Can I get retirement income from cash?

wastenot

I`m hoping for some positive feedback/comments on this please and would be grateful for support.
2013 has started fantastically well for me as my wife and I are in the fortunate position of receiving in excess of £200,000 as our share of an inherited property sale that we weren’t aware of at all until 6 weeks ago.

We`re hoping the money will secure us a regular income to boost our state pensions and the small annuity/pension I get. Our current total income is low enough for us to get pension credit.

I`ve talked to an IFA and his suggestion is to invest some of the money in an investment bond type plan and the rest in ISA`s etc. Yes, the plan would bring in the £6-7k pa that my wife and I are looking for but the main thing we don’t like is that the money is never accessible should we ever need cash in a hurry.

I`m disappointed that the IFA has very limited suggestions. We are also not impressed at his four figure fee for what comes across as simple advice and something that possibly we could get over the counter at our local bank.

We are looking for no risk investments/savings accounts or whatever else is available that will return £6-7k pa with a cash sum left over if possible for us to buy a few bits. We are both 65 years of age, own our own home with no mortgage and have no debts.

Comments from the experts re what is available would be much appreciated.

Aploogies for the text size, I copied & pasted from a word doc as I was logged out of the forum while typing.

somethingcorporate

Bank products would likely be uncompetitive and the "advice" you get from them would likely be tied to a small set of products compared to that of an IFA.

I'd get a second opinion from another IFA if you are unhappy with your first.

Linton

I suggest that you split the £200K into a bits and pieces fund and an income fund. You keep the b&p fund in a deposit account so get a small return, but more importantly the money is safe and accessible. The income fund can then be invested for the long term to provide a reasonable income, much better than you could get from a bank deposit account and one that with care could be tax free.

So, say you put £40K in the b&p fund. That leaves you £160K for income. Following your IFA's advice or investing in a portfolio based on dividend paying shares could get you a return of £6K-£7K with some chance of matching inflation over the long term and not eating into the lump sum.

The other option for the £160K would be to buy an annuity from an insurance company to provide a guaranteed income for the rest of your lives however long or short that time is. It would mean giving up the whole of the £160K but is the only option which will guarantee the level of income you are after. However annuity rates are low at the moment and the income you get would probably be fixed rather than increasing with inflation for the level of income you want.

suali_uk

Hi I am selling my £180k freehold home and want to transfer all that money and savings of about £20k. Thus total GBP £200,000 to an account in Bangladesh.

I hope to live there for the next five years and invest my money into developing property which a friend has already started and is a much more profitablle way forward for me. When I do decide to return to the UK I could mortgage or rent a new property but for now I wish to relocate to Bangladesh for at least 5 years.

Firstly I want to know is it possible to take all the money with me?

Also What's the best way to transfer all my £20,000 savings and £180,000 property sale proceeds to Bangladesh incurring the least in transfer fees, taxes or other costs and ensuring security of my cash?

I apologise if this post is in the wrong place but I couldn't find a thread to post on or new thread to create...

sleepless_saver

suali_uk wrote: »

I apologise if this post is in the wrong place but I couldn't find a thread to post on or new thread to create...

Log in, go to the board you want to post in, and you will see a blue "New Thread" button on the left hand side. You should get more response with your own thread title as well as not hijacking the original poster's thread.;)

atush

The above is the correct way to go. but I would reconsider your investment.

There is no problem in exiting the UK with all your money, if ther eis in bringing such money into Bangladesh I cannot say.

But you seem to be happy to invest all of your hard earned money into the investment of a friend. I have heard many sob stories here (and elsewhere including those of very rich individuals) who have lost all that they invested under such conditions (as relying on a friend to be truthful).

So tread carefully here, and never invest all of your money (or even 50%) into one thing at all much less this.

princeofpounds

To the original poster - why are you disappointed with these recommendations? If you asked for low risk AND near-instant access then cash or ultra-high grade bonds of various types is pretty much all you can expect to get back as a suggestion.

What more exactly are you hoping to get from an investment? Because apart from the access issue, it's hard to understand what your complaint is really about.

Obviously cash is a 'riskless' investment or as close as you can get, but frankly at 65 you hopefully have many years ahead of you and I would be worrying about it being eroded by inflation. The one risk you will not be running is the risk of getting good investment returns! That's not problem for a few years, but you'll certainly feel the impact over ten.

wastenot

Thanks for the replies.
Princeofpounds: please excuse my ignorance but can you clarify on your last paragraph? I understand the inflation loss with cash, but I don`t understand the last two sentence`s.

Obviously cash is a 'riskless' investment or as close as you can get, but frankly at 65 you hopefully have many years ahead of you and I would be worrying about it being eroded by inflation. The one risk you will not be running is the risk of getting good investment returns! That's not problem for a few years, but you'll certainly feel the impact over ten.

wastenot

Sorry but i obviously haven`t figured out how to copy the "quote" in my reply as its not highlighted.

atush

Risk, there are many kinds. Investment risk is what many fear but they think this is the only risk. the risk you are trying to understand above is inflation risk. If you invest you money at 2%, but inflation is 3% , you are losing 1% of your money every year. Not in monetary numbers/amounts, but in actual buying power which is the important figure.

Another under- understood risk is shortfall. Say you have 100K and you 'expect' it to get get 5% interest a year, and to last for 30 years. Say you actually live for 35 years. your cash cannot provide you with 5% interest, nor can it last forever if you are eating away w/ your capital. Not to mention should you expect there be any capital to be left to a spouse or other dependents. So your cash wont' go as far as you wish- this is shortfall.

wastenot

Can I use my cash to simply buy a pension?
Or would the maximum £50k payment pa into an existing pension fund also apply in my situation?