Investing for income?

Aged

What would be the options for investing a sum of say, £300,000 to provide an income without exposing the capital to too much risk? Would be interested to hear others' opinions.

PS assume ISA limit already used up.

Thrugelmir

What level of income are you looking to receive? The higher the yield the greater the risk.

Aged

What sort of income could such a sum generate in a low risk environment?

Linton

What do you mean by low risk? For absolute protection from depletion in capital you are more or less restricted to what the banks will pay in interest, or investing in gilts issued by the government with similar levels of interest.

However if you are prepared to accept fluctuations in capital you can get a lot more by investing in share and bond funds. By investing in a broad range of funds you could arrange to take around 4% annually sustainably. If you have no experience of investing a visit to a local IFA would be recommended for help in setting up an appropriate portfolio.

xylophone

For really low risk you use NS&I for the lot which will bring in around £3780 per annum gross - the interest rate is variable.

You might consider fixed term deposits, spreading the money around half a dozen accounts http://www.money.co.uk/savings-accounts.htm

Otherwise you consider stock market based investment - bond funds/equity income funds etc.

Or a mixture of all the above.

You might consider taking professional advice.

https://www.unbiased.co.uk/

tigerspill

xylophone wrote: »

For really low risk you use NS&I for the lot which will bring in around £3780 per annum gross - the interest rate is variable.

https://www.unbiased.co.uk/

Are there NS&I products available at the minute?

xylophone

Are there NS&I products available at the minute?

http://www.nsandi.com/savings

tigerspill

xylophone wrote: »

http://www.nsandi.com/savings

Thanks.
I was looking specifically for the index linked accounts which don't seem to be available currently.

ColdIron

ILSCs haven't been on sale since 2011, who knows when they will be again

Aged

I will take professional advice, but I'm new to all of this and I am trying to get my head round the basics so that I get maximum benefit from the advice when the time comes!

OK so, one of the suggestions above is NS&I products. I see from their website that they are presently offering income bonds with a rate of 1.25% gross (but obviously taxable) and that would generate a monthly income of about £300. Comparing this with keeping the cash in a bog standard easy access savings account, the advantages would be

a) All of the capital would be guaranteed as opposed to just £85,000

b) The income could be credited to my current account monthly

Would that seem reasonable?

jem16

Aged wrote: »

Would that seem reasonable?

The problem with putting £300k into such a low paying interest account is that you are going to lose a lot of the value due to inflation which is currently running higher than what you will get in interest. So eventually the spending power will seriously deplete.

As Linton says you would probably be best to see an IFA who could arrange for a portfolio that will give you income but also protect its value over the years.

You will, however, have to accept a bit of investment risk but otherwise you will suffer inflation/shortfall risk.