Investing £150,000 for growth

Linton

Threadersroyal wrote: »

It is a final salary scheme. The £150k is part of a £200k tax free lump sum I am taking. £50k for celebrations and £150k to invest for my kids future.

OK, so not as foolish as I feared, and the option of leaving the money where it is does not apply. However the comments on expensive advice remain as valid as ever.


Your figures on taking the lump rather than an extra £5K/month look fairly marginal to me from a purely financial point of view with a slight balance towards the lump sum because of tax. So if the £2100/month is more than sufficient for your needs taking the lump sum seems reasonable. One option could be to use some of the money to provide additiuonal income until you get your State Pension.



You mentioned a time scale of 10 years. This is fairly short term for investments as a high equity (shares) component always carries the risk of a major temporary drop in value during a crash. If the time limit was less than 5 years and you needed to ensure the value did not decrease then you should keep the money in cash for that reason. It is important that your advisor is aware of the 10 year period as it could have a large effect on the investment choice and the way the portfolio is managed, with safety being a significant concern.



We dont know the age of your children but one thing to consider is when or if they are likely to need the money. Many people want to leave a significant sum as an inheritance, but of course by the time they die it is quite possible that the children will be retired themselves - one would hope that they have sorted themselves out by then anyway. Perhaps your money could usefully be invested for longer at a higher risk and return to benefit the grandchildren. At the other extreme the children perhaps could make best use of the money now.

AnotherJoe

Avoid any company with the word "wealth" in its name (because that refers to their wealth not yours) and also any that happen to have the initials SJP in their name.

Heedtheadvice

I can well understand the attraction of a reduced income from a good pension to invest for the children. You hope by that method there will be a good increased sum later on to leave them -it also can give you potentially flexibility if you need capital amounts or to pay for care or if needs be take some income from it to supplement your pension(s).


On the other hand, although invested wisely [at low cost!!!] should see you gain in real terms over a long period you have still to be comfortable in accepting the risks such as volatility in the capital amount, return not was hoped for, erosion if you decide to splash out or costs are greater than expected, trading is done (perhaps poorly, not sheltered from tax -use a S&S ISA-), unexpected cash need etc.


Just be aware there are pros and cons so good advice is essential especially when you are starting from an inexperienced and possibly naive position.


£50K on celebrations sounds a lot to me but that is just personal choice. £200K is to many a substantial 'windfall' but will not buy many a year of good care for example.


Good luck with your retirement as one of the many in services we rely upon and often take for granted.

Threadersroyal

Linton wrote: »

OK, so not as foolish as I feared, and the option of leaving the money where it is does not apply. However the comments on expensive advice remain as valid as ever.


Your figures on taking the lump rather than an extra £5K/month look fairly marginal to me from a purely financial point of view with a slight balance towards the lump sum because of tax. So if the £2100/month is more than sufficient for your needs taking the lump sum seems reasonable. One option could be to use some of the money to provide additiuonal income until you get your State Pension.



You mentioned a time scale of 10 years. This is fairly short term for investments as a high equity (shares) component always carries the risk of a major temporary drop in value during a crash. If the time limit was less than 5 years and you needed to ensure the value did not decrease then you should keep the money in cash for that reason. It is important that your advisor is aware of the 10 year period as it could have a large effect on the investment choice and the way the portfolio is managed, with safety being a significant concern.



We dont know the age of your children but one thing to consider is when or if they are likely to need the money. Many people want to leave a significant sum as an inheritance, but of course by the time they die it is quite possible that the children will be retired themselves - one would hope that they have sorted themselves out by then anyway. Perhaps your money could usefully be invested for longer at a higher risk and return to benefit the grandchildren. At the other extreme the children perhaps could make best use of the money now.

Many thanks, I'm very grateful for yours, and all the other replies so far. The kids are 9 and 11. My plan is to give them (with tax advice) a decent 21st birthday present from the invested money, that's why I'm looking at 10 years. I don't need any other income now as our mortgage is paid and we have no debts, my wife has another 12 years to work (she is also in the Fire Service) with similar benefits as me when she retires then (assuming her pension scheme remains the same as now).

Linton

Threadersroyal wrote: »

I have another meeting with an IFA from Chase de Vere next month to get some advice.

You seem to be going out of your way to find the most expensive national IFAs. £150K is of course a great deal of money, but in the overall scheme of things it is a relatively small pot. A local IFA would be more appropriate. You are shopping for your groceries at Fortnum and Masons when the Spar corner shop would be fine.

Threadersroyal

Linton wrote: »

You seem to be going out of your way to find the most expensive national IFAs. £150K is of course a great deal of money, but in the overall scheme of things it is a relatively small pot. A local IFA would be more appropriate. You are shopping for your groceries at Fortnum and Masons when the Spar corner shop would be fine.

Many thanks I'm now in the process of sourcing local IFA's to meet with for comparison. The advice on here has been excellent.

bostonerimus

Threadersroyal wrote: »

I have another meeting with an IFA from Chase de Vere next month to get some advice.

Wow, you really can pick 'em. Another over priced financial company. Of course it's easy to pick an over priced financial advisor in the UK so you aren't really to blame, but take the advice being given and look for a well respected local firm that is upfront about their fees. Ideally I'd want you to DIY, but if you need/want and IFA at least be a diligent shopper and make the IFA work for the money.

Threadersroyal

bostonerimus wrote: »

Wow, you really can pick 'em. Another over priced financial company. Of course it's easy to pick an over priced financial advisor in the UK so you aren't really to blame, but take the advice being given and look for a well respected local firm that is upfront about their fees. Ideally I'd want you to DIY, but if you need/want and IFA at least be a diligent shopper and make the IFA work for the money.

I'm learning a lot from this post. I've spent 10 years in the Marines then 23 years putting out fires, so my expertise is not in the financial side of things. I would like to DIY but clearly shouldn't right now. I'm arranging visits from local IFA's now so hopefully will come to a 'correct' decision. Thanks again.

sendu

Threadersroyal wrote: »

I'm now in the process of sourcing local IFA's to meet with for comparison.

And don't forget, even at a "cheap" 0.5%, that's still at least £750/yr for advice that you could get reading a book that costs you a one-off ~£10.

By all means go for free meetings with IFAs and maybe pay a small up-front fee for advice. But having a pot of £150k to invest isn't anything complicated that you can't handle yourself.

Absolving yourself of the responsibility of choosing an investment by having an advisor do it for you is certainly appealing to many, but if you're going to do this, why not have a book author "choose" your investment for you instead?

AlanP_2

Using a local IFA makes sense to me.

DIY investing is like any other DIY activity - some can / will do it, some won't. Some of those that DIY do a good job, some don't.

Even using an IFA it's worthwhile reading up a bit on investing, at least the you will have a better idea and some context once the IFA starts talking to you.

The monevator.com website, whilst aimed mainly at DIY investors using a passive (tracker) strategy is pretty good and explains things well.