£350k cash, best long term strategy?

SteelChair

What would you do with £350k at 25 (house owned with no mortgage)

Inflation is set to go to 3%+ and savings rates will be around 1%. So savings accounts would result in a negative result.

I'm thinking these 2 other options would be the safest:

1. Put it all in the Ftse 100. I'm worried its overvalued, and could crash. But the 3.5% yield is good.

2. Buy 2 or 3 properties and let them out.

tommysaver

!!!!!!!! bricks that's a nice position to be in. I'd say property, but in all honesty I've no idea. I'm unsure what to do with 1/10th of that cash at the moment.

SteelChair

However I have no job, career or degree!

Ray_Singh-Blue

My starting position would be 50% total bond market, 50% total stock market.

Then tweak based on preferences. For example I don't currently have any bonds, I have cash and commodities instead.

A real return of -2% is not necessarily bad. If all other asset classes tank by -20%, then it's ten times better.

atush

What do you propose to do with your life? you cant live on 350K forever?

You need a pension, you need a S&S isa, you need 12 months in cash to live on while you look for a job/get educated. Then invest the rest but NOT IN A FTSE 100 tracker. Which is super high risk.

Look for a global tracker, look for good solid longstanding Investment trusts which have paid out rising dividends for decades w/o lowering them. Look at multi asset funds such as the Vanguard series.

dunstonh

1. Put it all in the Ftse 100. I'm worried its overvalued, and could crash. But the 3.5% yield is good.

The FTSE100 has underperformed for over 20 years. Why would you want to invest in that? Single sector investing is bad investing as well. This would just be really bad.

2. Buy 2 or 3 properties and let them out.

What experience do you have as a landlord? What type of buy to lets would you aim for? What rental yields would you be looking at? Are you able to identify the right area and tenant type for your rental model? Would you use an agent or do the work yourself? Would you use a builder/decorator or do it yourself?

You havent given us anywhere near enough information for anyone to suggest what is right for you. Given the two options you have listed, it is unlikely that your knowledge is up the required level for either to work for you.

Solutions cannot be given when the scenario is not known. What objectives are there for the money? Now, short term, medium term and long term. How does this fit with your wider circumstances and possible future circumstances?

JohnRo

It's entirely reasonable to expect sensible global equity investment to pay you 3-4% annual income for the duration and also to achieve some capital growth over the longer term, with the inevitable dips and bumps along the way.

That's a dependable 10-14K pa income on the whole amount, which will take several years to deploy efficiently but should approximately keep pace with inflation.

It buys you time to decide what you want to do, look for a career or whatever.

The question is whether you have both the stomach for stock market volatility and just as important, have the discipline to see a plan through to conclusion.

In that regard it's the only negative factor your age presents, at 25 it's difficult to see ahead to what you'll look back on in 20 or 30 years time. In all other aspects you're in an enviable position to set yourself up for the rest of your life if you're sensible about things now.

Good luck.

ArmyDilllo

I've invested (seriously) since 2003 and retired on 30th September at 56.
Before that just in savings and pensions.

ISAs
In 2003 I bought my first Shares ISA and chose to put it in a particular investment fund which I considered to have a low but 'safe' growth potential.
I measure all my investments and this one has grown at a rate of 7.62% annually since
In 2007 I did the same again and that has grown 3.55% pa (the 2008 crash screwed me there and cost half my investment).
I did the same in 2011 (+11.43%), 2012 (7.18%), 2013 (5.34%)


In 2014 I changed tack and opted for a more adventurous fund strategy;
2014 (12.13%), 2015 (5.78%).
This year I went completely out on a limb and bought shares in three funds and two companies (BP and Shell).
I later sold two funds and Shell and put that money into BP yielding the following result which has subsequently skewed all my measurements and predictions too high so I am still using last years growth figure for my future plans.
2016 (26.16% - I am treating this as a happy one-off but unsustainable in the real-world).

Until this tax year, my ISA investments have been achieving an average annual growth rate of 7.57%, through all the ups and through all the downs.


Investment bond
8% (approx. due to some re-investment screwing up my measurements)


Pensions
A) 9.38%
4% (approx. due to some re-investment screwing up my measurements)
C) Final Salary
D) Defined

The smart money says that growth rates will fall over the next few years.
The markets are high at the moment.
This usually foretells a crash.
But the U.K. market might not be as high as it appears.
After Brexit and the drop in Sterling it's estimated that the high we saw in the FTSE100 this week is actually 6% lower than it would have been if we'd seen the same figure this time last year.

Investing is a gamble.
Personally I believe it's a safer bet than the horses, where the trend is (for most) down.
The trend in shares has been (historically) up, over the long-term.

Good luck!
Oh, and GET A JOB, Hippy!

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[Deleted User]

Buy a franchise and start a business! Then you've fixed the problem of needing a job AND might make some money (probably not since you'll have no experience of doing this)