Inheritance

williamc10

Hi, I am inheriting approx. 250k and I currently earn approx 25k a year. The problem with investments as I see it is they tie you in, so you can't release any money you as need it. Is there a way to invest 250k to get a good return, but I can also dip into for cash as required? Apologies for the naïve question!
I've been reading about companies like Vanguard who invest in the stock market on your behalf. Would a stock market investment be likely to yield approx. 10% and therefore cover 25k a year?

xylophone

You might well benefit from the advice of an independent financial adviser who will look at your short and long term goals and advise you accordingly.

Phone a few and see what they have to offer and find out about how they charge.

https://www.unbiased.co.uk/

For the short term, while you explore your options, you could safely deposit the whole sum in NS&I income bonds.

http://www.nsandi.com/our-products

Interest is paid gross and monthly, so you will need to report the interest earned to HMRC.

Stubod

10% !!!!!..I wish.....but then some years you may get more than 10%...but then again some years you may loose 10% ......probably more like 4% on average..and don't forget the impact of inflation over time. There are companies that will let you invest and provide an income, you need to decide what you want over the long term, and this is dependent on your personal requirements and current status/ ie do you own a house?..(mortgage)...... do you want to?...how much do you need to live off..... do you have a pension..... do you have any debts?..do you have any dependents?..how old are you..etc...etc....

Linton

You could always split it in two. For example - £50K in cash for easy access and £200 long term investment. It's strange, people always seem to assume that they must do the same thing with all their money. For that amount of money you should be considering advice from an IFA.

For long term income matching inflation you can fairly safely draw down 3.5-4% of your initial pot which with a bit of thought could be tax free. This would require the use of funds invvesting in the global stock markets and/or a focus on UK shares paying dividends.

.

Sam_J12

A 10% return has been achievable in the past but requires that you reinvest all dividends and income from the investment in order to achieve the compound interest effect, and not spend any of the income. For example, the S&P 500 (the main American stock index) has achieved just over 10% since its inception, but this involves fairly long periods of low return and significant periods of much higher returns and never taking any income from the investment. In the long term, I see no particular reason that a 10% return is not achievable.

However, there are serious caveats. If you go down the route of investing in equities, then you have to be prepared to see your investment go down hugely but still stick it out and not sell. My hugely I mean see your £250k investment be worth less than £100k within 5 years. If you think you would lose your nerve in this type of situation and sell then you should avoid investing large amounts in stocks. You only get the large long term returns if you avoid selling in bad periods (and preferably invest more in bad periods).

I guess my main advice is to decide what you want to use the money for. Money you want to spend on buying a home in the short to medium future should be invested cautiously, while money you want for your retirement should be invested aggressively for maximum returns (assuming you are young and have a long time until retirement). Research what you are doing and be confident in what you are investing in, and crucially have a plan that you stick to through bad times as well as good. The majority of investors in equities get nowhere near the average return of stock markets because they act emotionally and sell at the wrong times.

kidmugsy

Sam_J12 wrote: »

I guess my main advice is to decide what you want to use the money for.

Zactly. Know thy purpose!

atush

Split your money.

Pay off debt.

Keep 3-12 months outgoings in cash (the latter or mroe if investing the rest as then you dont have to sell investments than have fallen recently).

Buy a place to live if you havent already.

Open a pension if you dont have one, boost yours if you do.

Fill S&S isas.

If you keep enough as cash, you dont have to worry about investments falling in general (if you dont invest in single shaes but in a diverfied porfolio of collective funds).

When markets fall, use your cash. when they rise, sell investments to spend.