Retirement pot 100k or safe 50k

dprice

Hi,

Just looking for some advice for a recently retired family member please.
Current financial setup is below with no mortgage or outstanding debt.One person living in property.

ISA Halifax - Needs moving as rate due to drop 24k
Premium Bonds 12k
Other saving – Need moving as rate poor 2k

Now retired;

Net Take home – 1.6k
Lump Sum – 100k

Proposal for redistribution of sums below.

Add 15k to ISA and move to Barclays at 2.02% fixed for 2 years. Total 39k
Open 2 x TSB accounts at 2k each – Total 4k.
Add 15k to Premium Bonds - Total 27k
Potentially open 1 Santander 123 account – Total 20k.

This would leave a pot of roughly 50k to invest.Investment wouldn’t need to be touched as can always draw down from premium bonds if required.Investment risk would be low risk investment with any dividends reinvested.

• Can anyone advise of a better strategy for growth? Bearing in mind the risk level is low.
• Can anyone advise of where you would look to invest the 50k? again with a low risk level. Happy for the investment to grow over time with the inevitable ups and downs.
• Is this approach far too conservative?

Many thanks for your advice.

edinburgher

No premium bonds if risk tolerance is low, but you need some growth, returns are terrible.

Premium Bonds Calculator

Linton

What is the money for? Income? Emergencies? Building a pot for the kids to inherit? Are timescales relevant?

One needs a clear objective with timescales for ones investments to devise an appropriate strategy. For example if the recent retiree has a large guaranteed income beyond his/her needs, has no-one waiting for an inheritance, and is uninterested or nervous about investing in shares why not keep everything in cash.

dprice

In short, kids have been given a hand to get on the ladder.


Emergencies are covered by money held in cash as mentioned elsewhere, if/as required.


View really is to generate more income/saving as oppose leaving in cash and therefore potentially losing value year on year. No interest in using the money in the short or medium term.

Linton

dprice wrote: »

In short, kids have been given a hand to get on the ladder.


Emergencies are covered by money held in cash as mentioned elsewhere, if/as required.


View really is to generate more income/saving as oppose leaving in cash and therefore potentially losing value year on year. No interest in using the money in the short or medium term.

A possible strategy just looking at steady cash generation from the £100K, leaving the existing cash savings for emergencies etc:

We can aim for say 4%/year taken as cash.

a) Ensure 3 years income (£12K) is safe, interest rate not too important: £12K. Could look for a series of 3 year £4K fixed rate deposit accounts, one maturing each year. Rates not too good at the moment but hopefully they will improve.

b) 5 years worth (£20K) of income held as a range of bonds, possibly including some equity income funds. At the moment in these uncertain times I am using Strategic Bond funds where the manager chooses from a wide range of options. Income could be reinvested or transferred to cash pool for subsequent rebalancing.

c) Remaining money (£68K) invested in equity, perhaps mainly in a global fund with a bit of spice.

Each year you would take out £4K cash and rebalance to keep the £12K and £20K tranches constant.

kidmugsy

Read the reviews of this lot and consider whether they would appeal as a cautious investment.
http://www.ruffer.co.uk/#ruffer/who-we-are/review-archive


And read this lot's reports and quarterly reports
http://www.patplc.co.uk

Eco_Miser

You mentioned TSB and Santander, don't forget Lloyds Club, £5000 @4% plus a regular saver £400 pm also @ 4%.