250k

bcfcctid

Looking to invest 250K long term to get the best return!
its for my elderly father

Any ideas?

I understand that the first 12.5K return per year would be tax free

CLAPTON

some few details about your father would help

-how old?
-property owner?
-pension or other income?
-presumably no debts?
-any depenants (wife?)

bcfcctid

He is 74 year old homeowner wit a 73 year old wife
has a pension and no debts

is that ok?

dunstonh

I understand that the first 12.5K return per year would be tax free

Depends on the tax wrappers you use. Which have you identified to use so far and why?

What is the purpose of the investing and what options have you looked at so far?
what risk profile are you looking at?

CLAPTON

a 74 year old (wifes age?) could live for another 20 years so it's important to consider the effects of inflation

at 74 his personal allowance is 10,500 which rises to 10,666 in the tax year he is 75 (assuming his total income - pensions, interest divi are less than 25,400)


I would suggests the money is devided between investment in S&S and some cash savings dependant upon how much income they need to live on.

Are they both using their ISA allowances?

xylophone

(wifes age?)

73 according to the OP's post 3 above.

It would be tax efficient to use both parents' tax allowances/ISA allowances.
http://www.hmrc.gov.uk/pensioners/index.htm

http://www.hmrc.gov.uk/tdsi/ten-per-cent-guidance.htm - remember to use current tax bands. http://www.hmrc.gov.uk/rates/it.htm

They might want to use both their cash and S&S Isa allowances.
How much income are they hoping to generate?
What is their attitude to risk?

innovate

If the money is available now, split it across banks to ensure there is FSCS protection for all the money. Then take your time to investigate and decide.

GeorgeHowell

Retirees of that sort of age usually cannot afford to lose substantial amounts of their capital. In the present climate the risk to capital posed by inflation is substantially lower than the risk posed by the vagaries of the stock market/s and other capital risky investments. I would hesitate to put more than 10%-20% of this money into such investments.

gadgetmind

Assuming marbles are still intact, a portfolio of Investment Trusts should generate decent dividend income (no further tax for basic rate tax payers) and they can also sell some of their holdings per year to use CGT allowances for further income and/or to move the money into ISAs.

There are also purchased life annuities, investment bonds, and other such exotica, but whenever I have looked at these I have taken a dislike to the fees and/or the bad deal for your estate.

Yes, ITs are "the stock market" but if you're investing long-term and wanting the best return, you won't get that in fixed interest.

grey_gym_sock

it depends what they're trying to achieve. i.e. what they'd like to spend each year, any other one-off expenditure, and do they care about having money/investments to leave to children (or to anybody).

if they can generate enough income from ITs, that's a plausible option, and gives their capital some chance of growing for the benefit of whoever they're going to leave it to.

purchased life annuities might be worth considering if they're struggling to generate enough income. they boost your income, at the price of giving up your capital. however, you can also boost spending by directly spending a little of your capital each year - not too fast, or you could run out of capital, but there is some room to do this safely when you're in your mid-70s.

jamesd

GeorgeHowell wrote: »

Retirees of that sort of age usually cannot afford to lose substantial amounts of their capital. In the present climate the risk to capital posed by inflation is substantially lower than the risk posed by the vagaries of the stock market/s and other capital risky investments. I would hesitate to put more than 10%-20% of this money into such investments.

Then you'd guarantee a very large loss of capital if there's an income need here.

Investments can be expected to deliver perhaps 4-6% of capital as income, more than that if there's deliberate capital drawdown. Inflation at 3-4% and that's perhaps 10% capital loss a year less interest rate unless investments are used. Perhaps fifteen years until the money has run out at 6% income taking.

By contrast, now is a relatively good time to be buying equities. Lots of price drops already so the downside/upside risk in many markets is pretty strongly in favour of buying, though gradually to avoid shocks. Less good for high quality corporate or government bonds in Europe, US and Japan though.

But we still don't know the objectives or risk tolerance here, so much of this is currently moot.