£50,000+ to invest in isa accounts

colsten

michaelm wrote: »

I agree about the 1|2|3 being a decent interest bearing account as, by depositing £20,000 of the money to my personal 1|2|3 account, it would bring me £600pm less tax

Sorry to dampen your expectations but £20,000 in a 123 account will provide you with max £666 gross a year in interest. Minus monthly charge and interest. Definitely not £600 a month.

bowlhead99

michaelm wrote: »

So on top of the initial £50,000 I will also be having my pension and benefits paid into a current account, around £1100 per month.

Is the £1100 a month also available for savings and investment or are you spending £1099 of it on living expenses? Or £1101 of it?

michaelm wrote: »

I want to get a small monthly income from this, just to top up our monthly incomings to what they were before I retired.

How much is that - the target figure which would top up the incomings to what they were before you retired?

In context, if you invest £50k to produce a conservative long term return of 4%, it's £2k a year or £167 a month before tax. You say you get pension and benefits of £1100 a month or about £13000 a year. So if you are trying to 'top up' to a £15,000 income it can probably work and if you are trying to top up to a £20,000 income it probably can't.

You say your benefits of £90 a fortnight (2300 a year) are nothing to lose sleep over, even though they are greater than the return you would get on 4% investment portfolio with your £50k windfall so it is difficult to make assumptions about what you would consider a 'good' return or a meaningful amount of income.

I'm not a risk taker, I never have been. So I want to do the most sensible thing possible with it.

Most people, before they try to understand anything about investments, consider themselves not to be a risk taker.

But if you simply put your money in a cash account you may find the real value of your £50k and the income you get from it will decline significantly in real terms due to inflation over the coming decades, which is a permanent loss and has to be considered a 'risk'.

If you invest it in a traditional portfolio of funds (shares and bonds and property etc) towards the conservative end of the scale, you should be able to get inflation beating returns for the long term but the paper value of your initial £50k investment would move up and down with the markets. Having something that can move down is a 'risk' but not if you don't forsee a need to 'cash out' and get your money back when it is down.

The 'most sensible thing possible' will mean lots of different things to different people. It might be to invest it to produce an income; or to invest it to produce a mixture of income and capital growth; or to save it in a bank account to produce a return lower than inflation in the long term but no risk of loss; or to keep most of it in a bank account and spend £5000 a year of it to supplement your cashflow back up to pre-retirement levels, even though that's only sustainable for a decade or so until it runs out.

At the moment, competition between the banks means that the interest rates on offer are actually above many people's personal inflation rate, so would be a sensible home for at least part of the cash if you are risk-averse, although this state of affairs can't last forever. But as a certain amount of bank interest is tax free every year it makes sense to take advantage of high rates when you can find them.

You mention "we're going to have a bit of financial security going in to our later years" so from the use of 'we' can we infer that you have a spouse or other half? If so, you will find with many banks that he/she can have a personal account, and you can have a joint account together, at the same time as you have your own personal account - so when you have your £20k maximum at Santander for 3% or £5k maximum at Lloyds for 4%, you can double or triple those limits for a couple really.

So, reading all the threads about terms and conditions of the different high interest bank accounts would be a start, because current accounts are all instant-access with no penalty when you decide what it is you want to invest in and take some of the money out to go and do that.