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Retirement - what to do with 500,000 cash...

VXman
VXman Posts: 609 Forumite
Fifth Anniversary 500 Posts Name Dropper
edited 5 December 2019 am31 5:17AM in Savings & investments
So say you had a regular pension income of around 36K (for a married couple) to pay the bills (no mortgage) run a car, put food on the table etc. and then an additional 500K for holidays, hobbies, treats.

Assuming 20 years of good health and being active what would you do with the 500K?
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Comments

  • Dan29
    Dan29 Posts: 4,763 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    I would spend £25,000 a year on holidays, hobbies and treats, and put the rest here: https://www.nsandi.com/income-bonds
    .
  • eskbanker
    eskbanker Posts: 35,380 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    Slice it up according to when it's likely to be needed:
    • Short term - easy-access savings account(s)
    • Medium term - fixed-term savings accounts, laddered to mature at different times
    • Longer term - invest
    Take into account the FSCS £85K (sole)/£170K (joint) protection and subdivide across institutions if/where necessary.

    Use ISAs to the maximum extent possible.

    Consider gifts to family or charities if there's more than you know what to do with....
  • reeac
    reeac Posts: 1,430 Forumite
    Ninth Anniversary Combo Breaker
    Fairly similar situation to that of myself and SWMBO except that we've now been retired 21 years. Our principle is to preserve the lump sum which is nearly all in S&S ISAs in a number of funds plus a big holding of one share which has increased in value by x 4.5 since we purchased it 20 years ago. All are accumulation funds or dividend reinvestment shares. Ultimately the estate will go to our children but they will pass it on to their children. We have already given each grandchild a hefty lump sum as a Potentially Exempt Transfer.

    The reasons for all this generosity are:

    1. that the current housing market condemns young people to renting which is cripplingly expensive and financially inefficient.

    2. Our children are very well off.

    3. We live very comfortable lives, have paid help with the (large) garden and with cleaning and yet don't spend all of our pension income. It may be that in due course we'll need to pay for care, hopefully in our own home, so that would mop up cash.

    Neither of us is interested in cruises, long haul flights or any other of the expensive blandishments on offer in the free copy of the DT that we pick up once a week in the supermarket.
  • Ken68
    Ken68 Posts: 6,825 Forumite
    Part of the Furniture 1,000 Posts Energy Saving Champion Home Insurance Hacker!
    Same here reeac...too old for holidays...free copy the DT??
  • reeac
    reeac Posts: 1,430 Forumite
    Ninth Anniversary Combo Breaker
    Ken68 wrote: »
    Same here reeac...too old for holidays...free copy the DT??

    Get it from Waitrose. We could have any newspaper from them but like to get the DT angle on things to compare with our daily paper. The DT adverts feature a potentially bankrupting combination of equity release plus big cruises.... not in the same ad. which might be foolish but on adjacent pages.
  • Pay off any debt
    Leave some as cash in the bank for emergencies and cash flow. This is not that critical as you have pension income rolling in.
    Invest the rest in low cost index or multi asset funds and just reinvest dividends.
    Give money away to charity and family
    Make a will and come up with an estate plan.
    “So we beat on, boats against the current, borne back ceaselessly into the past.”
  • Save it for care home fees.......
  • VXman
    VXman Posts: 609 Forumite
    Fifth Anniversary 500 Posts Name Dropper
    Save it for care home fees.......
    I thought it was the opposite - spend so the government can't nick it for your care home fees?
  • All good suggestions. They say money can’t buy happiness, but I don’t believe that. Of course Covid-19 will modify any plans for the near future but assuming we can bang it on the head ...

    Cruises sound good, why not go on some posh ones and see the world while you are still compos mentis? You don’t say what your interests are, but my experience with skating is that a teacher makes a huge difference. You could hire a language tutor to learn French, or Spanish, or even Mandarin. Or learn to play an instrument. Keeping fit is important, it keeps your immune and cardiovascular systems healthy, and improves mental well being, as well as prolonging life, so hire a personal trainer, or take up a sport. I took up ice hockey in my fifties, it’s made a big difference to life satisfaction. Don’t believe people who tell you that you are too old to learn new skills, learning new skills keeps you feeling young. Research proves that to be true. I know someone who was overweight with arthritis who got back into hockey, and he now looks the picture of health, albeit with wrinkles. 

    Generally it might be wise to invest most of the money in low risk S&S funds using the ISA allowance (transfer funds over if need be), with a 4-5 year buffer in cash in case of market crashes. You could hire an IFA to advise you, and they might charge ~£10K - 15K at a guess.
  • DiggerUK
    DiggerUK Posts: 4,992 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Photogenic
    VXman, you don't say how old you are, no need to be specific..._
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