Multiple Bank A/C Saving Scheme

caveman38

ceredigion wrote: »

Had two:coffee:and still waiting

OK, as I said before on the other forum. I have £100K to use to provide a pension for my wife. I had a 20 yr. plan for her to draw £5K + 3% each year for 20 years assuming I could get 3% return. This was where I was having a problem and have turned to this idea to achieve that. Unfortunately even if I haven't made mistakes, it is still a stupid number of accounts.

Plan removed as thread closed.

YorkshireBoy

You don't need any DDs on Nationwide FlexDirect (for interest).


You're missing out on another £15 a month from 3 x Halifax Reward accounts (unless you already have them?).


Are you depleting the Santander balances to feed the monthly savers or replenishing from income? If the former there will come a time when it's not cost effective due to the £10 a month fees.

caveman38

YorkshireBoy wrote: »

You don't need any DDs on Nationwide FlexDirect (for interest).


You're missing out on another £15 a month from 3 x Halifax Reward accounts (unless you already have them?).


Are you depleting the Santander balances to feed the monthly savers or replenishing from income? If the former there will come a time when it's not cost effective due to the £10 a month fees.

Thanks for info on NW DD's. I haven't included Halifax because I thought the number of accounts was getting extreme do you not agree?
I may replenish the Santander accounts with my money or use them to pay my utilities for cashback. But they are being used to feed the MS's and will reduce to nil but still generate £500 less fees plus any cashback.
Realistically could we open that many accounts as 60 year olds, one working and one retired with no credit history except options on my car?

YorkshireBoy

caveman38 wrote: »

Thanks for info on NW DD's.

Having said that, if you have some old current accounts lying around you can switch them (including 2 x DDs) for a decent incentive. Up to £400 or so between you.

I haven't included Halifax because I thought the number of accounts was getting extreme do you not agree?

I've had more sole accounts than you're proposing for two of you. That said, I did build up gradually, rather than quickly.

I may replenish the Santander accounts with my money or use them to pay my utilities for cashback. But they are being used to feed the MS's and will reduce to nil but still generate £500 less fees plus any cashback.

Seems like you've got that covered then.

Realistically could we open that many accounts as 60 year olds, one working and one retired with no credit history except options on my car?

I have no idea. I'm not an IFA(!), but there may/must be easier ways to generate an income...albeit with a little risk to capital?

ceredigion

caveman38 wrote: »

OK, as I said before on the other forum. I have £100K to use to provide a pension for my wife. I had a 20 yr. plan for her to draw £5K + 3% each year for 20 years assuming I could get 3% return. This was where I was having a problem and have turned to this idea to achieve that. Unfortunately even if I haven't made mistakes, it is still a stupid number of accounts.

You say it is a pension fund for your wife. But you are using accounts in your name and joint, so the fund must belong to both? If you are looking to set this up in the belief that she will survive you it is obviously flawed.

caveman38

ceredigion wrote: »

You say it is a pension fund for your wife. But you are using accounts in your name and joint, so the fund must belong to both? If you are looking to set this up in the belief that she will survive you it is obviously flawed.

I appreciate your comments. It is indeed my wife's money and I am happy to open accounts for her to use seeing as I will be managing it too. In the eyes of the law it is joint money sure but that's not a problem is it.
If I die first she will inherit the money in my accounts (which is hers anyway)
To be honest I cannot imagine these schemes running till I'm in my seventies and by then I will have to make other arrangements I know. It just keeps the fund topped up for how ever long it runs for.
Am I missing some legal hiccups or something else. Anyway I might live till my eighties.

Archi_Bald

caveman38 wrote: »

OK, as I said before on the other forum. I have £100K to use to provide a pension for my wife.

You wouldn't find any professional independent financial advisor who would recommend you keep £100K in cash for 20 years.

Have you, or more importantly, has your wife, actually considered to get proper professional advice? I would think you should as you don't seem to be happy with DIY investing.

Note there is an excellent thread somewhere by jimjames explaining how you can draw an income from income trusts. Hopefully he'll pop into this thread and can post the link - I thought I had it bookmarked but I haven't :-(

EDIT: just stumbled across it: https://forums.moneysavingexpert.com/discussion/5336097

caveman38

Archi_Bald wrote: »

You wouldn't find any professional independent financial advisor who would recommend you keep £100K in cash for 20 years.

Have you, or more importantly, has your wife, actually considered to get proper professional advice? I would think you should as you don't seem to be happy with DIY investing.

Note there is an excellent thread somewhere by jimjames explaining how you can draw an income from income trusts. Hopefully he'll pop into this thread and can post the link - I thought I had it bookmarked but I haven't :-(

EDIT: just stumbled across it: https://forums.moneysavingexpert.com/discussion/5336097

Thanks again for your thoughts. I would like to know why it is deemed to be wrong to keep that money as cash for 20 years where it is (in my opinion) safer than anywhere else. The sole purpose of the money is to provide a figure no more no less for a pension.
Granted it is a bit of a palaver and I may not yet be able to do it. Obviously annuities are simpler but the returns are only marginally better.
I admit I am not too comfortable with investing if you mean S&S. But I have traded on the market over the last 20 years and have made and lost money both in paper and CFD / SB on IG Index and found it stressful.
As suggested I could use an advisor and buy positions in investment trusts. But without sounding like a smart a**e most people would have made money over the last 10 years if they'd bought the position and locked it away.
If the market is overbought and due a correction then the opposite could happen. What would advisors be saying to their customers whom they bought for say in 1998 and then looked at that position again in 2008.
Obviously cash is not ambitious but gives me/her the guarantee that is necessary.
I would still welcome reasons why it is a poor decision but not on the basis that it could do so much better managed in a trust reliant on the market which I believe could equally deplete half her money.
If I could get 3.8% a year from now on it would give her £6K + 3% per yr. for 20 years drawing down or 7.5K + 3% per yr. for 15. and that is guaranteed (reliant on interest rates) better than any annuity unless we live till 90 in which case the state will most probably take all our assets for care fees.
The article you mention relates to a fund bought in 2011 whose value grew steadily by 20% over the next 5 years and returned a healthy dividend in that time. What would happen if someone bought a similar one in 2016 and the FTSE dipped from 7000 to say 5000 over 10 years with perhaps some of the companies failing to return a dividend. Those trusts wouldn't be advertising those figures would they.
I'd appreciate any other thoughts as if I can get those sort of figures in a simpler way, without a gamble I sure would.

TheTracker

Analysis of various markets, or simple balanced and diversified portfolios, since the 30s shows that equities beat bonds approx 60%, 80, 90, 99% of time over any 5, 10, 20, 30 year periods respectively. and bonds have typically beaten cash. An equity holding in the FTSE 100 as indicated in your graph is not a balanced portfolio. I'm maybe 5-10% invested in the FTSE 100.

Personally, I keep a heavier wodge of cash than many investors, but it's all part of my personal circumstances and an appropriate balance to the rest of my portfolio. You should either see an advisor or educate yourself on how any why the equity and bond markets work the way they do. Tim Hale's Smarter Investing is usually recommended on this forum as the Go To book for such purposes.

I wouldn't blanket say 100k in cash isn't appropriate, it may be fine in your circumstances but it is statistically unlikely.

AndyT678

caveman38 wrote: »

Thanks again for your thoughts. I would like to know why it is deemed to be wrong to keep that money as cash for 20 years where it is (in my opinion) safer than anywhere else.

As others have pointed out, if you want income then it's the income stream that matters not the capital value on any given day over the next 20 years and there are plenty of companies out there with decades long histories of dividend payments through all sorts of economic ups and downs.

Having said that I get that you're risk averse and you're right that with investing comes capital risk but have you identified and properly considered all the other risks that you are planning to take on?

Your plan at the moment depends on exploiting promotional interest rates. There could easily be a shake up in the banking system resulting in these being withdrawn. There's a lot of pressure on banks to reduce fees and if they do that they may not have the marketing budget to support promotional deals in the future. What's your plan in that scenario?

Your plan also requires a withdrawal of capital over time effectively a guaranteed capital depletion with no prospect of any growth, and as the capital depletes so will the income that it's generating. Your 20 year plan of £5k out + 3% interest means that you'll get £8k to start with but that will just go down and down each year as the capital declines. At the same time its purchasing power in real terms will also decrease as inflation eats away at its value. You seem to be locking in diminishing returns over time.

I genuinely don't know what the right answer is but I'd suggest spending a small amount of money on professional advice now could save you big money in the longer term.