No risk £100k investment

ericonabike

An elderly friend of the family has asked me to take a look at her finances. She is a widow, in her 80s, in her own home with no mortgage and is a non tax payer. She is looking to move into sheltered accommodation and wanted to understand her finances better. She manages very well on her income, and indeed has some £10k in her current account.

After spending an afternoon going through sheaves of letters and documents I worked out that she actually has around £100k, spread around a number of investment bonds, term shares and other financial instruments, none of which she understands. She basically accepted any advice given by her bank. This is causing her some distress as she feels it has all got out of control, and she wants to move what she has into things she understands - namely savings accounts!

I agreed to help, and am currently looking at splitting the money into
Santander 123 - £20k
Premium Bonds - £30k
5 year Vanquis Bond at 2.96% - £50k.

I appreciate that this may make less money than stocks and shares would, but feel the peace of mind it would give her is worth more than that. But I'd appreciate any alternative suggestions from forumites.

george4064

If she wants risk free, stick it all in NS&I Savings.


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

Glen_Clark

The title caught my eye as I know of no such thing as a 'no risk investment'
If you find one please let us know

jimjames

I certainly wouldn't bother with the premium bonds. Could you leave that £30k invested instead? Or increase Vanquis bond?

Sam_J12

Glen_Clark wrote: »

The title caught my eye as I know of no such thing as a 'no risk investment'
If you find one please let us know

What is the risk in NS&I?

Glen_Clark

Sam_J12 wrote: »

What is the risk in NS&I?

1) Inflation.
2) UK Government default. http://www.nationaldebtclock.co.uk/
contrary to their propaganda, borrowing to fuel house price 'growth' is not economic recovery. Housing costs are actually a drain on the productive side of the economy, as the current account deficit and national debt shows.

xylophone

I can't see any point in the premium bonds in this particular case.

If the lady in question is averse to investment risk, then cash deposits of one kind or another seems the way ahead.

A Santander 123 as her main account into which her pension(s) could be paid seems a good idea - presumably she has some direct debits which would earn her cash back?

With regard to NS&I, (very safe and government backed and no worries about FCSC protection) the income bonds pay gross and monthly - however, the interest rate at 1.26% is not scintillating.

http://www.thisismoney.co.uk/money/article-1583859/Best-savings-rates-General-savings-Internet-branch.html

A lot of information about various savings accounts above.

If she were willing and able to consider other current accounts to use as savings accounts, this might be another idea - for example, 3xBOS with Vantage funding each other by internal standing order would give her very little trouble - the interest could also be moved out by standing order to her current account.

A couple of Tesco current accounts might also be worth considering.

Glen_Clark

Don't think I would be looking at 5 year investments for someone in their 80's. My mum is in a similar situation, I've transferred all her money to instant access accounts. She gives most of it away to charities. Thats what gives her the most pleasure

Malthusian

Glen_Clark wrote:

Don't think I would be looking at 5 year investments for someone in their 80's.

Minor points, but

a) Most women in their 80s will live longer than 5 years, some a lot longer. Average remaining life expectancy drops below 5 at age 90 for women.

b) Many (though not all) fixed rate deposit bonds will pay out on the owner's death. (*edit* I checked - Vanquis is one of them.) So age is no obstacle - only the possibility of needing to access the money within 5 years. If you are certain the money will not be needed during the owner's lifetime, you should go for the longest term you can get for the higher return.

I would also largely concur with the OP with the exception of the Premium Bonds. (Not knowing anything about the existing investments I won't comment on the advisability of cashing them in.) If I'm helping a friend with their money and they don't want to invest in the stockmarket then it's neither my place nor in my interest to persuade them they should.

ericonabike

Thanks all - yes, may rethink the Premium Bonds, but the idea of perhaps having a big win quite appealed to her! She isn't internet enabled, and so multiple current accounts aren't really suitable. And yes, the Vanquis Bonds pay out on death, as well as being FSCS protected, so no risk there. Will talk the ideas through with her and see how she feels.

DiggerUK

As she is 80, then there is not a lot to condemn in what you plan. Just tell her to live long and prosper.

Some alternatives for you to consider.
Why risk Vanquis when you can get much of a same return in cash ISA's with different time frames. No need for any major windfall via PB's, would transfer to cash ISA's as and when..._