Investing a LARGE lump sum for income

Ark_Welder

Mr_Dudley wrote: »

So far I have steered well clear of bonds but maybe there will be some attractive bond oppotunities if prices continue to slide?

If you are considering direct holdings of bonds rather than funds then I strongly suggest that you look at using an advisory service if you are thinking of investing large amounts. Bonds can be a minefield even for the experienced investor due to all the different quirks they can have (that's the bonds with the quirks rather than the investors...usually...). You might pay more now by going that route rather than DIY, but you might end up losing a lot less in the long run). Plus, you might get access to bonds that are not listed on the LSE.

http://www.fixedincomeinvestor.co.uk/x/gencontent.html?title=How%20can%20I%20buy%20bonds?&ContentTitle=buy%20bonds

Both that site and the following are useful for more on bonds.

http://www.fixedincomeinvestments.org.uk

gadgetmind

You should be holding some fixed interest but it's not as tax efficient as dividend income so need to be ISA/SIPP sheltered if possible.

If you have a spouse, also make sure you use their personal allowance and 10% dividend tax brackets.

To be honest, if you get things right regards tax, and if you get the right equity/bond allocation, then I can't see you having any problems achieving the income you state.

Glen_Clark

gadgetmind wrote: »

To be honest

Thats the first time I have seen you write that Gadget. Does it mean the rest of the time you haven't been honest

gadgetmind

Glen_Clark wrote: »

Thats the first time I have seen you write that Gadget. Does it mean the rest of the time you haven't been honest

That's for me to know and you to merely speculate upon.

As it happens, I find honestly to be the best policy as my memory wouldn't be good enough to keep up with any significant rate of lying.

payless

OP could almost be a case study from a RDR exam from CII G70, CISI PCIAM or AIFA dip.

Aegis

vectistim wrote: »

Unless things have changed as far as I'm aware St James Place is just a rebrand of Allied Crowbar with a pretty brochure, which isn't quite the same as an IFA

Things haven't changed. They're still a slick marketing operation, but their salesmen can still only recommend a very restricted range of very expensive policies. In addition, as they are "vertically integrated" they seem to believe they can still pay rather large commissions to their salesforce without disclosing those amounts to the client.

They're about as far from IFAs as it's possible to get while still being regulated advisers in the FCA's eyes.

bigadaj

A chat with ifa would be useful, and utilising them for accessing truly clean classes of funds could make them cost neutral or beneficial for the relatively large sums involved.

The drawback is that IFAs would only provide advice on those investments they are authorised to do so, a reasonable exposure to property is very sensible given the sums the OP is looking at but an ifa wouldn't be able to recommend.

Allocating an amount of the low hundred thousands to an ifa investment would be good, and would allow an interesting comparison against other investments. Notwithstanding the above self education is always beneficial, and will help in challenging the ifa to justify the basis of any recommendations. The PI cover might come in useful as well!

quotememiserable

Have you thought of putting some in private debt? You can return around 10% although capital is at some risk. Not that you would put all your money in, but say £100k returning £10k per year so you can afford a few bad debts.

Aegis

bigadaj wrote: »

The drawback is that IFAs would only provide advice on those investments they are authorised to do so, a reasonable exposure to property is very sensible given the sums the OP is looking at but an ifa wouldn't be able to recommend.

Couple of points here:

• Property exposure can be gained through regulated investments, so it would certainly be possible to gain exposure to that asset class. Admittedly this is usually commercial property rather than residential, but property nevertheless
• An IFA can advise on the tax consequences of BTL properties if that's what the client wants
• The reason IFAs don't tend to get involved in the specifics of direct property investing is that such investments are effectively a client choosing to run a business. We don't get involved in the business decisions of our clients regardless of their chosen focus, but we can talk to them about managing their personal taxation regarding that business

Allocating an amount of the low hundred thousands to an ifa investment would be good, and would allow an interesting comparison against other investments. Notwithstanding the above self education is always beneficial, and will help in challenging the ifa to justify the basis of any recommendations. The PI cover might come in useful as well!

Absolutely agree with the idea of learning enough to challenge the adviser. Questions are always good, and a good adviser should be able to answer reasonable queries in a comprehensive manner.

Not sure I agree with the amount to allocate, but I'm hardly neutral on that point!

gadgetmind

Aegis wrote: »

Not sure I agree with the amount to allocate, but I'm hardly neutral on that point!

I guess it depends on how diverse an asset allocation the IFA would be looking to use.

An IFA wanted me to put my entire SIPP into a scheme that made mezzanine loans to property developers. I said I wouldn't be prepared to put more than 10% into an asset class such as that, which I think is a reasonable position.