Pension lump sum cash options?

yetirider

Hello

I'll shortly get just over £110,000 lump sum from my pension, little savings due to paying mortgage off.

I've been looking at longer term options for saving and investments, but I can't seem to get into my head how much of this should be held back as a cash pot and where to put that money.

Could anyone offer suggestions of the amount or % of that pot on average people would tend to work with and an example account type where to hold it?

Would people simply use a saving account of as you can get fairly quick access something like the Vanguard LifeStrategy® 20% Equity Fund?

Many Thanks......

masonic

That would really depend on your own circumstances and the purpose of your cash pot. Someone who is planning to continue working will have very different needs than someone who has retired and is drawing down and living off their investments, and different again from someone who is buying an annuity or receiving a final salary pension that would cover their core spending for the rest of their life.

yetirider

I have a final salary pension and plan to work for up to a maximum of a further 18 months.
So I really just need to keep some aside for holidays in the short terms then start using my investments as we get older if the pension does not cover our full spending requirements.

So if i keep £20K as a cash pot where would I hold this?

masonic

If it is for short term spending needs, then you'd be best off keeping it in cash vs. low risk investments. Even VLS20 is not really suitable to hold for periods less than 5 years. One option would be to stick £1k per month into the best (at the time) 1 year fixed term savings account so that you have £1k maturing each month to be reinvested or spent, and put the rest in the best easy access account. Fixed rate cash ISAs might be of use because these can be accessed at any time with an interest penalty, but rates tend to be about 20% lower than non-ISA accounts. If you have any personal savings allowance, then interest on £20k is unlikely to exceed it.

Radiantsoul

I think Marcus is probably the best place if you need instant access. You can probably squeeze a bit more interest out using regular savings accounts.