Investing 250k inheritance post Brexit -advice needed

chockydavid1983

You may also consider opening a SIPP for additional pensions contributions.

longleggings

Hi All 
I could do with a mid-corona update. My inheritance monies (approx.250K) is about to come through (got held up in the corona malaise) Previous advice /discussion on this was before Pre-Corona.
My current thoughts are to place to money initially into a NS&I easy access account while i decide what to do. I am thinking of investing the amount into a low risk multi asset account such as Vanguard or L%G etc. maybe across 2 providers. I would be looking to achieve 3% return. My question is - is it worth my while going through an IFA  which will add to costs. (e.g Vanguard seems easy to manage online) or do I DIY ?
Are there particular benefits in using an IFA at the current time ?
Thanks in advance

MaxiRobriguez

It might be worth talking to an IFA if you're in receipt of £250k. An IFA is unlikely to encourage you to position into gold for example. 

3% isn't a huge target to achieve, so you're likely to find a mixed portfolio of global equities, bonds and yes, some gold, may well do the trick but that's just my opinion and a professional's may differ.

I think the two biggest things for you are:

1) Don't ignore the wrappers when thinking about what to do with the money. You'll find making your investments as tax efficient as possible will go just as far as the investment returns. You have a £20k ISA limit which you can drip feed into, and you can still pay into a pension after retirement (albeit not quite as much) and have your money topped up. 

2) You've sort of missed the boat with Coronavirus, where there was a hefty discount on everything in March. Since then equities are back to pre-Coronavirus prices, and bonds and gold are more expensive. The risk/reward at this point is probably significantly weaker than it was when you first raised this topic and the likelihood of short/medium term losses have increased. You need to make sure you're comfortable with that, really make sure, before making the final decisions in what you invest in. You've still got 30+ years left by the sound of it so it's more an emotional ask rather than a timeline one.

Best of luck to you. 

83705628

Firstly, never make an investment decision because of the news,or Brexit, or the "way the country's going" etc.
Obviously clear any debts first (with the mortgage it's debatable), get as much as possible into a SIPP or buying additional pension if it's a DB scheme before you retire.
Your 3% target isn't unrealistic at all, however you need to be clear. Are you saying you want the £250k to yield £7.5k in interest and dividends, or are you saying you just want to be able to take £7.5k out of it.

But since you're asking the internet for investment advice here goes.
You already have a livable pension income, and plenty of cash, and the state pension to count on. I would use stick £50k in NS&I premium bonds, 100% of the rest in an equity index fund. Because of the amount, there's no harm splitting that between 2-3 platforms. Personally I use iWeb and Vanguard. As for a fund to invest in, I'm just a Vanguard fanboy, you could do a lot worse that Lifestrategy 100 because it slightly upweights the UK - I like that, others disagree, there's no right answer.

As for how I would personally invest that remaining £200k, I usually go 2/3 UK 1/3 global equity, but since you're about to retire you need a bit less volatility, 1/2 each. I'd buy these funds and I'd personally probably just use the Vanguard platform even though it would be slightly more expensive than splitting some of it into iWeb, just because I'm lazy:
£60k Vanguard FTSE UK All Share
£40k Vanguard FTSE 250
£50k Vanguard FTSE Global All Cap
~£25k each Vanguard FTSE All World High Dividend Yield, Global Value Factor (I used to include global minimum volatility but I'm starting to doubt if the extra costs are worth it)

Don't rebalance, just set and forget. You can set up an automatic withdrawal to take say £600 a month and Vanguard will take both cash dividends and sell off the funds in proportion. I just quickly worked out that the dividend yield on these funds, even allowing for some more cuts because of COVID, should come to about £7.5k (that's the actual dividend yield on the indices they follow, not what the funds are expected to payout, and it depends if you go with acc or inc funds). Whenever you need a bit more because of inflation you can just login and push the number up a bit.

83705628

longleggings said:

Hi All 
I could do with a mid-corona update. My inheritance monies (approx.250K) is about to come through (got held up in the corona malaise) Previous advice /discussion on this was before Pre-Corona.
My current thoughts are to place to money initially into a NS&I easy access account while i decide what to do. I am thinking of investing the amount into a low risk multi asset account such as Vanguard or L%G etc. maybe across 2 providers. I would be looking to achieve 3% return. My question is - is it worth my while going through an IFA  which will add to costs. (e.g Vanguard seems easy to manage online) or do I DIY ?
Are there particular benefits in using an IFA at the current time ?
Thanks in advance

/
NS&I is the safest place to keep it while you make your decisions.
IMHO for that amount, if you're going to do a DIY multi-asset fund anyway, you don't need an IFA.
***very humble personal opinion coming up***
Also, see my other comment, you really don't need to go with a low-risk fund like VLS 20 or 40 because you already have the DB pension, plenty of cash and the state pension. I'd max out my £50k in NS&I Premium Bonds allowance, and stick the rest in something like VLS 100. It would also make sense to split the money across 2-3 platforms, and 2-3 funds (VG, L&G, HSB, BlackRock etc.) because of the FSCS protection and in case of any problems with a platform or fund management company. If you're looking for a 3% real return (i.e you can take out an income of 3% or £7.5k that rises with inflation) then your only option is equity, bonds won't do it.

longleggings

Thanks for the advice tcallaghan - this is really helpful. I'll check out the 2-3 multi asset funds as you suggest and maybe try a few IFA (1 hr free consultations) to get a feel for what they offer. Though i am inclined to go with what you suggest.
One question - can you explain the difference , if any, between a NS&I instant access account current paying just over 1% and your suggestion of NS&I Premium bonds.
thanks again
LL

AnotherJoe

longleggings said:

Thanks for the advice tcallaghan - this is really helpful. I'll check out the 2-3 multi asset funds as you suggest and maybe try a few IFA (1 hr free consultations) to get a feel for what they offer. Though i am inclined to go with what you suggest.
One question - can you explain the difference , if any, between a NS&I instant access account current paying just over 1% and your suggestion of NS&I Premium bonds.
thanks again
LL

To answer for TC, with £50k (max amount) PB's will pay 1.2% on average tax free. 

longleggings

Hi all
Sorry to be a pain but i was wondering whether there are any benefits in sticking 40K into a SIPP. Though rates seem low at the moment. Apparently I cannot apply for an additional pension with my existing pension (teachers)
Thanks again
LL

bigadaj

longleggings said:

Hi all
Sorry to be a pain but i was wondering whether there are any benefits in sticking 40K into a SIPP. Though rates seem low at the moment. Apparently I cannot apply for an additional pension with my existing pension (teachers)
Thanks again
LL

Putting money into a sipp would be fine, but you are limited to your earnings, for a db scheme such as TPS you would have to ask the scheme what your contribution is as it isn't simply the amount deducted from your pay. You would need to determine what to invest in within your sipp. 

Diplodicus

Since you mention Brexit in your concerns, I would suggest investing abroad, for some proportion of your investment, for two reasons:

1) The historical direction of £ over the last century is down, down, down; and no clear reason why Brexit should reverse that. 

2) Your fortune is tightly wound up with the value of £ : pension, property, salary, savings; so it makes sense to diversify.

Investing abroad is easy, the names everyone knows are the most heavily traded stocks in the world.