100K to invest, need monthly income

dunstonh

dunstanh kindly explained about CAR to me, and NMA was mentioned in the same thread. If an IFA doesn't know what a NMA is, should they be disregarded IYO?

NMA is mentioned in just about every financial services paper every week. It even has it's own publication from citywire called new model adviser. If the adviser doesnt know the term, it suggests they are either not involved in running the business side of the firm (which would suggest an employed adviser) or they dont take an interest in the industry. "Most" employed advisers or attached advisers will work to a transactional basis as the employer/parent firm can take as much as 70% of the remuneration from them. They dont have the scope to work to NMA basis.

One appointment has been made with an IFA that has a DIP (Decision in Principle I think, but not sure what that means exactly?) In your opinion again, are they worth seeing? Or what initials should a good IFA investment specialist have after his/her name?

DIP = diploma. Thats higher than standard. Dont necessarily be bought in by qualifications though. The industry has a lot of very skilled advisers who havent got the full higher qualification as there hasnt been a need to. Many have one or two of the higher exams but not the 5 required to get the diploma. I hadnt bothered going the distance to get all 5 as there was no point but with the RDR review changes likely to come in 2009 with an estimated period of 5 years to get the higher exams, I have decided to complete the remaining diploma exams next year. A lot of the IFAs I have spoken with (which does tend to be the director/owner/partners rather than employees) are doing the same.

If you are looking for a longer term relationship with an IFA, then it is worth asking them what their plans are with the FSA's review suggesting that higher qualifications will be needed if you wish to remain an IFA. The FSA have admitted that upto 2/3rds of current IFAs may drop IFA status. Again, owner/partner/director IFAs will have/get the required qualifications as they have to. However, employee or attached or those close to retirement are more likely to call it a day or downgrade..

snowball3

Sorry dunstonh that I do not have all the answers for you, my husband has just died and I am waiting to find out what I am intitled to. I don't want the money tied in because I may in the future need to take some out for emergencies. I am 61 by the way.

Obviously there is no simple answers, I think I will go with the easiest option, put it in a bank account for now.

jem16

passion8 wrote: »

jem16 - can I just ask a quick question please?

We're in a similar quandry, but with an expected higher sum, and my husband made a couple of appointments about seeking advice from IFAs.

dunstanh kindly explained about CAR to me, and NMA was mentioned in the same thread. If an IFA doesn't know what a NMA is, should they be disregarded IYO?

One appointment has been made with an IFA that has a DIP (Decision in Principle I think, but not sure what that means exactly?) In your opinion again, are they worth seeing? Or what initials should a good IFA investment specialist have after his/her name?

Thank you in advance.

Dunstonh has answered all of your questions and I would certainly go along with what he is saying.

I would certainly advise shopping round until you can find an IFA who is working on NMA basis as you will find they are more likely to offer ongoing servicing and be much more interested in how your investment is doing.

jem16

snowball3 wrote: »

Sorry dunstonh that I do not have all the answers for you, my husband has just died and I am waiting to find out what I am intitled to. I don't want the money tied in because I may in the future need to take some out for emergencies. I am 61 by the way.

Obviously there is no simple answers, I think I will go with the easiest option, put it in a bank account for now.

Probably a good idea for around 6 months until you are more sure of what your needs are.

However I did exactly the same 5 years ago and it was only 18 months ago when I got around to doing something about it. I know I lost out a lot by leaving it so long.

EdInvestor

snowball3 wrote: »

Obviously there is no simple answers, I think I will go with the easiest option, put it in a bank account for now.

A simple step-by-step way of approaching this might be to start with it all in cash and then annually take out your 7k stocks and shares ISA allowance.

Choose a "self select" ISA with someone like Hargreaves Lansdown https://www.h-l.co.uk and then invest the money in funds/shares/investment trusts which pay out an income. You could choose a mix of equity income funds, property income funds and bond funds.

Investing 7k a year and gradually building up the risk side of the portfolio is often a better way to acclimatising to investing rather than putting a lot of money at risk at the start, which can easily scare people off if there is a market wobble shortly afterwards.

Such wobbles will usually not affect the income from your investments at all of course and if most of the money is in cash the overall effect will be negligible.But it can take time for this to sink in.Once you have got the "feel" of it, then you can invest more in the risk assets just by buying directly.

libra10

We have some money in the Nationwide Over 60s account. The current interest rate is 5.86% AER and the interest is automatically transferred to our Nationwide Flex account each month. There is also a passbook with this account.

We find it really handy and if the interest isn't needed we transfer it back to the Over 60s account.

There are obviously better interest rates available. Good luck

munk

snowball3 wrote: »

Sorry dunstonh that I do not have all the answers for you, my husband has just died and I am waiting to find out what I am intitled to. I don't want the money tied in because I may in the future need to take some out for emergencies. I am 61 by the way.

Obviously there is no simple answers, I think I will go with the easiest option, put it in a bank account for now.

If you do decide to put it in a high interest account (I would definitely recommend finding a good IFA though) be very very wary of any banks asking you if you'd like advice on investing the money more suitably.

My mum was in exactly the same position as you just a few years back when my dad passed away. When they saw a large chunk of money in her account after probate they approached her to suggest a more suitable option than leaving it in a savings account and as a result unfortunately it lost 10% of it's value after 2 years.

I believe/presume that banks flag any accounts that suddenly see a large increase in value and the account holder will then be contacted to discuss ways to invest the money more suitably. For example in my mum's case, with Lloyds TSB this involved suggesting investment via Scottish Widows - unfortunately they had an abysmal product range which only served to make Lloyds/SW more money to pay for their fancy pants adverts/sponsorship of the olympics etc :rolleyes:

Basically be very wary of any bank offering you financial advice! Sounds counter-intuitive, but at the end of the day banks are only there to make money.

passion8

As it's very late I'd just like to say a quick thank you to dunstanh for such a comprehensive overview of my post and the correction regarding DIPs. So much for Google in the wrong hands

I'll follow what you've said, and keep you updated on what follows. As CGTs are involved and IHT, we need to update our wills before Monday! (for the EPA) so we're working to a tight deadline for that, but many thanks once again.

Thanks also to jem16 for the confirmation. It's much appreciated.

Finally, for now, can I offer you my sincerest condolences snowball3, and send my apologies if I interrupted your flow of thoughts in anyway. Take care x

[Deleted User]

I think putting it in a high interest savings account is the best and simplest thing to do. yes you probably could lose some money in 'real' terms but thats only if you spend the all the interest you get every month. plus it is easy to understand and the money is easily accessible- to me that would be a priority in retirement. with this option you can easily take control and understand things yourself - that is the key to success in my experience.
another thing is that yes there are probably hundreds of things you could do to maximise your pot of money - but don't forget to live!! unfortunately we are all on the way out, better to enjoy the money rather than worrying if you will leave 130 or 110k at the end. If you say allowed yourself £50 a week from the interest - you would be managing your own money increasing your total amount of savings and still have easy access to the money if you wanted to say go on a big holiday.
I hope it all works out for you.
my advice = KISS
Keep
It
Simple
Stupid



( oh and the stupid is referring to me!)

jamesd

snowball3, a high interest savings account is OK for now but longer term you should consider that the better funds in the UK equity income sector like Invesco Perpetual Income have returned around 15% a year, not the 6% or so you can get from a savings account. That difference is enough to get you 6% of the capital in income (about 6000 a year before tax), grow with inflation so it doesn't fall in value over time and probably slowly increase your income.

You can place some of the money in a savings account (say 6000 to smooth out the income over the year) and more in corporate bond funds that have a fairly stable value and can be the emergency money part of the investments. In any case, you can withdraw up to the full value with no more than a couple of weeks notice, so the money isn't tied up if there's an emergency that requires it.

The value of the capital would vary year to year, perhaps falling 20% in a bad year for the stock market, but that wouldn't affect the income you could take unless it lasted for a many years, at least five, and it's most unlikely that it will. Five years from the start it would be unlikely that it would every fall below the starting value even in a bad stock market year.