£20k to invest for income - any relatively stable funds with decent yield to suggest?

edinburgher

Advice appreciated.

OH and I have recently moved to a more expensive area (which we love) and have started having thoughts along the lines of putting off buying for another couple of years if the new flat works out.

I can afford to pay all the rent/bills etc. on my salary with a little left over for fun and savings, but OH's employment prospects are looking shaky from the end of June.

We've discussed starting a family as it's something we've always wanted to do and if she's going to struggle to find something suitable, it might be a good time to start trying!

If we invest our house deposit (iro £20k) to produce a small monthly income, what's the best we can expect from a fund? Any good picks for income funds that would produce an income and have a good track record for capital preservation?

Had considered sticking it/some of it in Zopa and withdrawing any interest payments + a small amount of the returned principal on a monthly basis, but suspect that it would take a long time to fund £10k into Zopa at £10 a loan?

CLAPTON

I can make no sense of this post

-you are not a house owner
-you only have 20k in savings
-your bit about starting a family seems to make no sense


whyever do you want monthly income; all logic says would need to be saving more and not taking income from your existing saving

any thoughts of 'investing' rather than saving for such a small sum in your circumstances is totally inappropriate

review your budget and save like mad to buy a property prior to starting a family

edinburgher

whyever do you want monthly income; all logic says would need to be saving more and not taking income from your existing saving

Try reading, it helps:

OH's employment prospects are looking shaky from the end of June.

Good chance we'll see a 50% drop in our income with little prospect of replacing it with a job that pays as well in the short term - why exactly would we tie up our existing capital in a house deposit for a mortgage that we'd not be able to afford if I lost my job as well?

Sorry for the tone, but you were pretty quick to jump down my throat with the 'start saving and buy a house' rhetoric without properly reading my post. We're fine at saving, that's where the £20k came from

CLAPTON

I have read your post fully and properly

maybe try re-reading mine

review your budget and save like mad

spending savings on living is a bad idea

if you don't like my tone then just ignore my posts .. simple

edinburgher

maybe try re-reading mine

I read it properly the first time round, you made no allowances for individual circumstances and just trotted out the line about buying a house. 'Saving like mad' = completely agree, but not for the purpose of buying a house, for the purpose of having to dip into our current savings as little as possible.

spending savings on living is a bad idea

And losing 50% of your family income is pretty unfortunate as well, like so many other couples we may not have a choice.

Re. starting a family - this might just be confusing matters. Query remains, how best to mitigate a fall in income through investments?

Anyway, back to the point in hand - can anyone recommend any income funds?

sympatex

Although 20,000 is not a insubstantial amount of money, in terms of an income generator its not going to generate anything you live off in the current climate.

At best you could expect 7% return on a good fund. £116 a month less associated charges, fees and penalties.

Going to need more.

edinburgher

Although 20,000 is not a insubstantial amount of money, in terms of an income generator its not going to generate anything you live off in the current climate.

At best you could expect 7% return on a good fund. £116 a month less associated charges, fees and penalties.

Going to need more.

I realise that £20k invested won't replace a £25k job - what I'm trying to do is explore options for narrowing the gap between our current income and our expected income if OH loses her job as expected. I don't think she'll be eligible for JSA of any form due to our savings, so securing even a small tax-free income held in an ISA would be pretty handy.

Also, there's nothing to stop us transferring the money back into more suitable growth funds once she gets a new job.

Linton

For £20K you could buy shares in a range of dividend paying large companies that would give you say 6% tax paid. BUT you must be prepared for major fluctuations in your capital. During the credit crunch such companies halved in value. Some such as the banks which were good dividend payers , well you know what happened to them.

The sort of fund Sympatex talks about could suffer the same instability.

If you want an monthly income without the danger of losing capital you are not going to do much better than a good fixed interest account.

I agree with the other contributors. £20K is far too small to make a significant contribution to your income shortfall. You need to focus on earning more and spending less.

psychic_teabag

edinburgher wrote: »

... if OH loses her job as expected. I don't think she'll be eligible for JSA of any form due to our savings

IIRC there is one type of JSA that is based on past NI contributions, and is not means tested.

edinburgher

For £20K you could buy shares in a range of dividend paying large companies that would give you say 6% tax paid. BUT you must be prepared for major fluctuations in your capital. During the credit crunch such companies halved in value. Some such as the banks which were good dividend payers , well you know what happened to them.

Thanks for that - this is one I had considered, but had mentioned funds as hopefully my exposure will be lower to any one company fluctuating too rapidly. I'm aware of volatility and the risk of losing some/all of our initial capital and am as comfortable with this as I can be

I can't earn more (wage freeze), but if OH struggles to find suitable work we can, of course, cut back on certain things.