£100k - what to do?

newbiesaver55

For all of us who aren't savvy re the stock market ... And who don't see the point of being landlords... Looks expensive and hard work... Where do we put our money?

No debts, comfortably paying off mortgage on a low interest rate...

Eco_Miser

Bank accounts.

NS&I

Then get savvy about the stock market because cash suffers from inflation.

mozza78

If you don't already own any equity then I would put it in 10 reasonably reliable decent dividend stocks then you should get around 5% which will give you 5k a year which is handily enough the exact dividend allowance you don't then have to pay any tax on it making it very tax efficient.

bowlhead99

newbiesaver55 wrote: »

For all of us who aren't savvy re the stock market ...

mozza78 wrote: »

If you don't already own any equity then I would put it in 10 reasonably reliable decent dividend stocks

If you are "not savvy re the stock market" the very last thing you should try to do with your life savings is have a guess which ten companies out of tens of thousands on the planet would be able to sustainably pay you a dividend and reliably grow your assets in the future without incident.

However, as Eco Miser suggests, once you have exhausted all the good bank account deals and have decent emergency cash reserves with a bank or in NS&I savings/bonds, the next logical step is the stock market. So you should endeavour to find out about the basics of investing in funds which pool your assets with other people and let you invest collectively in broad diversified portfolios. Not ten companies picked out of a hat, but hundreds, across all business sectors and countries globally, and across the major asset classes of company equities, government and company bonds, and property.

You can invest in one or two multi-asset funds where a fund manager allocates your money between these asset classes and between individual companies and governments, aiming for some reasonable level of risk or return over the long term. Or if you have £100k sitting around and you don't want to learn how to become a DIY investor, you can pay an IFA a fee to discuss your specific needs, goals and risk capacity / risk tolerance and construct a suitable portfolio for you - this might use more specialist funds as building blocks and periodically rebalance between them as your investments grow or contract from year to year.

The vast majority of people retiring on anything more than the state pension will be funded in retirement by their employer pensions or personal pensions. The growth over a few decades, which allows someone to have a relatively small percentage of their salary put away over 40 years of work to take a larger percentage of that average salary over 40 years of retirement, is largely attributable to long term stockmarket performance, which well exceeds that of cash deposits and is the only practical way to beat inflation once you have taken what you can from promotional deals on bank accounts.

I say 'only', but obviously if you are willing to put your eggs in one basket and start your own business as a landlord with a rental property or two, that is also something that can create a return better than inflation - but it can be hard work, is not without significant risk, and current government policy is to create tax barriers and disincentives to discourage people from doing it as much as they used to.

By contrast, investment funds can be held entirely tax free in stocks and shares ISAs, and even outside an ISA the tax on dividend and interest distributions and on capital gains can be low or non-existant due to annual allowances or preferential rates. So, if you are not savvy, follow Eco's links and start to get savvy.

Marine_life

The first thing to think about is what this represents as part of your total net assets.

Secondly, whilst you are not "savvy" with the stock market, there are independent financial advisers who can help structure a portfolio for you.

Just to give you some figures - over 10 years a savings account generating 1% per annum would turn your 100k into about 110,000. 100k invested in the stock market assuming 3% growth and 3% dividend yield would turn it into around 155k. But you may need to accept some gyrations over that period.

As with all things its a question of finding the right risk / reward profile.

newbiesaver55

Thank you all - lots of reading to do!

infj

Go and read the Monevator site section about passive investing.
Then decide how much you want to keep in cash for safety net, then start monthly investing in an ISA tracker fund - your choice as to whether a UK only one or a global one. Sit back and forget about it for the next 25-30 years. If you get a taste for it you can diversify to other trackers but not necessary.

bigadaj

infj wrote: »

Go and read the Monevator site section about passive investing.
Then decide how much you want to keep in cash for safety net, then start monthly investing in an ISA tracker fund - your choice as to whether a UK only one or a global one. Sit back and forget about it for the next 25-30 years. If you get a taste for it you can diversify to other trackers but not necessary.

Uk only would be a big mistake.

Dan83

P2P? You could quite easy get 12%, although it might that a while to get the full £100k invested at that rate.

Broken_Biscuits

Dan83 wrote: »

P2P? You could quite easy get 12%, although it might that a while to get the full £100k invested at that rate.

Disagree you could "easily get" 12% over a lifetime of investing.

If you invest now with p2p you may get offered 12% returns.

Assuming your actual return will be 12% is a bit naive. A diversified p2p portfolio would have to aim for a much lower percentage after deductions like bad debt etc.

From the little information we have about the OP it does appear they want a low hassle approach so the 12% sites would not be relevant as no time to keep shifting money or carrying out due diligence. The fire and forget ratesetter, zopa or/and bondmason types would be more appropriate and even then not for the full £100k into a fairly new market!

bigadaj

Broken_Biscuits wrote: »

Disagree you could "easily get" 12% over a lifetime of investing.

If you invest now with p2p you may get offered 12% returns.

Assuming your actual return will be 12% is a bit naive. A diversified p2p portfolio would have to aim for a much lower percentage after deductions like bad debt etc.

From the little information we have about the OP it does appear they want a low hassle approach so the 12% sites would not be relevant as no time to keep shifting money or carrying out due diligence. The fire and forget ratesetter, zopa or/and bondmason types would be more appropriate and even then not for the full £100k into a fairly new market!

Why are Zopa and Ratesetter appropriate for any scenario?