Redundant- best way forward financially?

BEC

I'll be redundant come 01/01/07. My notice ends then - currently on gardening leave! I'll then be 53 - was looking to retire at 60 anyway. But has come a bit early. I'm being positive and realistic. I suspect any future work I do will probably be unpaid which is ok with me.
I was saving/investing looking towards financial independance eventually.
I have savings/investments of £140K. Of which £110k is in unit trusts/Investment trusts. £25K is in building society products generally. £5K in premium bonds.
In January I've choosen to start receiving my company pension which will be £370 per month and lump sum of £30K. I'll get £17K rendundancy lump of which I'll add £10K to the £30K pension lump so will have a further £40K to invest. The 7K (with the pension) should last me about a year.
The investments I already have(stock based) are all growth. Should I invest the £40K in income investments or also in growth ? I'm happy to invest in the stock market and am happy with the associated risk.
I don't intend to claim dole. Any advice or idea's with what to do would be very much appreciated.
When will I need to fill out a tax return?
I'm the type of guy who has empathy with other people and their problems so any advice on how best to use my time in the future would also be appreciated.
Wishing everybody the best of luck.

nrsql

Congratulations

You're on gardening leave so presumably have plenty of spare time (unless you have a big garden).
Why not make appontments to see a few IFA's and see what they say.
Also have a chat with your bank to get a minimum baseline - I would do that first as the suggestions would probably be poor and will give you something to talk to the IFA'a about.
Just think of the excercise as to learn what is available rather than to commit to something. You can go back to the IFA later to do business if you like them and their advice.

You'll have to assess how much income you need and how much risk.
I would say you are a bit exposed to the market where you are now but you say you're happy with it - depends really where you are invested.

Make a list of all your monthly outgoings and see if you can cut them down - I've saved myself over £1500 a year just by cancelling old worthless things and changing a few others.
I have a spreadsheet which gives all my fixed outgoings and unearned income and the difference - it's fun to manipulate it by moving money around. Also makes you keep things in reasonable interest accounts.

angioma

It is nice to see someone else in a similar situation to myself - being made redundant a few years earlier than planned!!

This happened to me about 3 years ago, and I would certainly agree with nrsql's points. Relative to yourself, I have a much higher percentage of my capital in the highest interest bearing cash accounts that suit me, and my only commitment to the stock market is in a couple of ISA's. This is mainly because the monthly interest from these accounts supplement my pension income as I still have 2 dependant children, albeit for not many more years!

I'm not entirely sure about this, but I think signing on the dole would only be for employment availability, as I think your pension plus interest may well be considered to be adequate income. So, probably no additional income on that front.

Don't want to sound too negative, but paid employment ain't so easy to find. I have applied for many jobs to utilise my many years IT experience, but I think the 50+ age is still a negative despite the new legislation! I now work freelance and some months are good, but they are interspersed with slightly more barren ones. C'est la vie!

Having worked in a corporate environment, I was used to seeing many people everyday, but my world has become much smaller, and I can sometimes spend a whole day working on my own and not seeing anybody. Don't know what you've been used to, but I think you might need to be flexible in dealing with a change of lifestyle like I have had to.

Anyway, that's enough from me. Do enjoy your retirement!

RayWolfe

You are going to be a long time retired with little hope of increasing your capital. You also need income.

You may like to consider moving your share investments from growth to income producing but leaving them in the stock market. I retired 10 years when I was 56 and did just that. Each year my income from that source has increased much faster than inflation so whilst I have no opportunity to earn more, my income has gone up. (As has the capital but you would expect that over any 10-year period.) Of course I keep a fair chunk in cash to give me some certainty and quick access if needed, but the income producing UTs that I have have given almost as much certainty of income as any cash account.

Good luck and enjoy yourself.

BEC

Thanks so much for your reply.
Yes I suspect that I'm going to miss the people more than the income. I'm certainly a 'people person'. I need to find something to replace that.

BEC

Thanks very much for your advice - much appreciated. I will give it plenty of consideration.

Jake'sGran

Hello and welcome. You will probably enjoy reading this site. It has been helpful to me. If you want work I believe you could find it. I had two new jobs after the age of 50 but perhaps not in your league. I was an exporter and good with books.

A lot of my money is invested in the stock market, PEPs and ISAs and the biggest percentage in income OEICS. I have never used an IFA but have done well. It's easy to find the top of the league funds - have a look at Citywire. I do take the income (twice yearly from half the funds) and in the others it is reinvested. If you have a look at the Bestinvest site you will see that they have a Manager Record Index (MRI) arrived at by measuring a fund manager's monthly performance against the benchmark. Citywire give top ratings of AAA to a few managers. Depends on your life style but like many others you will probably find that you spend less in retirement. I imagine you could submit a tax return at the end of this tax year. It should be easy to do and can be done on line. Income from the P60 plus income to 5th April. Think I've got that right? Good luck.

BEC

Hi
thanks very much for your reply. I'll look up some of the items you mention.
I wonder if its best to invest for income or invest for growth then just sell as you need to - ie periodically when the market is doing well? Anyone any views on that?
Thanks again.

RayWolfe

BEC wrote:

Hi
I wonder if its best to invest for income or invest for growth then just sell as you need to - ie periodically when the market is doing well? Anyone any views on that?
Thanks again.

Well, it might do but growth shares have tended historically to have been more volatile. I also belive that companies need the dicipline of producing a dividend. It makes them think more about their shareholders than their options! ;-)
(I belive that ENRON never produced a divi.) ;-)
Ray

Optimist

You might want to check
http://www.thepensionservice.gov.uk/ and get a state pension forecast to see if you have sufficient stamps to get a full pension come the time

DocProc

One of the best ways to become really wealthy, has been to disassociate oneself from time-restrained methods of earning an income.

eg, If you only have one job, earn £5 per hr and work 38 hrs per wk doing it, then the ceiling on wealth creation kicks off with £5 x 38 x 52 = £9,880 maximum income (gross) for a whole year.

What are the only solutions to allow a breaking out of the problem if you stay 'time-restrained'?

1. Get a pay rise or
2. Work more hours.

Q. So what really is the solution?
A. Get involved in 'buying and selling' things and from which you can make a profit.

So now we have a new problem.

BUT

It has nothing to do with 'time'. It isn't 'time-restrained'.

Welcome to the first day of the rest of your life, BEC.

(Notice how it starts TODAY and not on 1.1.07)



(Just to get you thinking along some new lines)

PS. Don't for goodness sake mess with the stock market!