Where's Best to See £3500pa From £70k

portlandboy

Hi,

My wife and I have a £70k investment with Scottish Widows that we hoped would generate about £300 per month or £3500 per year. It did that in the first year or so, but even though we have never withdrawn the capital or the interest, this is now under-performing for us.

We are both non-tax payers and we are happy to invest this money over a fairly long term, but with the option of drawing on some of the interest occasionally, always leaving the initial £70k to grow.

I'm not adverse to the idea of peer-to-peer systems as long as they have a lenders guarantee, though my wife is a little more cautious about this than me.

Any ideas on where we should consider putting this investment please?

Thanks.

jimjames

What other cash do you have? What is it invested in at the moment?

You can get 4% on equity income funds which would be close to the 5% you are after but the capital is at risk - as it may well already be with your existing investment.

eskbanker

'Interest' is usually associated with savings rather than investments - your SW product is presumably some form of actual investment product that may grow over time (but won't be guaranteed to do so nor to protect the capital).

If you're happy to take a long-term view, you shouldn't be seeking to change tack every time an investment under-performs (against what criteria by the way?) - the nature of such products is that performance is inevitably volatile so you should expect that there will be a mix of good years and bad ones rather than a predictable x% per year.

portlandboy

It's a unit-linked Investment Portfolio Bond. It has an element of life cover with it, though that is not the primary concern of the investment. I would need to check to be sure, but I think it is a capital protected bond.

When I say it has under-performed for us, I am relating only to our own target of £300 per month. In the last year the return has been about 2.15%, giving us about £1630 in interest, on last years value of around £75k.
After the up front charges were taken from the £70k, we saw it go up by about £7,000 in the first 2 years, so this year is considerably down and I wondered if it was still in the best place or whetehr it should be moved.

portlandboy

jimjames wrote: »

What other cash do you have? What is it invested in at the moment?

You can get 4% on equity income funds which would be close to the 5% you are after but the capital is at risk - as it may well already be with your existing investment.

Currently we have the maximum £5,000 in the Club Lloyds and about £7500 each in stocks & shares ISA's, £15,000 in an NS&I FTSE 100 linked bond, I have shares in a few companies that I have bought over recent years, plus an amount in an easy-access account.

Our situation is pretty good really. Like a lot of people it just bugs me that all the time we were paying the mortgage off the rates were really high but now that's paid, the rates are so low.

Glen_Clark

portlandboy wrote: »

it just bugs me that all the time we were paying the mortgage off the rates were really high but now that's paid, the rates are so low.

You need to subtract the rate of inflation from the rate of interest to get a true figure. When you subtract house price inflation from the interest rates you paid, I think you will see you have been very lucky indeed..

Thrugelmir

Life assurance will come at a cost to.

talexuser

Bear in mind that Scottish Widows equity income funds are at the very bottom of the Sanlam Income Study "Black List" of seriously underperforming UK funds, so do not engender a fair amount of confidence in the company's ability to provide value for your investments.