turn savings cash into income

allen61

Hello, we have about £200k savings outside of a pension (i.e. its currently in various bank accounts earning various interest). We would like to transfer the money to something that pays us a monthly income but do not want an annuity. We are pre retirement age.

I have considered Unit Trusts paying dividends but the FTSE is too high at the moment to tempt me buying.

Any suggestions?

bostonerimus

Why do you say the FTSE is too high.

First I would look at getting your savings inside of a tax efficient wrapper like an ISA if you have not used that allowance.

To generate income I would use a portfolio of well diversified index trackers. If you want to minimizing potential capital losses then I would tilt it towards fixed income, but I would use a total return approach. You could use short term bonds and some cash as a buffer against stock market falls.

Linton

How do you know the current FTSE100 value is too high? At what level would you be tempted? How long are you prepared to wait for it to get there?

If you are looking for income paying shares/funds surely it's the yield and its sustainability that matter, not the price. There ae plenty of solid FTSE350 companies paying 5%+ and funds paying 4%+. What yield do you require? You neednt limit yourself to the FTSE100 or FTSE All Share. There is a big world out there. Far East and European funds can pay a resonable dividend. There are also corporate bond funds to consider.

dunstonh

I have considered Unit Trusts paying dividends but the FTSE is too high at the moment to tempt me buying.

Too high compared to what? Its actually lower than its real terms high point.

Which FTSE are you referring to? We are assuming FTSE100 as that is often abbreviated to FTSE. However, no sensible person invests solely in the FTSE100. (and the UK allocation of your portfolio would be better in all share, FTSE250 or a managed option).

Any suggestions?

You have given nothing to help filter down the options. On the limited criteria you have given, you could give 30,000 different answers.

AnotherJoe

allen61 wrote: »

Hello, we have about £200k savings outside of a pension (i.e. its currently in various bank accounts earning various interest). We would like to transfer the money to something that pays us a monthly income but do not want an annuity. We are pre retirement age.

I have considered Unit Trusts paying dividends but the FTSE is too high at the moment to tempt me buying.

Any suggestions?

Why didn't you buy in 2003 or 2009 then ? Was it too low for you?

And why is the FTSE relevant in any case?

Lastly , how old are you? "pre retirement" could mean almost anything

xylophone

Well, you could deposit the lot in NS&I Income Bonds and receive a monthly income but the rate is below inflation and hardly tempting.

https://www.nsandi.com/our-products

You could use other deposit accounts and take interest monthly but again, interest rates are low and below inflation.

http://www.thisismoney.co.uk/money/saving/article-1583868/Best-savings-rates-Monthly-income-saving-accounts-html.html


You could construct a portfolio of funds paying a monthly income - there is a risk to capital but the yield will give some inflation protection.

https://www.trustnet.com/News/736116/top-rated-uk-monthly-income-funds-for-your-portfolio

http://citywire.co.uk/money/hargreaves-launches-monthly-uk-equity-income-fund/a992491

http://www.telegraph.co.uk/investing/funds/make-investments-pay-monthly-salary/

atush

No 1, you need to invest. With at least some of your money to get a return over inflation.

No2 are you still working? If so, stick some of that extra cash into a pension. Immediate boost of tax relief, plus money grows w/o tax?

enthusiasticsaver

I would consider £200k in bank accounts presumably earning low interest to be devaluing rapidly. Investing offers far better returns. The FTSE only refers to the UK and if you are fairly risk averse you would be investing globally so the level of the FTSE 100 or FTSE 250 is irrelevant. Stocks and Shares ISAs and SIPPs are worth looking into for you. How old are you and when do you plan to retire?

Spreadsheetman

Jim Collins' Stock series is a good introduction to investing (http://jlcollinsnh.com/stock-series/). It's USA-based, so the tax elements are different, but the basic principles are the same.

Two people investing into an ISA can put £40k into a tax wrapper each year, so that £200k could be tucked away to grow and be drawn tax-free in 5 years. (you'd want to keep an emergency fund in a bank savings account though)

Ongoing income could be directed into a SIPP to get tax relief etc.

It's hard to be more specific without extra info e.g. how long to retirement?

allen61

Thanks for all the replies.

Sorry I did.nt give much information. I was averse to being too boring.

So here it is pretty much in full.

I'm 56 male, living & taxed in France. I have a small UK DB pension that pays me each month.
I have investments in a handfull of Unit Trusts (a mixture of tracker and income funds also corporate bond funds).

The £200k is sitting in low return savings accounts and was kept liquid whilst buying a property in france. That is now complete.

The french tax system takes no tax from my small pension (it is too small) but it takes 15.5% in social charges from investment income. Hence my desire to convert the £200k to something like 'income'

My view on the FTSE100 is simply that it is close to an all time high so I prefer to wait for say a 5% fall.

I am taking advice from Blevins Franks who have advisers based i France but wanted to see what i could find out myself.

Again thank you.

AnotherJoe

Being based in France will make a huge difference because things like ISAs and pensions may not be applicable to you. Then you have currency risk.
Then aside the recklessness of investing in the FTSE which is to all intents and purposes a very narrow set of companies amd industries, the FTSE should be of zero relevance to you since you would be best advised to be investing globally. I don't think anyone here would advise a British resident to invest all their money in the Bourse, why would you intend to invest in the FTSE ???