Saving 750k for income and retirement

rabbit1234

I am looking for advice on how to invest £750k to fund my income and retirement. I am 50 with no outstanding mortgages. I have stopped work and want to live off this lump sum. Where is the best place/s to invest the money for a long term income and capital growth?

AnotherJoe

There are way too many dependencies to answer that. People would need to know your personal circumstances, your tax position, where that money currently is, your other finances (do you own a home? Are you paying a mortgage?) your attitude to risk, how much money you need and want to live on (two divergent things entirely), your health, etc etc etc. You could probably best do with chatting to an IFA who could I think give you a broad outline for a small fee and then for a larger one manage the money or advise who could manage it for you.

In your position, I'd get some advice about the stuff you need to understand and then since you aren't working, use your time to learn about the options and considerations so that even if you do decide to pay for someone to manage it, you understand what's going on.

Linton

The best place in my view is a broad range of investment funds to provide both short term income and long term security, with a significant amount of cash (eg 3 years living expenses) as a buffer for when the markets fall.

Exactly which funds and the appropriate wrappers (Sipp, ISA, Investment Bond ,taxable account etc) in which to hold them are the key problems. The best strategy will depend very much on your circumstances, needs, dependents if any, wishes (eg max income or leave some for your beneficiaries), other income, tax position, ability to cope with the ups and downs of the market etc etc. Also you will presumably need extra money from now until you receive your state pension - another complication. So you cant expect a simple and correct answer from an internet forum.

As a very rough guide £750K could provide a long term, hopefully inflation matching, income of £25K-£30K. Remember that you could easily live another 40+ years. So £750K sounds like a lot of money, but it wont enable you to spend the rest of your life in hedonistic luxury.

So I would strongly suggest that for that amount of money you would be foolish not to consult an independent professional. Whether you need a specialist in High Net Worth Individuals or whether the average high street IFA would regard this as standard business I couldnt say.

bigfreddiel

rabbit1234 wrote: »

I am looking for advice on how to invest £750k to fund my income and retirement. I am 50 with no outstanding mortgages. I have stopped work and want to live off this lump sum. Where is the best place/s to invest the money for a long term income and capital growth?

Instead of asking for advice, which cannot be given, I would be skiing board members, especially those that claim to be (I)FAs for details on how they actually handle their future financial wellbeing.

Cheers fj

atush

Why didnt you put some of that cash into pensions while you could?

Is any of it in ISAs?

bigfreddiel

atush wrote: »

Why didnt you put some of that cash into pensions while you could?

Is any of it in ISAs?

I think rabbit was asking what you would do, not asking for questions which in this case are based on no evidence that rabbit does not have a pension or an ISA.

Very odd assumption!

fj

bigfreddiel

Rabbit, looks like you're out of luck, no one really knows how to handle such a large sum, not to say I'm surprised, good luck anyway

fj

jimjames

bigfreddiel wrote: »

I think rabbit was asking what you would do, not asking for questions which in this case are based on no evidence that rabbit does not have a pension or an ISA.

Very odd assumption!

fj

It might actually help answer the question though. Is it pension money or something else

racing_blue

Here is what I hope I would do:

50% ns&i
50% total stock market tracker
rebalance annually

I would plan to spend the savings interest and the tracker dividends each year (£4K + £7k in 2015)

Assuming £11k not enough, I would also plan to draw down a % of the principal each year based on best-case life expectancy.

In reality I would probably go and do something far more complicated and stupid - that's human nature!

Linton

bigfreddiel wrote: »

Rabbit, looks like you're out of luck, no one really knows how to handle such a large sum, not to say I'm surprised, good luck anyway

fj

I am sure some people could come up with sensible strategies, but only on the basis of a lot more detailed information than it is practical to acquire in a forum.

Some general suggestions I can give which would apply to any set of circumstances:

1) Make a lifetime financial plan of what you want to achieve from your £750K. How much income do you need over time? Set up a very high level spreadsheet year by year model asuming say 2.5% inflation and 5% investment return and State Pension coming in at whatever age is right for you. Dont forget tax. Does a steady drawdown last your lifetme?- look on the ONS lifetime predictions for someone of your age/sex.

2) Dont look at it as a £750K lump sum that you must do one thing with. Split it into several quite distinct tranches with different focussed objectives. eg Short term safety: cash. Ongoing steady income: diversified income generating funds. Long term growth: diversified share based funds. Perhaps some amount of wealth preservation. You can move money between these tranches perhaps every year or two depending on economic circumstances.