Advice, please, on investing £46,000 this year

manninman

I’d be grateful for advice on how to use/invest some £46,000 that will be coming to me during September by way of matured bonds, ISAs etc. I will have a further £18,000 approx to invest next year, and then £62,000 during 2017. I’d like to have some sort of plan – or, at least, a steer --- for using this money, rather than sitting down each year and taking three separate and perhaps unrelated decisions. These funds are in addition to my regular income. This latter is about £26,000 p.a. and derives from state and work pensions and an annuity. This is enough for my regular outgoings.

I am 72 years of age now and retired. My wife, whose income is about the same as mine, has also recently retired with a state and an NHS pension and the income from a decent investment portfolio that she inherited from her mother who died some 20 years ago. So, our joint income is getting on for £50,000. Our house is fully paid for and worth probably about £900,000; we have no debts. We do not want to move from our home. We have no children, but do have a handful of nephews, nieces, godchildren and children of friends, whom we would like to help with funding for education, travel and perhaps even buying their homes.

I am in excellent health (as is my wife) and live what I think is a healthy and active lifestyle. With luck, we’ll both be around for a bit. I am looking for an investment arrangement that would need to be shorter [a five- to seven-year horizon??] than the longer term that younger investors might have in mind. I suppose I’d like an idea that would generate some additional income to finance holidays and a decent cultural life, while leaving something behind for the coming generations … perhaps a 50:50 split between income and future growth. I’d be willing to take a bit of a risk with part of the investment.

I have already bought £20,000 of 65+ bonds from the NS&I. I was thinking about buying a S&S ISA – I bought an ISA last year in Woodford’s new fund. Should I repeat that this year? Either way, that leaves money over and I want also to bear in mind the money that will become available in 2016 and 2017, as outlined above.

I have seen many useful tips already in this forum; I’d be grateful for any further suggestions that might be appropriate in my case.

Thanks in advance.

C_Mababejive

I think in your boots i would just sit back and smile. I wouldnt invest that money, i would save it at the best possible rate. I think any investment at the moment would be subject to unacceptable volatility and short term loss.

Pincher

manninman wrote: »

I have seen many useful tips already in this forum; I’d be grateful for any further suggestions that might be appropriate in my case.

Go on holiday, check out the property market in Europe.


Radio 4's YouandYours did a segment on "pensioner pockets".
Help your grand children buy a house near you.

Eco_Miser

First a technicality: you don't buy an ISA, you buy stuff, like Woodford's fund in an ISA, which is a tax-protection wrapper. You can usually add more money to the same ISA and buy more of the same, or something completely different.

As for what to put in the wrapper, and what to do with the rest of the money, apart from spending it, have you considered Investment Trusts? http://monevator.com/investment-trust-retirement-income/ Some have maintained a rising income for decades.

kidmugsy

(i) look into deferring your State Retirement Pensions - particularly your wife's since she seems to be younger. You could live off some of your capital meantime. When you restart, you get an extra 10.4% on the pension for each year of deferral - a remarkable bargain, especially since it's largely heritable. Extra pension income is wonderful as you age because it takes no management and is harder to steal than capital.
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/372517/dwp024-102014.pdf

(ii) Both of you should fill up your entitlement each tax year to pension contributions - up to your annual earnings, or £3600 p.a. gross if larger. You can do this until you are 75. It's money put by for the future and if you don't use it you can leave it tax-efficiently to your nephews, nieces etc.


(iii) Also look at the new "pension top-ups" available in the Autumn through until April 2017. They are also called Class 3A National Insurance Contributions. They are not such stunning value as (i), but decent value, and share many of the advantages.

(iv) Remember that you can each gift £3k per tax year exempt from Inheritance Tax (£6k if you haven't used the previous year's allowance).

(v) You can also make regular gifts out of surplus income free of IHT, another advantage of (i) and (iii).

After that, if you have already used interest-bearing current accounts to the max, you could look at ISAs. I'm leery of S&S ISAs at the moment because asset prices have been so inflated by QE (especially in the US) but you can make your own guess about market timing. Remember that ISAs have the wonderful new feature that the wrapper is now available for your spouse to inherit on your death, so money can be kept, or returned to, a tax wrapper until second death.

xylophone

Give with warm hands - are any of your relatives, godchildren etc young enough to have CTF/JISA? You could contribute.

AndyT678

manninman wrote: »

I am 72 years of age now and retired. We have no children

Pincher wrote: »

Help your grand children buy a house near you.

I realise that medical technology is constantly improving but I think that particular ship might have sailed some time ago

moneyfoolish

I'm only a couple of years younger than yourself and am in a pretty similar position re income, mortgage (or lack of!) although the value of our house in worth just less half of yours. We have all of our money in high interest current accounts, Fixed Cash ISAs and NSI Pensioner Bonds plus Index Linked Bonds. I have a large ISA (around £46,000) terminating in September but although I've decided not to invest in equities or bonds at my age I may well risk some of the money in P2Ps to improve on the current low Cash ISA rates. If I do this I won't be investing in anything over 3 years and probably most would be for 1 year at a time.

Pincher

AndyT678 wrote: »

I realise that medical technology is constantly improving but I think that particular ship might have sailed some time ago

Blooper well spotted, hence the sound scientific practice of peer review.


Alas, where there's a will, there's a way.


In China, many parents who lost their only child, a product of the one child policy, are so desperate that they are resorting to having a baby at extreme old age. A couple of weeks ago, there was a documentary segment on a 60ish old woman with twins. She claimed she got a tip, to drink goats milk I think, but obviously she must have paid for some fertility treatment.