How risk averse are you?

enthusiasticsaver

Oh and I recently saw an IFA as OH is retiring in October and will have substantial lump sum to invest from his pension. We both filled out separate risk profiles which IFA sent us and have both come out as cautious. I am therefore wondering what he will suggest we invest in as surely most investments he deals with has an element of risk.

At present our savings are split 50% current accounts, regular savers, 30% stocks and shares isa with vanguard lifestrategy 60 and 20% fixed term cash isas.

For those who naturally lean towards cautious what percentage of your savings do you invest rather than save?

lvader

I'm quite cautious, I'm really concerned that gilts will crash and inflation will kick in so I'm about 85% in shares.

enthusiasticsaver

lvader wrote: »

I'm quite cautious, I'm really concerned that gilts will crash and inflation will kick in so I'm about 85% in shares.

Interesting. I would say 85% in equities would be risky? I get what you say about inflation though.

economic

equities should prove to be safer then bonds in due time. bonds have peaked. equities will be the new safe haven once bonds start to collapse.

[Deleted User]

Interested in this thread as I'm thinking about retiring this year as well and currently have no S & S investments although I realise that I'll probably need to

AnotherJoe

enthusiasticsaver wrote: »

Oh and I recently saw an IFA as OH is retiring in October and will have substantial lump sum to invest from his pension. We both filled out separate risk profiles which IFA sent us and have both come out as cautious. I am therefore wondering what he will suggest we invest in as surely most investments he deals with has an element of risk.

At present our savings are split 50% current accounts, regular savers, 30% stocks and shares isa with vanguard lifestrategy 60 and 20% fixed term cash isas.

For those who naturally lean towards cautious what percentage of your savings do you invest rather than save?

Hopefully the IFA is not going to try and sell you anything other than his services, in which case it's irrelevant what products he "deals in" because he'd suggest something that fitted your profile. Which I'd suggest would be an annuity (see below).


I'd actually say you were far beyond cautious into petrified ! Your cash is actually 70% and of the remaining 30% only 60% is stocks. So you are 82% cash and bonds, which might suit someone who is just about to buy an annuity but is a lousy mix if you've kept it like this for say the past 30 years or so, you've missed out massively on growth.

In your position you should probably buy an annuity now and be done with it because the returns from cash aren't going to match an annuity and the only other way of getting better would be far more investments than you have now and far more than you are comfortable with.

enthusiasticsaver

AnotherJoe wrote: »

Hopefully the IFA is not going to try and sell you anything other than his services, in which case it's irrelevant what products he "deals in" because he'd suggest something that fitted your profile. Which I'd suggest would be an annuity (see below).


I'd actually say you were far beyond cautious into petrified ! Your cash is actually 70% and of the remaining 30% only 60% is stocks. So you are 82% cash and bonds, which might suit someone who is just about to buy an annuity but is a lousy mix if you've kept it like this for say the past 30 years or so, you've missed out massively on growth.

In your position you should probably buy an annuity now and be done with it because the returns from cash aren't going to match an annuity and the only other way of getting better would be far more investments than you have now and far more than you are comfortable with.

Actually the cash has only been invested for the last few years, not 30 and we have a lot invested in our pensions too. The cash is specifically
to provide a additional fund to subsidise pensions in the next few years. Buying an annuity with my husbands lump sum is something we may go for though once we have discussed our options with an IFA.

EdGasket

Not enough for my own good!

Flobberchops

Well, I haven't lost the shirt off my back yet, but there's still time!

AnotherJoe

enthusiasticsaver wrote: »

Actually the cash has only been invested for the last few years, not 30 and we have a lot invested in our pensions too. The cash is specifically
to provide a additional fund to subsidise pensions in the next few years. Buying an annuity with my husbands lump sum is something we may go for though once we have discussed our options with an IFA.

Well it always helps to give a full picture when asking for advice !

i stand by my comment that with that much cash and a seeming reluctance to invest in shares, that an annuity would give you the best payback for such a cautious outlook.

Your opening assumption was that he'd recommend something to invest in but I would hope he'd recommend an approach rather than jump into investing. Do you need investing or do you need an income ?

enthusiasticsaver

AnotherJoe wrote: »

Well it always helps to give a full picture when asking for advice !

i stand by my comment that with that much cash and a seeming reluctance to invest in shares, that an annuity would give you the best payback for such a cautious outlook.

Your opening assumption was that he'd recommend something to invest in but I would hope he'd recommend an approach rather than jump into investing. Do you need investing or do you need an income ?

My husband is taking early retirement so we will need an income. I will read up more about annuities. We have had quotes from my husbands pension provider but it just seems to be a minefield and we don't really have enough knowledge to make informed decision on our options hence us going to an IFA. Is an annuity risk free then or can the income go up and down? We don't really want to invest as our income is dropping by 30% once OH retires. Based on quotes from pension provider though we will have enough income from pension plus substantial lump sum and we just need to see if IFA can recommend any other options than just taking what pension provider is offering.