No risk £100k investment

JohnRo

ericonabike wrote: »

Thanks all - yes, may rethink the Premium Bonds, but the idea of perhaps having a big win quite appealed to her!

You can still have that chance of a big win with fewer premium bonds, the difference between having a few hundred and a few thousand premium bonds really isn't going to shift the odds meaningfully in terms of the big win over a decade or two.

I'd be far more interested in the immediate tangible benefits of earning interest or investment income for the bulk of the premium bond money. She could even use some of that income to purchase a lottery ticket or two, as well as other treats.

dunstonh

she actually has around £100k, spread around a number of investment bonds, term shares and other financial instruments, none of which she understands.

investment bonds are exempt from any means tested benefits. So, if she is going to be in receipt of those or already is, then be wary of changing them.

atush

Glen_Clark wrote: »

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

Bias

given those who I know who have lived past 90, i'd say yes- some money (not all or a large %) should be invested,

OP, you need to explain the idea of RISK. AS the only risk being considered is investment risk. This is an important risk.

However, it can be mitigated by diversification (ie say to the investor that investing in collective funds of hundreds/thousands of shares is less risky than single shares overall, and diversification between assets and countries multiplies this. If you dont invest in a single share/market/asset class you lave less exposure to investment risk.

Then there are other risks not considered/understood.

Risk of inflation. Sure right now there is little inflation . But it wont last. And even in the years after the crash there was some inflation. And if you get 1% on your savings, and inflation is more than that- you are losing money. Like a slow bleed. So every 100 you have is only worth 95 the next year etc.

Then there is shortfall risk. You may think you will only live to 80, but you may well make it a decade or more. So the money you have will not support your lifestyle if not invested to grow. esp if you live longer.

steelbru

You say she manages very well at the moment on her income, but she is looking to move into sheltered accommodation.
Will she continue to manage very well on her income once in sheltered accommodation, or will she need to start using up her savings to fund the sheltered accommodation ?
ie Are her current savings required to fund her life in sheltered accommodation, or are her savings most likely to remain untouched and be passed on to whoever she has decided in her will ?
If the former then agree on 100% caution, if the latter then you could perhaps persuade her to be more adventurous.

justme111

My guess would be sheltered accommodation was arranged not relying on those investments - as she does not understand them she would not have known what they can bring her so doubt would take them into account. Worth checking of course. If it is the case she probably could not care less if they diminish by 20% in 10 years due to inflation and her priority is no stress so explaining about diversification is likely to be not welcome. I looked at vanquis bond - it is basically a savings account -or did I get it wrong ? so surprising it will not be taken into account for means tested benefits

Glen_Clark

atush wrote: »

You may think you will only live to 80, but you may well make it a decade or more. So the money you have will not support your lifestyle if not invested to grow. esp if you live longer.

The OP said 'she manages very well on her income', which suggested to me she is not relying on her savings to support her lifestyle.

Glen_Clark

justme111 wrote: »

I looked at vanquis bond - it is basically a savings account -or did I get it wrong ? so surprising it will not be taken into account for means tested benefits

Dunstonh says 'investment bonds are exempt from any means tested benefits' - not the Vanquis bond. (which is news to me too)

xylophone

The OP said that the family friend lived in her own home and was mortgage free - perhaps she intends to sell her home to buy a sheltered accommodation property?

Linton

My experience with my elderly relatives is that by the time you get to your 80s absence of stress and hassle is far more important than a few % extra return. If she has the means to do what she wants to do then simply keep the money in an instant access account. I would disagree with the idea that you should advise her to invest for the benefit of those to whom she is leaving her money. Until she dies it's her money to be used in the way she is comfortable with.

atush

I never suggested the person in question should invest to provide for those left behind.

She may manage now, but would her income cover increased expenses due to failing health? This is what the few extra % i mentioned was for.