Best investments

Kazza62

I have £190k to invest. I am retiring in 3 years' time although I will not be receiving my state pension until I am 67. I am currently 57 years old.


I want to use the investment upon retirement. Could you recommend any savings accounts whereby I won't touch any monies for the first 3 years, but will drawing it off to use as a pension once I hit 60 and retire.


Thanks.

Prism

I am not sure you should be doing this without advice. Most people wouldn't use savings accounts to fund their retirement but use stocks and shares to allow for better growth during retirement. Where is this money kept currently? Do you have a SIPP or personal pension?

badger09

Kazza62 wrote: »

I have £190k to invest. I am retiring in 3 years' time although I will not be receiving my state pension until I am 67. I am currently 57 years old.


I want to use the investment upon retirement. Could you recommend any savings accounts whereby I won't touch any monies for the first 3 years, but will drawing it off to use as a pension once I hit 60 and retire.


Thanks.

Do you mean invest or save?

If you keep all your £190k in cash, its value will decrease over time. Where is the £190k now?

Will you have an occupational pension when you retire? Or later?

Do you have other savings? ISAs? Any investments? Mortgage?

dunstonh

Could you recommend any savings accounts whereby I won't touch any monies for the first 3 years, but will drawing it off to use as a pension once I hit 60 and retire.

Quite a mix of terminology being used incorrectly there.

Investment = risk based investments
savings = cash based deposits. No investment risk but subject to inflation risk and shortfall risk.
pension = a tax wrapper typically used to contain your investments to provide an income later.

So, can you clarify what you are referring to please? Are you going with pretty high risk option of cash savings (yes, cash is high risk in the potential scenario you are looking at). Or are you talking about investments? Is it in a pension or already invested or your bank account?

Kernel_Sanders

Does shortfall risk on cash just mean inflation outstripping the interest rate?

Herbalus

Kernel_Sanders wrote: »

Does shortfall risk on cash just mean inflation outstripping the interest rate?

Not quite - you're describing inflation risk.

I always understood shortfall risk as where you don't have a big enough pot to last you x number of years. e.g. if the boiler breaks and you need to spend more than you thought.

Prism

Kernel_Sanders wrote: »

Does shortfall risk on cash just mean inflation outstripping the interest rate?

It just means in general you fail to meet your goals, typically in the case of cash because the return is too low. Unless you already have a sum of money which you can spend in retirement, increase that spending in line with inflation and also not run out early. Most people don't have that amount unless they are just looking to spend it all for a short span until state pension or maybe another pension kicks in.

dunstonh

Does shortfall risk on cash just mean inflation outstripping the interest rate?

As cash does not provide much in the way of return, you may not have enough and be required to use the capital. The more you use the capital, the less interest you get and you spiral until the money has gone.

Shortfall risk is not making enough to achieve the objective.

Inflation risk is important as you are drawing the interest. If we look at the example given by the OP. If done over 0 years and never touched the £190k, then your statement will still say £190k. However, inflation would have eroded your value to around £133k. Plus the interest will be less as well. This can create the need to make capital withdrawals which then enters the spiral of decline again.

Kazza62

Thanks to all that replied. I think it shows that I need professional financial advice. This I will do now.