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

burner03

Reported for inappropriate imagery in my head

quirkydeptless

Alistair31 said:

A gold car?

Thanks to the money generated from this site, I already have one

steampowered

Over a 20 year investment horizon, it would not be sensible to keep the money in premium bonds. If you do that, inflation will eat into the value of your pot each year.

Over a 20 year period, inflation poses a greater risk to capital than the fluctuations of the stock market.

I would keep an amount adequate to meet my needs for the next few years in cash or premium bonds. I would invest the rest of it into a diversified stocks & shares portfolio.

Audaxer

steampowered said:

Over a 20 year investment horizon, it would not be sensible to keep the money in premium bonds. If you do that, inflation will eat into the value of your pot each year.

Over a 20 year period, inflation poses a greater risk to capital than the fluctuations of the stock market.

I would keep an amount adequate to meet my needs for the next few years in cash or premium bonds. I would invest the rest of it into a diversified stocks & shares portfolio.

The OP plans for the £500k over a 20 year period is to spend it on holidays, hobbies and treats as he is in the comfortable position of already having adequate pension income to meet his regular spending needs. In these circumstances, I would think he should keep about half that amount in cash savings to spend over the next 10 years, with the rest invested as he doesn't need access to until the following 10 years.

kinger101

Audaxer said:

steampowered said:

Over a 20 year investment horizon, it would not be sensible to keep the money in premium bonds. If you do that, inflation will eat into the value of your pot each year.

Over a 20 year period, inflation poses a greater risk to capital than the fluctuations of the stock market.

I would keep an amount adequate to meet my needs for the next few years in cash or premium bonds. I would invest the rest of it into a diversified stocks & shares portfolio.

The OP plans for the £500k over a 20 year period is to spend it on holidays, hobbies and treats as he is in the comfortable position of already having adequate pension income to meet his regular spending needs. In these circumstances, I would think he should keep about half that amount in cash savings to spend over the next 10 years, with the rest invested as he doesn't need access to until the following 10 years.

I think holding 10 years cash is still too much.  I'd probably hold five, replacing it with 6-7% drawdown on the pot each year.  

Audaxer

kinger101 said:

Audaxer said:

steampowered said:

Over a 20 year investment horizon, it would not be sensible to keep the money in premium bonds. If you do that, inflation will eat into the value of your pot each year.

Over a 20 year period, inflation poses a greater risk to capital than the fluctuations of the stock market.

I would keep an amount adequate to meet my needs for the next few years in cash or premium bonds. I would invest the rest of it into a diversified stocks & shares portfolio.

The OP plans for the £500k over a 20 year period is to spend it on holidays, hobbies and treats as he is in the comfortable position of already having adequate pension income to meet his regular spending needs. In these circumstances, I would think he should keep about half that amount in cash savings to spend over the next 10 years, with the rest invested as he doesn't need access to until the following 10 years.

I think holding 10 years cash is still too much.  I'd probably hold five, replacing it with 6-7% drawdown on the pot each year.  

Normally it would be too much cash to hold if investing for the long term, but OP wants to be in position to be able to spend the £500k cash over the next 20 years.

steampowered

Audaxer said:

The OP plans for the £500k over a 20 year period is to spend it on holidays, hobbies and treats as he is in the comfortable position of already having adequate pension income to meet his regular spending needs. In these circumstances, I would think he should keep about half that amount in cash savings to spend over the next 10 years, with the rest invested as he doesn't need access to until the following 10 years.

Personally, I think keeping £250k in cash is far too much. Especially as that Op has other income. That's 10 years of inflation reducing the value of the Op's capital, bit by bit, year after year. I would keep more like £50k - £100k in cash, invest the rest and draw down from it over time.

Sibbers123

You would be best advised in spending a very small proportion on an independent financial adviser!

With interest rates at all time lows, there is no magic wand. The first thing I would be doing is spreading the cash over numerous banks, just in case one were to go bust!

You probably want to think about IHT planning too.

ratechaser

burner03 said:

Reported for inappropriate imagery in my head

I apologise for the snowflake that clearly landed on your head... 

6022tivo

I find it mad when people say the government taking my money when I'm older and need a care home. 
It's like saying, why buy a house now when the government will pay my rent if I don 't have it. 
When/If I need a care home, I'll be happy to pay for it like all people should be.