk.

seven-day-weekend

EdInvestor wrote:

Hi 7DW

I'd be inclined to put it all in high interest accounts initially until you get settled back in the UK and sort out all your pensions/property etc.

I would suggest you both use your 7k maxi (investment) ISA allowance when you return, which will get 28k protected over 2 years, leaving the rest in cash. You ought to be able to generate a 4.5-5% net income from that at an acceptable level of risk.

My first reaction to this post (being in Spanish mode ) was '?Que? Porque?' ('What? Why?') but I have read it again slowly and the maths certainly adds up; it is excellent advice and we will almost certainly do that. Thanks.

cheerfulcat

seven-day-weekend, you do realise that maxi-ISAs are a fair bit riskier than bank deposit accounts?

EdInvestor

A maxi ISA might be riskier than cash - or not - it depends what it's invested in.I'd have thought 7DW could take a low-medium risk with a minority portion of her capital, once she's done a bit of reading and worked out the basics of how it's done.

At the level of income she is talking about, there's a need to generate a bit of capital growth for the long term IMHO as, 7DW and hubby are not even 60 yet.Although their pensions are index linked, as we know this doesn't fully cover inflation for oldies.

Retired people spend more as a percentage of income on services whose prices go up by more than inflation, eg council tax and utilities, while not really benefitting much from cheaper Ipods, etc.

So putting some of her money into funds which will both generate income and offer the chance of growth is worth considering, as long as she's not going to be worried about "volatility" ( ie value of the capital wobbling up and down).This is just something you need to get used to, like riding a bike or sailing a yacht.

seven-day-weekend

On the other hand, we may just spend it..........

Motorbike, boat, .....

Thanks all for your good advice.