best place to invest

Stubod

Hi all,

I am 55, and have just been made redundant. I am unlikely to find a job locally, and I do not want to move as my wife currently works in the area. I have always been cautious, and most of our savings are in ISA's etc. Any pensions I have had are small, and not worth that much, but I have a "pot" of about 200k that I would like to use / invest to generate an income, (Not bothered about the capital, more intersted in an income), or should aI just stay with savings options?

What would anybody recommend?

many thanks for any suggestions

xylophone

Type 'investing for income' into Google and see if any of the ideas appeal?

dunstonh

Pensions and ISAs for starters (pensions still produce the best income). However, how you actually invest depends on a range of factors which we dont know. So, any more than that we cannot really say.

BLB53

You won't get much of a return from cash or gilts, so the obvious solution is equities. Personally I would be looking at investment trusts from the growth % income sector - both UK and global - average yield around 4.5%. Average dividend growth is around 8% pa which means dividends will double roughly every 9 years. Possibly also some corporate bonds and property ITs.

jamesd

To start have a look at Invesco Perpetual Monthly Income Plus within a S&S ISA. that pays out about 7% tax free within an ISA and could be your first choice for using ISA pots. Add Invesco Perpetual High Income to that to get some capital growth potential to keep up with or ahead of inflation, it's currently paying out about 4.5%.

Have the investments pay out into a savings account. Have two or three years of planned income level in the savings account. Use a standing order from the savings account to your current account to provide your regular income. This way the savings account evens out the payouts and means you don't need to be continually adjusting your spending levels.

You can transfer from a cash ISA to a stocks and shares ISA but not the other way around.

You should be able to generate about 5-6% of the capital value as income without much chance of long term reduction in capital, so £10,000 to £12,000 a year.

You could increase that by perhaps £2,000-£4,000 if you don't mind reducing the capital level and then getting the state pensions to top up the ongoing income level for the rest of your life.

For all of these the capital value will vary. The funds I've mentioned are popular and respected ones in their areas but are just examples to get you started with the learning. You should really ultimately be looking to use a dozen or so different funds.

If you're not familiar with investing you should visit unbiased.co.uk to find a local IFA and get investment advice. Or, better, get a personal recommendation from someone you trust. IFAs are just like builders or other contractors, different people get on best with different ones and prices vary, so don't just pick the first one you talk with.

Linton

With that amount of money, staying in savings accounts is very unlikely to be a good option. Some of this money will need to be around for perhaps 30 years before you use it. If your investment return doesnt have a reasonable chance of exceeding inflation, which savings accounts historically dont, there is the danger that your real income in old age will be very much lower than you would have hoped.

People here cannot give you definitive advice because so much demands on your specific circumstances and attitudes.

I would agree with jamesd that you need a few years planned expenditure in cash, my view would be 3-4 years rather than 2. You could perhaps arrange it as a series of say 10K 3 year fixed rate deposits one taken out each year, so you get the annual income but benefit from the higher rates available from longer term deposits.

I think jamesd's estimate of a fairly steady 5-6% return is reasonable IF you dont allow for inflation. But of course you will need to.

Bearing in mind the size of the pot and its importance for perhaps the remaining 40% of your life, if you dont already know the answer to your questions IMHO you should definitely consult an IFA.

middlepuss

BLB53 wrote: »

Personally I would be looking at investment trusts from the growth % income sector - both UK and global - average yield around 4.5%.

Please could you suggest a couple? I too am looking to make this sort of investment so would welcome a couple of starter suggestions.

BLB53

Please could you suggest a couple? I too am looking to make this sort of investment so would welcome a couple of starter suggestions.

From the UK sector I hold City of London and Murray Income, and from the global sector the stand out performer is Murray International managed by Bruce Stout. I am sure all will continue to perform well over the long term.