HELP Investment guidance needed

dud52221

I'll try to keep this brief!... unfortunately my MIL has got to go into full time care she is self funding and will have capital of about £200k. Her pension less care fees leaves us with a shortfall of about £900 per month.

I went into my local A&L today and they tell me they can invest the money minimum of 5 years and it will pay about £840 per month without touching the original investment.

This has all come about a bit sudden so any pointers or suggestions would be gratefully received.

dunstonh

Forget the banks. Their own products are no good and the insurance companies they are linked to are expensive.

Go to an IFA. Your options here are immediate needs annuity or an investment producing income. Or a combination of the two.

Savings accounts are not going to be good enough so a small amount investment risk may be needed.

Aegis

dud52221 wrote: »

I'll try to keep this brief!... unfortunately my MIL has got to go into full time care she is self funding and will have capital of about £200k. Her pension less care fees leaves us with a shortfall of about £900 per month.

I went into my local A&L today and they tell me they can invest the money minimum of 5 years and it will pay about £840 per month without touching the original investment.

This has all come about a bit sudden so any pointers or suggestions would be gratefully received.

Even a savings account with 4.5% net (somewhere between basic and higher rate with the best savings account) you could get £9000 per year, so you should have to invest for 5 years to get that sort of monthly income!

As dunstonh says, go to an IFA and work out the best course of action for your needs.

dud52221

Excuse my ignorance but i take it that with an annuity you pay a lump sum upfront for a guaranteed income, if so its a case of weighing up the amount needed over the life expectancy. ie invest £60k but should ones health deteriorate and the invevitable happens within 2 years say,your £60k has gone or if the person lives another 10 years this type of plan would pay for itself, if that makes sense.

dunstonh

There are different types of annuities. Some with capital return on amounts unpaid. The immediate care annuity is paid gross with no tax to pay and is designed for this. Downside is that they can be expensive. Upside is that they are often the best way to pay for care. The worse the health, the better the immediate care annuity is priced. If health is still good, a purchase life annuity can be better.

If the investments at 5% net on a cautious spread can meet the required income level, then they can be considered instead as you may stand a better chance of holding onto capital than the annuity.

A savings account would just see the money dwindle down quickly and run out.

Most often, a combination can be a good idea. However, from experience, where the capital is high enough to pay the bills assuming 5% net p.a. investments are usually what the individuals go for due to capital being retained. I don't want to pigeon hole though as it is a mixture of personal view and individual circumstances as to what could be best.