Investment or property to gain £1K per month

bails41

I'm new to posting, so please be gentle with me if I'm in the wrong forum!
We about to cash-in on our property which will leave us with around £400K surplus cash.
My wife wants to retire due to ill health, although it's not that bad as to be certified unable to work etc and therefore claim any benefits.
Therefore, we're looking to trying to generate at least £1 - £1.2K per month income from this surplus.
We originally were going down the property route, but just lately I've been contacted by Fisher Investments and they reckoned that they could almost guarantee me £1.6K per month! However, having looked into Fisher in more detail I've not taken them up.
But, this has got me thinking to see if there is a very low risk way of investing the £400K in order to get this monthly return.
Do any of you know/have recommendations for these sort of returns or am I best placed to go down the property letting game, along with those risks etc?
Any advice will be gratefully received.

darkidoe

How comfortable are you with property letting industry or investing?
Are you still working?
Will you and your wife be dependent on this 1K income for expenses?

xylophone

How old are you and your wife?

bails41

I'm 56 and just being made redundant, but will be looking for electrical maintenance work in Hampshire where we're moving to.

My wife is 55 and will be dependant on the income.

We haven't been in a position before to purchase extra properties, but have considered buying 2, 2 bed flats or one 3 bed house in order to try and gain the £1K.

Linton

£1.2K a month is about 3.5%/year. You should be able to take that sustainably from a broad portfolio of investments comprising both equity (share) funds and bond funds. The capital value will rise and fall with the market but the income taken should be reasonably consistent and could in the long term match inflation. In my view £1.6K/month (before tax), 4.8%/year, is rather ambitious but may be possible if you are prepared to alter your income in response to market conditions rather more actively.

If you have no experience of investing I suggest you talk to a local IFA who could also advice on the best approach from a tax point of view.

xylophone

Do you both have pensions? If so, what type?

Have you both obtained new state pension statements?


http://www.thepfs.org/yourmoney/find-an-adviser/

bails41

Many thanks Linton for your comments, I'm seeing my IFA soon, but my previous stocks/shares ISA's with him haven't performed particularly well since I've had them. I agree with you with regards to the 4.8% expectations, I believe he was just after a quick sale!!

Xylophone

I'm already drawing my old company pension as I took it at 50 and have been saving it in cash ISA's for both myself and my wife.
My wife hasn't got any extra pensions, so will be relying on state & inheritance in the future.
We've both received state pension statements and we're both expecting maximum payment.

Many thanks for your comment

xylophone

I'm already drawing my old company pension as I took it at 50 and have been saving it in cash ISA's for both myself and my wife.

Had you each considered contributing to a pension?

Even if a person has no earned income, a contribution of £2880 can be made and the pension provider will claim £720 tax relief.

http://www.taxation.co.uk/taxation/Articles/2015/05/05/333016/money-go-round

Are you both making maximum use of high interest current accounts?

With a lump sum of £400,000, a portfolio of equity/bond funds could yield something close to what is required.

https://www.trustnet.com/News/594256/funds-to-build-a-monthly-income-portfolio-for-retirement/

bigfreddiel

bails41 wrote: »

I'm 56 and just being made redundant, but will be looking for electrical maintenance work in Hampshire where we're moving to.

My wife is 55 and will be dependant on the income.

We haven't been in a position before to purchase extra properties, but have considered buying 2, 2 bed flats or one 3 bed house in order to try and gain the £1K.

Rental property is hard work, and risky putting a legend sum into one asset. Not to mention the additional 3% stamp duty, you did know about that didn't you.

A portfolio of stocks and bonds, high interest current accounts should achieve your target of £12k annual income, plus capital growth

Good luck fj

kidmugsy

BTL was a wonderful wheeze for people who were lucky with their market timing, and who geared up with mortgages, and were lucky, or wise, in their choice of tenants. The new tax laws may lead to a bit of an exodus from the market, which might mean that buying in would be better value in three or four years time. You must also remember that many people were investing more for capital gains than for income, and are presumably about to learn a good deal about Capital Gains Tax.

I've often thought that a way to reduce the risk would be to buy a property that one would be happy to live in oneself, perhaps as one's last home. It could perhaps be adapted for a future aged couple in a tax-efficient way while it is a letting property. Then at some suitable time one could in sell one's owner-occupied house and move into the former BTL. Selling the o-o house would be free of CGT of course. And the former BTL would be free of CGT if one kept it until death.

There's a cheery thought, eh?

darkidoe

I echo Linton and fj. Given your age, you would probably want to be less adventurous with your share allocation compared to your bond allocation. You should read around investments on Monevator before taking the plunge with some advice from your IFA.