Creating an income from savings

markymark78

I have recently received £100k through inheritance and I was wanting to invest it to create an additional monthly income when my wife goes on maternity leave. Traditional savings accounts and cash isa’s dont have particularly inspiring rates and I was wondering what other options there are.

Dorian1958

Totally depends upon your attitude to risk. There is a wide spectrum from NS&I products to the 3.45 at Kempton. What sort of return are you hoping for?

Linton

If you invested in an appropriate set of share and bond funds in S&S ISAs you could reasonably expect to be able to take about £3500 as a tax free sustainable inflation adjusted income. As it appears you have no experience of investing you may need help from an IFA to set this up. This is a long term commitment - in the short term the value of your investments may fall, possibly to a significant extent. In the long term however you could expect the pot to increase in value, at least with inflation.

Is your wife expecting to go back to work after a relatively short gap? If so just take the required money as cash straight from the inheritance and then do whatever you want with the rest.

Albermarle

The simple truth is that if you want to earn more than you can get in a savings account , you have to invest the money . Investment = risk . The more risk the higher potential return .
By risk I mean not necessarily losing everything ( very unlikely for mainstream investment products ) but the very real possibility of the investments going down in value, especially on a short/medium term basis.
I suggest for this large amount of money . You should spend a lot of time researching investments .You can start here https://www.moneysavingexpert.com/savings/stocks-shares-isas/
or employ an IFA to advise you . It will cost money but might save you money in the end, especially if you have little knowledge in this area

kidmugsy

Does this appeal for part of the money?
https://www.barclays.co.uk/savings/bonds/3-year-flexible-income-bond/

If you and your wife get the tax details right there would presumably be no tax to pay on the interest.

The other part of the money you might like to invest in equities, in hopes of growth or high dividend yield. For example you could look at the Schroder Maximiser funds as a source of income.

Have you both got current accounts and regular savers that pay 5% AER? Or even 3% AER? Because if not why not?

xylophone

Assuming that you/spouse have never had a Nationwide Flex direct account, you could open sole each and joint and between you receive 5% on £7,500 for a year.

You might open sole and joint TSB Plus accounts and receive 5% on £4,500 between you.

You might open Marcus accounts and receive 1.5% for a year.

Other savings rates here

https://www.thisismoney.co.uk/money/saving/article-1583864/Best-savings-rates-Isas-Cash-Isa-accounts-fixed-rate-Isas.html

You have the inflation risk to consider - 2.4% CPI/ 3.3% RPI.

If you are looking for a monthly income higher than this then you need to look to investments - but the capital will fluctuate.

You could each subscribe £20,000 to a stocks and shares ISA and choose income funds.

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

Thrugelmir

markymark78 wrote: »

I have recently received £100k through inheritance and I was wanting to invest it to create an additional monthly income when my wife goes on maternity leave.

Probably better to allocate such a large sum into 3 pots. Short term, medium term and long term. To cover your wife's income use short term cash on deposit to tide you over. The remainder allocate as appropriate to other objectives. With inflation exceeding safe investment rates. Your inheritance is only going to deflate in value over time.

Can you make an overpayment on your mortgage and reduce your monthly outgoings?