How to make the most

Primrose

In my opinion, buying a property with somebody else can be a minefield especially in later life. What happens if that person dies and their share of the property has to be released? Easier perhaps if it,s rented out as an investment but even so peoples' financial needs change as they get older. What happens if that person goes into care and their assets need to be liquified . You're at the mercy of somebody else,s fate.

Renting his own property doesn,t seem a carefree option to me at the age of 60 either. Who wants to be a pensioner at the mercy of a landlord who may want to sell the property at any time?. There are enough potential uncertainties from the age of 60 onwards, especially where health is concerned. I wouldnt want the security of the roof over my head to be at at somebody else,s decision.

Can he not use his windfall towards the purchase of a modest property. Ne might still be able to get a mortgage at age 60.

*** sorry, just read the other partner is younger so probably no care home or death issues but what happens if that person wants to get married and wants his cash back? Selling will involve fees and expenses. My instinct is really to avoid any shared investments with friends. Usually ends in tears when personal interests eventually go in different directions according to individual needs.

kidmugsy

TerryC3 wrote: »

What are peoples thoughts on companies such as 'wealthify' and 'nutmeg'?

Sorry; no views on them. But one view I have is that since he's 60 and still earning he really should consider contributing as much to a pension as is allowed. If his work offers one he should join, and contribute enough to maximise the employer's contribution.

Overall his pension contributions per tax year are capped at his earnings (or £3,600 if he earns less). So if, say, he earns £10k and puts £200 per tax year into his employer's pension then he can contribute £9,800 gross into some kind of personal pension of his own. How it works is that he pays his provider 80% of that (0.8 x £9,800 = £7,840). The provider claims the difference (£9,800 - £7,840 = £1,960) from HMRC and adds it to his pot.

The point is that investing is risky so that you want every tax advantage you can find, to offset the losses if they should happen.

As for what he should invest in, I'll make some suggestions.

(i) Cash in a savings account (or, better, split across two) - nothing to do with a pension. He should find the best combinations for him of convenience and interest rates.

Then within his pension:

(ii) Shares in an investment company that aims to protect his capital rather than take greater risks to grow it. It spreads the money across company shares - mainly in the UK and US - index-linked government bonds, gold, and foreign exchange. It's called Personal Assets Trust - there's lots to read on its website.

(iii) Shares in a second investment company that aims to protect his capital rather than take greater risks to grow it. It spreads the money across company shares - particularly in Japan - index-linked government bonds, gold, and foreign exchange. It's called Ruffer Investment Company - there's lots to read on its website.

(iv) He might even look at a third such investment company - Capital Gearing Trust.

(v) Another possibility would be to invest in the Vanguard Life Strategy Fund that puts 40% into shares and 60% into bonds, or the companion that puts 20% into shares and 80% into bonds.

Personally I expect rather a stock market crash in the near future, starting in the US, so I wouldn't rush to invest. But at some point he'll want to grasp the nettle and start moving some money from cash to investments. Maybe he should take the time to look at those companies' websites and read their stuff, and give himself plenty of time to turn it over in his mind.

I repeat, once his money is safely in (say) two savings accounts with different banks or building societies (or at ns&i), then he can take his time. Before April 6th he can put into his new pension whatever he's allowed for the tax year 18/19, and after that he can start his contributions for 19/20.

But some people just don't have the stomach for this sort of investment. In which case he could consider a rather old-fashioned "With Profits" investment. Over the years we've had good experience with Foresters Friendly Society who offer a With Profits ISA. The underlying investments are still bonds and shares but the society uses its reserves to try to smooth out the biggest peaks and troughs in the returns. Maybe he could look for a pension that still does With Profits. I know the Pru used to - even if it doesn't there may still be some around. Maybe the Wesleyan? Maybe Royal London? I plain don't know.

If his lump of capital is big enough he could turn to an Independent Financial Adviser - with the emphasis on the Independent. But for most of those chaps the burden of regulation and the associated cost of insurance inhibits them from advising people with modest amounts of capital.

jimjames

TerryC3 wrote: »

Sorry I probably should have touched on that!
He doesn't own his own property as he wants to avoid the stress of being a homeowner.

I really can't get my head round this. The stress of being a homeowner is nothing compared to the stress of being a landlord. Having your own home where you aren't at the mercy of a landlord seems like a far more logical option if you're looking to reduce stress.

Katiehound

In a way it sounds like he doesn't want any responsibility , after all being a home owner is a biggie, but at least it your own biggie!

I certainly wouldn't want to rent if I had the opportunity to own a house - renting is dead money after all.

BTL- no thanks. I have a couple of friends who have been there, done that.... and sold. Loads of hassle, tenants always phoning with a problem.
The house next door to me has been let for the last 8 / 9 years (prior to that it was an owner occupier.) The last tenant was lovely but son comitted a capital crime so she moved, prior to that it was the family from h**l who did untold damage and made our lives a misery. The landlord worried that they would never get them out. It has been suggested that tenants are going to be given extended tenancy- several years.

Money & friendships don't survive. At some point it will turn nasty because one will need the money out and selling a house does not happen instantly. Buying & selling property can be stressful enough even if there's no pressure.

Get some advice regarding a pension and I would consider an Independent financial adviser. You can so easily make a few decisions and lose a lot (well, so could an IFA ! but I would ask around for recommendations.)

It would be very sad to just fritter that sum away.... but easily done.

kidmugsy

OP, if you are prepared to put in a bit of work to help your pal, may I suggest a fine blog post to read and reflect on?

http://www.theretirementcafe.com/2018/12/my-year-end-review-and-planning-regime.html

The author is, I imagine, a wealthy man. But what he says accords entirely with my experience and I am not "a retired executive of a Fortune 500 technology company"! In particularly, he says

(i) Expenditure in retirement - which is approaching for your friend - is unpredictable. You cope partly by having cash savings.

(ii) It's comforting to have what he calls 'a strong safety-net, or "floor"': I should think that he's referring to guaranteed income such as he might get from a final salary pension, his US "social security" (i.e. his state pension), or annuities. But maybe you could extend the idea: an owner-occupied property is also a "floor" that gives your pal somewhere to live whatever happens in stock markets (or whatever happens to his landlord). And such a property frees the money that would otherwise be paying the rent.

(iii) If you are going to invest don't plunge too much into equities (whether shares or collective investments in shares). He, a wealthy and experienced man, limits himself to 40% of his "portfolio". He would worry too much if he had more in equities.

Bravepants

Some excellent posts on here about what to do instead of buy to let!