Lump sum and precarious plans

JackAll123

Hi all,
Long time lurker here looking for some advice.

I have recently come in some 250k lump sum inheritance. I am currently renting in London and my initial thought was to use this towards a deposit for a flat some time around the middle of 2017. Until then i'd have to look for best buy instant access savings rates.

However with the Brexit news I am uncertain how confident I would to be buy at this time due to uncertainty in both London prices and also potentially in future job security. Obviously both these will become more certain closer to the time, but if it came to a larger delay >2 years I might end up investing it around this time anyway whilst I settle down again.

I have already around 75k separate in a managed investment account which has performed pretty well over the last 3 years I've had it. There would be no initial fees for the additional investment deposit i'm told.

I am wondering if, given I am not certain on the property purchase, and likely further cuts to interest rates on the horizon, should I accept the extra risk and put the lump sum together with the other investments? Or should I keep it in cash and just accept low interest until my situation crystallises, even though I might end up putting it in the investment account at this time anyway?

Appreciate any thoughts!

dunstonh

hould I accept the extra risk and put the lump sum together with the other investments?

An economic cycle is around 10 years nowadays. Your potential investment term is 12 months. That would make any risk based investment a higher risk option (time dilutes risk but you are not giving it time).

You should stick with cash until you know more for sure.

Linton

Do you need to do the same thing with all your £250K? It would be much easier to manage if you split it in your mind into separate tranches with different objectives. Why not keep some in cash, sufficient for a deposit on a flat plus more to cover emergencies etc and put the rest in long term investments now?

jamesd

Shares and bonds wouldn't be a good move. Some P2P offers the exit option and relative stability that might do the job. Unlike equity and bond funds there's very limited volatility (short term ups and downs) to deal with so the time effect is lower. Biggest risk relate to late repayment of commercial loans and to defaults that can take potentially years to collect on, so you'd need to be willing to accept some potential for that.