£150,000 to invest, what to do?

OldBlade

An inheritance and pension lump sum have given me £150,000 cash to do something with. Rather than stick it all under the mattress, I'm looking for suggestions for how best to use it to achieve the maximum income return.

I am in my 64th year, retiring next year, and have other pensions which will provide a 'living' income. I'm looking for this pot of cash to provide additional income in my retirement for the 'extras': holidays, transport etc.

Your suggestions gratefully received.

Linton

For that sum of money, if you have little experience of investing I think you should talk to an IFA.

In general I suggest:

- Firstly hold a fair amount in cash for spending with a reserve so you have some on hand to cover the times when investment prices are low. There is little point in holding it in ISAs. Lets say £30K.
- Next max out an S&S ISA (or 2 S&S ISAs if there is a spouse) each year. You can get all your investments tax protected in 6 (or 3 ) years.
- You need a very broad range of global investments, mainly equity and a tranche of something safer.
- Every year re-balance between and within the equity, the safer funds and cash. Allow your cash to run down if equity prices have fallen badly.

kidmugsy

There is interest from time to time in the Harry Browne Permanent Portfolio as a way of preserving and growing wealth.

(i) 25% in cash. Use Cash ISAs, high interest current accounts, high interest regular savers, even Premium Bonds.

(ii) 25% in gold e.g. consider gold sovereigns held securely somewhere, perhaps the Royal Mint. There's no CGT to pay on Sovs.

(iii) 25% in equities. I suppose the cheapest way to do this and get reasonable diversification is via a global equity ETF. People here might make other suggestions.

(iv) 25% in Bonds. If the aforesaid Harry were still alive he'd presumably consider index-linked gilts the natural bonds for you to invest in. Personally I find them expensive so I might look elsewhere.

Then once a year, say, rebalance the portfolio if any component has strayed outside the range 15% -35%, say.

There's no crime in rejecting this portfolio but if you'd prefer to reject it would be wise to work out why. That should clarify your thinking.

tacpot12

Have a look at the world of Investment Trusts. Once you understand the difference in how they work to open ended funds, you might find they offer another option to ordinary equities.

As well as an IFA, you might talk to your Bank. They will be able to sell you a discretionary wealth management service if you don't want to manage an investment portfolio yourself. Compare their charges with a local independent IFA's discretionary wealth management service, and don't buy anything until you are sure you understand the charges you will pay.

Eco_Miser

First stick it in NS&I Income bonds so you're earning .75% AER (1% until 30th April) and the money is completely safe, while you decide what to do with it.

Note that maximum income as you specify usually means maximum risk as well, so maybe just go for a good, steady reliable income.

Have a read of Monevator's de-accumulation articles for some ideas on investing to spend. The rest of the site has some useful info too, but remember while there is much good guidance for beginners, it is a collection of opinion pieces, and has a bias towards passive investing.

slowpoke_rodriguez

Wish you'd never asked?

OldBlade

No not at all. Thank you everyone for your advice. I'm investigating further.

One thing though. I've been looking at managed portfolios, like Hargreaves Lansdown. These seems to have good returns. Are such things worth considering?

Pincher

Let us say it's £100k inheritance, and £50k lump sum.

You have enough hassle trying to stuff £100k into an S&S ISA as it is, why do you want to take £50k out of a tax free wrapper, and then wait six years to put it back in?

You could move the pension into something more draw down friendly, leave it invested, and spend the cash already outside wrappers.

bigadaj

OldBlade wrote: »

No not at all. Thank you everyone for your advice. I'm investigating further.

One thing though. I've been looking at managed portfolios, like Hargreaves Lansdown. These seems to have good returns. Are such things worth considering?

Returns on equities have been very good on most things recently, so good returns aren't necessarily a sign of anything special.

Hargreaves are expensive, but have a user friendly website, and can be an easy option for inexperienced investors, however their fees are considerable on larger sums.

Probably best to consult an ifa who won't be anymore expensive than hl but will guve you bespoke advice or do soem background reading on monevator and other investment sources and use a cheaper platform to invest yourself.

I think the former might be better to be honest.

kidmugsy

OldBlade wrote: »

I've been looking at managed portfolios, like Hargreaves Lansdown. These seems to have good returns. Are such things worth considering?

We like HL's service on our small SIPPs, but I don't like the idea of paying the charges for a "managed portfolio". In your shoes I'd look for something cheaper e.g. the options offered by Vanguard.

kidmugsy

bigadaj wrote: »

Hargreaves are expensive

My memory is that they are not expensive for simple tax-exposed trading. They are for ISAs.