Can you help?

Dt59

Hi, I am rapidly approaching retirement and have 50000 to invest. To many this is not a vast amount, but to me it carries a heavy burden, as it is my Lump Sum from my pension, and cannot afford to waste it. Ideally i would like to invest it for 5 years as this will take me to my 60th birthday. I have never invested money before, and to be honest I have know idea where to start. I have considered a few options, but looking for any advice from seasoned savers/investors, however here's what I have considered so far.
1) invest £2500 into nationwide Flex Account ( the max allowed) and this gives 5% interest! then fill 2 ISAs (wife&I) to the max, giving a return of 2.2% interest.


2) invest 50000 into premium bonds



3) buy a house for £50000, which would give me a rental of £395.00 a month, however in know I would be liable for tax, Letting Agent fees £40.00 a month + insurance which is around £23.00 a month. (I must stress that houses in the North East are still available for £50000)


Any other suggestions would be most welcome


Regards
Dt59

quotememiserable

Have you considered peer to peer lending? My thin cats account returns 10% (before tax).

Houses can be hard work, and there are all sorts of costs in the first year. You're bound to need some renovation, electric tests and stuff to let it, and it will take a while to find a tennant. It took me nearly a year before I started to get any meaningful income.

bowlhead99

Dt59 wrote: »

Any other suggestions would be most welcome

With the house you are probably missing all the costs of maintenance, and the fact that it will stand empty for periods of time between tenancies, and the fact that the tenants might cause thousands of pounds of damage over and above their security deposit and the months rent that were lost when chose not to pay you before you were finally able to get them evicted.

Do you actually have any experience of being a landlord? I am guessing not as you have not referred to buying 'another' house to rent. For most people, buying one property as their retirement fund would be too much 'eggs in one basket'. The only remotely sensible approach to managing your risk in your new profession as a landlord would be to split the 50k as down-payments on multiple properties supported by mortgages, having left back a reasonable chunk (£10k+) as a floating fund for renovations, to cover the mortgage during voids etc. This is less 'all in one basket' but introduces further risk through the debt involved.

You say you are 5 years from 60. So 55 and only just in the position where you can access the lump sum. And the options involving cash savings or premium bonds only deliver 1-3 percent per year, and presumably you can't live on the resulting income of £500-£1500 per year. If you spent any of the proceeds rather than adding it to your pot, you would be allowing the 50k to be eaten away by inflation.

You say you are looking to invest until 60? What happens then - do you need it back to spend on something?

So, to recap, age 55 and only just in the position where you can access the lump sum. But the returns from the lump sum, if you don't want to risk the capital, are tiny and at £1k a year will not make much difference to your lifestyle (I assume). So, my suggestion is to not take the lump sum.

PennyForThem_2

have you considered asking on the pensions forum? You will need to give age and possibly other relevant details.

xylophone

Have you considered 2 TSB Classic Plus for yourself, 2 for your wife and two joint? This would take care of £12000 at a gross rate of 5%. These can be simply internally funded by matched standing orders.

You and your wife could each have a Nationwide Flexdirect and also a joint account - remember that the 5% on these accounts only lasts for a year and that you have to fiddle about a bit with the external funding requirement. This would take care of another £7500.

You might wish to consider a joint Santander 123 accountmaking sure that your power, water, council tax etc DDs are taken from it and that it is funded as required.

You might each wish to consider using a stocks and shares ISA where you would invest for income.

https://forums.moneysavingexpert.com/discussion/comment/65422041#Comment_65422041

jimjames

You've mentioned investing but only the BTL option is actually an investment, the rest are savings.

Is there a reason for only holding for 5 years? If income is important then that wouldn't suddenly change age 60.

It would be worth looking at real investments using a pension or S&S ISA to give a better long term return.