We’d like to remind Forumites to please avoid political debate on the Forum.
This is to keep it a safe and useful space for MoneySaving discussions. Threads that are – or become – political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
Portfolio for a Retired parent
jimmyjones_2
Posts: 106 Forumite
My mother is 63, retired and has recently inherited around £100k. She wants to get her finances in order.
She has a decent teachers pension and no mortgage. She says she doesn't need any additional income on a month by month basis but will occasionally want to dip into her savings / investments for a new car, holidays etc.
Her current portfolio looks like this:
£80k in shares - mainly in S&S ISA
£120k in cash - Mainly instant access accounts, some in Fixed Rate Cash ISA
The shares are a pretty random setup of funds spread over numerous accounts which I haven't looked into yet. She was mainly advised by Financial Advisers from Banks and I suspect their prime motivation was making themselves commission. The one account I looked at seemed like it had been transferred for no particular reason to Scottish Widows to funds with high TERs and initial charges.
This weekend, we are going to create a spreadsheet with all of the accounts and funds so we can see the overall picture then we will arrange an appointment with an IFA. We are going to ask the IFA for their idea of what to do with the money and manage it ourselves e.g.
What percentage should be in cash?
Of the investments, what percentage should be in Shares and what percentage in Bonds?
Should she bother with Commercial Property or Commodities?
What portfolio should we setup? Possible ideas are:
- Global Passive using cheap index funds / ETFs
- DIY High Yield mainly in UK blue chips
- High Yield investment trusts
I would be interested to know what the knowledgeable people on this forum would do in a similar position so I can compare that with the IFA's suggestion.
She has a decent teachers pension and no mortgage. She says she doesn't need any additional income on a month by month basis but will occasionally want to dip into her savings / investments for a new car, holidays etc.
Her current portfolio looks like this:
£80k in shares - mainly in S&S ISA
£120k in cash - Mainly instant access accounts, some in Fixed Rate Cash ISA
The shares are a pretty random setup of funds spread over numerous accounts which I haven't looked into yet. She was mainly advised by Financial Advisers from Banks and I suspect their prime motivation was making themselves commission. The one account I looked at seemed like it had been transferred for no particular reason to Scottish Widows to funds with high TERs and initial charges.
This weekend, we are going to create a spreadsheet with all of the accounts and funds so we can see the overall picture then we will arrange an appointment with an IFA. We are going to ask the IFA for their idea of what to do with the money and manage it ourselves e.g.
What percentage should be in cash?
Of the investments, what percentage should be in Shares and what percentage in Bonds?
Should she bother with Commercial Property or Commodities?
What portfolio should we setup? Possible ideas are:
- Global Passive using cheap index funds / ETFs
- DIY High Yield mainly in UK blue chips
- High Yield investment trusts
I would be interested to know what the knowledgeable people on this forum would do in a similar position so I can compare that with the IFA's suggestion.
0
Comments
-
£120 in cash
£12,000? £120 000?
Is there any reason why she shouldn't DIY through Hargreaves Lansdown say, or Cavendish or Charles Stanley Direct etc - others here http://www.thisismoney.co.uk/money/investing/article-1718291/Pick-best-cheapest-investment-Isa-platform.html#axzz2JkjUw1ad
It would be possible to transfer her S&S ISAs to any of these in cash or in specie or both.
She could use equity income funds or Distribution funds - she might want to look at funds aiming more for capital growth - as she does not require income immediately she should use accumulation units.
Try Trustnet for research into funds and have a look at Hargreaves site for an overview.
Compare what she has with best in sector.0 -
-
oops, fixed that: £120k.
If only I could make £120 into £120,000 at the touch of a keyboard...:D0 -
Is there any reason why she shouldn't DIY through Hargreaves Lansdown say, or Cavendish or Charles Stanley Direct etc - others here http://www.thisismoney.co.uk/money/investing/article-1718291/Pick-best-cheapest-investment-Isa-platform.html#axzz2JkjUw1ad
No, absolutely not DIY is fine - I use Cavendish for my ISA and HL for my SIPP.
I think we need to work out an investment strategy before choosing a platform e.g. Cavendish might not be ideal for passive since it doesn't offer super cheap vanguard trackers. HL doesn't rebait any commission for funds so it could work out more expensive.0 -
jimmyjones wrote: »I think we need to work out an investment strategy before choosing a platform e.g. Cavendish might not be ideal for passive since it doesn't offer super cheap vanguard trackers. HL doesn't rebait any commission for funds so it could work out more expensive.
Can't see expenses being important in this within limits. You are talking over many years with no way of knowing future charges. Just look at recent supporters of various platforms who within months were being ripped off by charging changes and hit by transfer/exit fees
IMHO much more important is security. Security of the investment vehicles and security of platforms (web access/ telephone access).
As for portfolio build an IFA's input avoids you carrying the can if it goes wrong. I once gave my opinion to a family member - never again
I believe past performance is a good guide to future performance :beer:0 -
jimmyjones wrote: »I use Cavendish for my ISA and HL for my SIPP.
Then in your shoes I'd be tempted to use neither for your mother, but use a competitor instead. Then if any firm fails, or its computer system fails, you don't have both of you without access to your money at the same time. Eggs, baskets.Free the dunston one next time too.0 -
A couple of articles recently on RIT - one investing for income using shares and the other using investment trusts- DIY High Yield mainly in UK blue chips
- High Yield investment trusts
http://www.retirementinvestingtoday.com/2013/01/investing-for-income-via-investment.html
Also recommend a read of the 'Slow & Steady Steps..' book.0 -
Can't see expenses being important in this within limits. You are talking over many years with no way of knowing future charges. Just look at recent supporters of various platforms who within months were being ripped off by charging changes and hit by transfer/exit fees
I think I am just a little obsessed with expenses as a meticulous passive investor
As for portfolio build an IFA's input avoids you carrying the can if it goes wrong. I once gave my opinion to a family member - never again
That is an excellent point, I don't mind being accountable for my own money but not for other peoples.
I was just interested to see what strategies MSE members would use in the same position so I can sanity check the IFA's recommendation.
Do people bother with 100-age as a percentage in equities rule of thumb for example?0 -
jimmyjones wrote: »Do people bother with 100-age as a percentage in equities rule of thumb for example?
it's the 101-year-olds shorting equities for the first time that i feel sorry for ...
investing in equities, in order to protect the real value of your capital during your lifetime, does become less important as you get older ...
but ppl vary in whether they're also trying to preserve its value for their heirs, or rather to spend it all without running out too soon .... this is both a matter or priorities and of the resources available to them ...
ppl also vary in how comfortable they are holding equities (or cash) ...0 -
grey_gym_sock wrote: »it's the 101-year-olds shorting equities for the first time that i feel sorry for ...
:rotfl: And then forgetting why they're doing it :eek: (No offence meant to any 101 year old reading this)grey_gym_sock wrote: »investing in equities, in order to protect the real value of your capital during your lifetime, does become less important as you get older ...
ppl also vary in how comfortable they are holding equities (or cash) ...
Both true. Quite a conundrum for me
grey_gym_sock wrote: »but ppl vary in whether they're also trying to preserve its value for their heirs, or rather to spend it all without running out too soon .... this is both a matter or priorities and of the resources available to them ...
...
Precisely. Impossible for most to know how soon is 'too soon' though. Still, a much nicer dilemma than having to worry about whether you can pay the next fuel bill, or afford to eat properly 0
This discussion has been closed.
Confirm your email address to Create Threads and Reply
Categories
- All Categories
- 352.1K Banking & Borrowing
- 253.6K Reduce Debt & Boost Income
- 454.3K Spending & Discounts
- 245.2K Work, Benefits & Business
- 600.8K Mortgages, Homes & Bills
- 177.5K Life & Family
- 259K Travel & Transport
- 1.5M Hobbies & Leisure
- 16K Discuss & Feedback
- 37.7K Read-Only Boards