The Windfall Diary

WindfallWinnie

So, the IFA's recommendations are:

1) Make a lump sum contribution into hubby's pension: £40,000
= credit to the pension of £50,000 (20% tax relief at source), plus a further 20% additional HR relief either as adjustment to tax code, reduction in further tax due or tax rebate. Net effect: £50,000 invested in pension has cost £30,000.
Because hubby is over 55 he could take tax-free lump sum of 25% of value of pension = £12,500. Net effect then would be £37,500 invested in pension has cost £17,500.
We will do this once now, and again in April. We do not need to take the tax-free lump sum but would have the option to do so in the future. Pension with Skandia (I will post details separately of the funds invested in).
Amount invested: £80,000

2) Use up ISA allowances for this year: £10,680 each in stocks & shares ISAs. Hubby pays in £300/month to his Skandia ISA so we will top that up.
Again, we will do this now, and again in April.
Amount invested: £40,000 approx

3) IFA asked hubby how long he was prepared to 'lock away' money for. Hubby said 6 yrs. IFA recommended a 6yr structured investment plan offered by one of the big companies: Barclays/HSBC/Aviva. Product pays out if FTSE is same or higher on 1st anniversary. Currently offering 11% return.
We have done one of these before & it 'kicked out'/paid out on 1st anniversary. We will probably do one of these each.
Amount invested: £100,000

4) IFA discussed Investment Bond in shares/unit trusts (in my name as BR tax payer) via one of the larger insurance companies again. This would be a 5yr investment.
We need to discuss this further as it isn't an investment we've had before.
Amount invested: £50,000 tba

5) Finally, IFA mentioned Venture Capital Trust. High risk investment in AIM-listed companies.
As soon as he mentioned this hubby did sharp intake of breath & started crossing & uncrossing his legs. He has quite a relaxed attitude to risk but this was too much for him. I would probably have taken a punt of £10,000 to see how it went....

The rest we will keep on deposit in my name & I will keep checking the forums for new savings accounts!

What do you think?

WindfallWinnie

This is the spread of funds for the pension, values as of yesterday. Bear in mind that IFA asks hubby for his attitude to risk in form of a questionnaire 1-2 times/year. Last time he did it his attitude was 7/10 & the funds selected reflect this.

Aviva Property Trust UT 9320 units £12,237
BlackRock UK Dynamic UT 6960 units £9,926
Cazenove UK Growth & Income OEIC 5328 units £10,193
Fidelity American OEIC 612 units £11,016
Fidelity MoneyBuilder Income OEIC 24385 units £7,813
Fidelity SE Asia OEIC 981 units £6,204
First State Asia Pacific Leaders OEIC 1820 units £6,168
Henderson Strategic Bond OEIC 6884 units £7,842
Invesco Perpetual Japan OEIC 2812 units £5,617
JOHCM Continental Europeean OEIC 3876 units £7,744
JPM US OEIC 2623 units £11,100
M&G American (share class X) OEIC 1027 units £10,629
M&G Property Portfolio (share class A) UT 21249 units £15,548
M&G Recovery (share class X) OEIC 5922 units £10,660
Schroder European Alpha Plus UT 7816 units £7,902
Schroder Tokyo UT 4310 units £7,440
Schroder US Mid Cap UT 9363 units £5,344
Standard Life UK Equity Growth OEIC 4737 units £10,090
Threadneedle American OEIC 9879 units £11,256

(all figures rounded)

Total pension fund value: £175,000 approx

ISA invested in similar funds: £24,500 approx

Now that I've been through that I might find a program/app that lets me track the various funds...

crittertog

atush wrote: »

Cars. If any are getting on, good time to think of replacing them. Dont forget to ask for Cash Discounts (I do this even when buying more than one white good)

You may not get a discount from a franchised dealer for paying with cash - in my experience, they prefer finance (I'm guessing that as the finance company is a subsidiary of the manufacturer's regional subsidiary, the dealership receives either an arrangement fee or a cut of the interest). When I was looking for my current car, the franchised dealerships I visited made it very clear it was better for them to have it on finance, and weren't really interested in a cash purchase (and I walked away because of it).

At the moment VW/Audio group are doing some 0% interest offers and/or no-VAT, so you might be better off buying on finance and putting the sum in savings, then paying it off (not 100% sure about the full terms).

(Obviously the above depends on the marque, and is not necessarily true for all)

atush

I always take 0% finance and stooze the payments. And yes, cars are harder these days but if you have a CC that covers purchase price with a cashback they will Usually give a discount instead ;-) white goods are easier to do this with.

As for Winnie. it seems you are less risk averse than hubby (but are a decade younger so makes sense ;-) I haven't had time to look at your pension overall in detail but I can see you are 'light' on emerging markets (although you have good Asia exposure it might not cover India and the Brics)and maybe commodities such as metals/mining but have good US exposure.

gadgetmind

WindfallWinnie wrote: »

1) Make a lump sum contribution into hubby's pension: £40,000
= credit to the pension of £50,000 (20% tax relief at source), plus a further 20% additional HR relief either as adjustment to tax code, reduction in further tax due or tax rebate. Net effect: £50,000 invested in pension has cost £30,000.

As long as he has enough HR tax to cover this, it's a splendid idea. Ensure that the IFA knows about *all* other pensions that hubby pays into, including employer contributions, and also ensure that both Carry Forward regulations and Pension Input Periods have been taken into account.

2) Use up ISA allowances for this year: £10,680 each in stocks & shares ISAs. Hubby pays in £300/month to his Skandia ISA so we will top that up.

More great advice IMO. Make sure IFA knows about any cash ISAs you might have subscribed to recently.

IFA recommended a 6yr structured investment plan offered by one of the big companies: Barclays/HSBC/Aviva. Product pays out if FTSE is same or higher on 1st anniversary. Currently offering 11% return.

I hate these.

4) IFA discussed Investment Bond in shares/unit trusts (in my name as BR tax payer) via one of the larger insurance companies again. This would be a 5yr investment.

Not products I know anything about.

5) Finally, IFA mentioned Venture Capital Trust. High risk investment in AIM-listed companies.

I think it was fair that the IFA mentioned them, but perhaps this was only to bring the risk level of everything else into context.

Ark_Welder

WindfallWinnie wrote: »

5) Finally, IFA mentioned Venture Capital Trust. High risk investment in AIM-listed companies.

If you decided that VCTs were of interest then I would suggest looking at generalist funds rather than ones concentrating on AIM, at least for an initial investment. Generalist funds have a much wider set of potential investments and can be less volatile than those that concentrate on AIM: the investee companies for the latter are listed vehicles which means that their valuation is subject to investor demand as well as how well (or not) the business is doing. Some of the existing generalists do hold a proportion in AIM-listed companies so you would still be getting a certain amount of exposure to them.

WindfallWinnie

Ha! So much for getting a windfall... This morning I got a text from the bank to say the current account was overdrawn. So busy concentrating on investments I forgot to keep an eye on the everyday debits.

WindfallWinnie

And now for more financial matters... Becoming 3rd party signatory (if thats what it's called?) on bank accounts for my two elderly relatives.

Bless them. The youngest broke her hip just before Christmas & it made her realise how dependent she was on her car. The elder is 92, more 'with-it' than her 81-yr old niece & just wants a bit of back-up should anything happen to her. Have dug out some ID-type documents & keeping fingers crossed.

I also act as 'financial advisor' to them now that they are both widowed. Neither of them is particularly interested & I'm sure they'd both shove it all under the mattress if they could. They both saved for a 'rainy day' to the extent that they could now cope easily with a prolonged deluge so this means having several savings accounts/bonds/etc each to stay within the safe savings limit.

I find it a little sad that they didn't do more with their savings when they were younger & a little fitter. But I suppose they have the peace of mind that, should either of them need any sort of long-term care, they would be able to afford it. Still sad, though...

gadgetmind

WindfallWinnie wrote: »

I find it a little sad that they didn't do more with their savings when they were younger & a little fitter. But I suppose they have the peace of mind that, should either of them need any sort of long-term care, they would be able to afford it. Still sad, though...

It's a hard balance and there is no one right answer. What might seem like a lot of wasted capital is often an important means of generating additional income, plus a little security, and something to pass on to the younger generation.

darkpool

Congrats to the OP for the windfall and starting an interesting read.

You will have about 400k in funds/ managed investment? you do know you will be paying 5 figures EACH year in fees?