Advice needed

Crackle

My husband and I are in our late 50s and have just retired. We are both now drawing our occupational pensions and are 20% taxpayers although I do not reach the tax threshold. We own our own home and have no debts.

We seem to have got to this stage so quickly although we have spoke about it for years!.

We have around a third of our savings in cash Isas and NS&I index linked certificates. A further third in Santander 123 accounts (3), Nationwide Flexdirect and cash in easy access accounts as rainy day money. The last third is the part I keep coming back to. My husband worked for a large company and over the years bought shares in share save which have done very well. I know you should diversify but we think these shares could do well in the future.

Are we on the right track or do you think we have room for improvement? Advice greatly appreciated.

jimjames

If 33% of your wealth is tied up in the shares of one company I would certainly diversify that. They may do well as your husband expects but may also not. Maybe keep some but put the rest into something more of a balanced portfolio.

People who worked for Halifax or RBS thought their shares would do well but are now left with their savings destroyed so it can happen.

ChopperST

Welcome along and congrats on your retirement.

Having the shares in one company is high risk I would probably look at diversifying. Do they pay a dividend at all?

eskbanker

As you recognise, having a third of your entire savings in the shares of a single company is a high risk approach! Personally I'd favour selling at least some of the shares and investing in broader funds, etc, preferably with as much as possible within a S&S ISA wrapper....

bigadaj

Single company share investment is mad, my mil got hit badly with that from the lloyds debacle, look at bp etc

I'd be selling ten grand a year to be within cgt limits without any worries and the. Cycling that back into general funds within the annual isa limits.

kidmugsy

Crackle wrote: »

The last third is the part I keep coming back to. My husband worked for a large company and over the years bought shares in share save which have done very well. I know you should diversify but we think these shares could do well in the future.

Since it's a large company its prospects will be intensively studied by investment analysts. So there's every chance that its prospects are already "in the price". An exception might be if your husband's experience in the firm taught him, say, that the senior management is unusually competent, or that the workforce has been hired with unusual good judgement. But it's a whale of a gamble with one third of your money. Might it not be wiser to sell, say, three-quarters of those shares and invest the proceeds more widely?

pip895

The very first thing to do is sell ~£5640 of the shares and use that to open a SS ISA. There is plenty of advise on here already on possible funds to invest in in that.


As others have suggested probably worth taking your % in your husbands old company to no more than about 10% of your investments if you can do that without realising a capital gain.

atush

We are both now drawing our occupational pensions and are 20% taxpayers although I do not reach the tax threshold.

You can't be a 20% taxpayer if you don't. So if you get less than your PA, have no other income, you should notify HMRC to adjust your tax code. If you have unwrapped income, it should be put in your name so tax is deducted.

2, I agree you should sell some of your shares to diversify. And you can sell more if some are transferred into your name as you each get a CGT allowance.

Choose some sort of collective fund, or even one of the Vanguard series of funds. And invest within a S&S isa. You can each invest nearly 12K per year, or half that if you already used this year's ISA.

Crackle

Thank you all for your replies they confirm my thoughts that we have to sell some. The company shares do provide a dividend which is slightly below average although the company have promised increases over the next 2 years also their value has rocketed over the last couple of years.


As ATUSH kindly pointed out I am not a taxpayer as I only have a small pension and have put any other monies we have into my name to avoid paying tax.


Do you have any recommendations of who to go to for a SS Isa and what is meant by general funds. I have been following a threads on here about Vanguard LS 100 would this be a good place to start? I know I have to do the homework but I find it all very confusing!

atush

It sounds to me you don't have quite enough knowledge to DIY yet, so perhaps an IFA is in order?

If you do DIY, you need to do a bit of research.

For instance Vanguard LS 100 is 100% into equities which may (or may not) be more risk than you want and a different series (perhaps the 80:20) would be better for you?

And who you go to for DIY would depend on what type of funds you are going to have in your ISA. AS some like Hargreves L charge a fee for holding Vanguard.

ChopperST

As above.

You really need to decide how long you would be happy to tie the money up for as investing 100% in equities would be high risk if you want the money at easy access over the short to medium term.