I've saved £350,000 - should I see an IFA?

Dunc3823

Hello! I'm in my early 50's and for my entire working life myself and my better half have been saving. We've managed to pay off our mortgage and have about £350,000 saved up. Our house now seems to be worth about £300,000 but we have no plans to move. I know this sounds like a lot of money but we've just been careful over the years. Never had credit card debt, don't drink, don't have a fancy car, don't have expensive holidays etc. We've just worked hard, put a bit away each month and here we are.

Obviously this has happened slowly but I'm starting to think I should really get some professional help with this from an IFA. Here's what I've done so far with our money, as you can see I've been quite cautious:

£85,000 in a 5 year bond @ 2.2%
£70,000 in investment ISAs
£50,000 in peer to peer ISAs @ around 5%
£85,000 in general savings @ 1.4%
£40,000 in a small share portfolio that I manage myself
£20,000 in easy access savings @ 0.25%

I'm also self employed and didn't want to lock the money away in case I needed to invest in our business, but things are pretty stable now so I have more options open. My own pension situation isn't great, I have a handful of small private pensions from past employers. I don't pay in to a pension at the moment but then again I'm not 100% convinced putting huge sums in to pensions is the best move here. My business should continue to generate an income for us if I ever retire and no plans to retire early since I enjoy work. That, plus our state pensions and my wife's pension should be plenty anyway.

Is it time for a trip to an IFA? I'm well aware I should probably have done this years ago but I've been busy. :-) Thank you in advance!

Duncan

rawhammered

I'd start dumping £40k a year into your pension.

Albermarle

Pensions contain investments but in a tax beneficial way . The advantage compared to a S&S ISA is at least 6.25% ( depends on your exact circumstances) The disadvantage is the money is not accessible until you are 55 , but for you that is not a big issue .
Otherwise your £300K contains a lot of safe but low returns savings ( 60%) but at the same time a relatively high % of a risky alternative investment = P2P
Personally I have P2P as well but at a lower % than that .
I think you might see other posters saying pull out of P2P and put the money in a pension.

colsten

Yes, spend some money to get proper professional advice, from a truly independent financial advisor.

In the meantime, I would move the £20k that linger in that terrible 0.25% account to somewhere better, such as Marcus or Santander 123, or may be put some of it into Nationwide FlexDirect accounts. You can have 3 of those between you and your better half - that would be £7,500 for a year at 5%. This could pay for your initial session with the IFA :cool:

SonOf

I'm not 100% convinced putting huge sums in to pensions is the best move here.

Whether you use an IFA or DIY is like any other job in life. Do you do it yourself or get someone to do it for you.

Your statement above indicates that you lack understanding on tax wrappers. So, that is one area an IFA would come into play.

Its also interesting that your P2P is almost as high as your conventional risk based investments. So, possibly risk is not understood.

You do need some cash savings and that means suffering dreadful interest rates but 0.25% on £20k when you have another immediate access account paying more does not seem sensible.

cfw1994

First up, I'd say you've done reasonably well on your own: well done!

Yes, more of it could potentially be inside ISAs, and I would STRONGLY agree that you should stack some into a pension ASAP - that is THE most tax-efficient vehicle for your 'pension money' (ie, funds to access after you hit 55).

Whether you seek an IFA or sort it yourself is a bit up to you.....your company accountant ought to be able to help you with the pension side (SLIGHTLY surprised they haven't suggested something before!)

SonOf

your company accountant ought to be able to help you with the pension side (SLIGHTLY surprised they haven't suggested something before!)

The op says they are self employed. So, not a limited company. So, it may just be a book keeper or low level accountant.

You would also be surprised at the number of accountants that do not understand pensions or still think that pensions today are like 1980s/90s style pensions. i.e. a product and not a tax wrapper.

colsten

SonOf wrote: »

You would also be surprised at the number of accountants that do not understand pensions or still think that pensions today are like 1980s/90s style pensions. i.e. a product and not a tax wrapper.

It's not the job of an accountant to advise on pensions. IMO, it would be foolish to take guidance from an accountant on it. You can't hold them responsible for bad advice, whilst you can do that with an IFA. That is, if you actually received advice, and not just had a chat with them.

SonOf

colsten wrote: »

It's not the job of an accountant to advise on pensions. IMO, it would be foolish to take guidance from an accountant on it. You can't hold them responsible for bad advice, whilst you can do that with an IFA. That is, if you actually received advice, and not just had a chat with them.

We have been in situations where we have had disagreements with accountants. One even told a client, in writing to put in a complaint as they claimed what we proposed was not possible (it was and the accountant backed down but never apologised for being wrong and telling the person to complain).

I have had to "train" another accountant on the taxation of an offshore bond wrapper for a limited company as he didn't know.

So, I agree with your comments. Accountants are not IFAs and IFAs are not accountants. There is a small bit of overlap but the problem with a little bit of knowledge on something is that you don't follow it when it goes out of date or dont really know enough to be certain its the same for everyone. That is why many IFAs work with accountants to ensure best advice.

Linton

Dunc3823 wrote: »

Obviously this has happened slowly but I'm starting to think I should really get some professional help with this from an IFA. Here's what I've done so far with our money, as you can see I've been quite cautious:

£85,000 in a 5 year bond @ 2.2%
£70,000 in investment ISAs
£50,000 in peer to peer ISAs @ around 5%
£85,000 in general savings @ 1.4%
£40,000 in a small share portfolio that I manage myself
£20,000 in easy access savings @ 0.25%

Roughly a 1/3rd of your hard-saved pot is returning less than inflation and therefore losing real value. Is this sensible?

......
. I don't pay in to a pension at the moment but then again I'm not 100% convinced putting huge sums in to pensions is the best move here.

Why arent you convinced? A modern pension is very much like an S&S ISA but with different tax benefits.

My business should continue to generate an income for us if I ever retire and no plans to retire early since I enjoy work. That, plus our state pensions and my wife's pension should be plenty anyway.

Have you worked out how much you will need in retirement? What happens when you or your wife dies - will there still be enough income for the survivor? Will your business generate income in perpetuity with no involvement from you?

Is it time for a trip to an IFA? I'm well aware I should probably have done this years ago but I've been busy. :-) [

Before you talk to an IFA it would be sensible for you to decide what the £300K is for. Extra income? One off expenditures? Inheritances for friends/relations? If the money is essential for your future well-being then yes, in my view it would be very sensible to talk to an IFA.

Thrugelmir

Dunc3823 wrote: »

£50,000 in peer to peer ISAs @ around 5%

Not a position I'd feel comfortable with personally. There's good reason why the return on offer is so high.