£100K to invest

neelpeel

My parents are looking for somewhere to invest after an imminent house sale. They are retired (65 & 70), but only have state pension and some modest savings that they are currently living off.
They will need access to say £20k of the £100 within the next 3 years. Otherwise it could be locked away without access.
They are quite risk averse and would not do internet banking.
At this point they intend to put all in premium bonds and I'm assuming they can do better!
Any advice appreciated.

dunstonh

At this point they intend to put all in premium bonds and I'm assuming they can do better!

Ask them if they would put the money in a savings account and then use the interest it generates to buy scratchcards. If they say no, then let them know that is effectively what they are doing with premium bonds.

You say they are risk averse but are they aware of all risks are just looking at a couple of risks? You have investment risk with the main options but other options which many consider risk free do come with inflation risk and shortfall risk.

What needs do they have with the £80k? (as £20k is clearly suited to savings accounts)

atush

I agree, you need to give them a crash course on risk. In that cash (esp if they wont do internet banking so the new current accounts are no good) wont beat inflation, and they will be losing buying power each year.

If they want access to income, but not capital, then I would suggest they try S&S isas using some good general investment trusts that yield around 4%. they take the income tax free each year, and the capital can go up and down with the markets. In many of these trusts, dividends have been rising each year no matter what the markets do for decades. So maybe have them put 50-60K into these this year and next between them, and the rest in cash savings the best rate they can find (incl term savings as they dont need access).

One of the best things you can do for them, is teach them (or find local class) for silver surfers as internet use for the older generation can help them to have fun with hobbies, keep in contact with family, and find better deals for themselves. Not have to go into town to the bank when the weather is treacherous? Who knows, they could even take up internet banking lol.

kidmugsy

We do internet banking but also spread our risks by keeping one account that we operate by phone and two savings accounts that use passbooks. Similarly we use two different credit cards.

robatwork

kidmugsy wrote: »

We do internet banking but also spread our risks by keeping one account that we operate by phone and two savings accounts that use passbooks. Similarly we use two different credit cards.

I understand why some people don't want to do internet banking - but what do you mean "spread our risks" above?

Are you implying that banks with an internet option are somehow at more risk of collapse? Or that you are more at risk of fraud having an internet banking option?

bigbloke45

I think you need to help them list their objectives, starting with the most important etc. Once they've done this, then look at their risk profile before moving on to a strategy to try and meet their objectives. It may be that their risk profile changes depending upon high up the list of objectives each goal is.

xylophone

My parents are looking for somewhere to invest after an imminent house sale. They are retired (65 & 70), but only have state pension and some modest savings that they are currently living off.

And your father's small private pension?

Is there a Santander branch locally? A joint account into which they could transfer the £20,000 might suit. Ideally they would transfer the cashback qualifying DDs to this account. They would deposit the £500 every month, leave in enough of that to cover their DDs and use the balance for their usual spending.

They might perhaps use their ISA allowances to open an S&S ISA each - they might choose an equity income fund to supplement their income.

https://www.hl.co.uk/free-guides/equity-income

Perhaps a one year bond each and then consider using the stocks and shares ISA again in the new tax year?

http://www.thisismoney.co.uk/money/article-1621507/Best-savings-rates-Fixed-rate-accounts.html

Pincher

They can have one Santander 123 each, which takes care of £40k.

Sadly, they have just missed the 65+ Pension Bond, yet again £20k each.

neelpeel

Firstly, sorry to post and run. Been busy over last few days.
Thanks for all the comments though. To answer some questions...

They do use internet, etc but they do not trust internet banking. I've seen this with many older folks and I don't think I'll change their mind.

'Capital that will go up and down with the markets' - I fear they will not be interested in this. So rules out S&S ISAs and the like. They are looking for a safe bet with best interest rates possible, even if it means tying up most of the cash for a while. ...and I know this contradicts their plans of putting into premium bonds - have tried to explain countless times.

I'll look into Santander 123 for £40k. What about the other £60??

xylophone

A joint Santander + 2 sole for @£60,000.

There are the other high interest current accounts as well.

atush

neelpeel wrote: »

Firstly, sorry to post and run. Been busy over last few days.
Thanks for all the comments though. To answer some questions...

They do use internet, etc but they do not trust internet banking. I've seen this with many older folks and I don't think I'll change their mind.

'Capital that will go up and down with the markets' - I fear they will not be interested in this. So rules out S&S ISAs and the like. They are looking for a safe bet with best interest rates possible, even if it means tying up most of the cash for a while. ...and I know this contradicts their plans of putting into premium bonds - have tried to explain countless times.

I'll look into Santander 123 for £40k. What about the other £60??

Which is why I said you have to explain risk to them> You and they are talking investment risk.

if they use cash, they are guaranteed to run afoul of both shortfall risk and inflation risk if they use zero equities.

No one is saying to bet the farm. we are saying 25-50% of it should have some exposure to equities for both income and to balance risk.