What to do with 200K and where to save to?

ProDave

We have this little thing called COVID doing the rounds at the moment.  As I have mentioned recently stock markets are once again falling due to the second wave, increasing infections and deaths, France Germany and Spain going back into some form of national lockdown, others including us likely to follow.

In my opinion, right now is not the time to be buying equities or funds based on them.  Wait a while, watch the markets, and buy as soon as they start to turn back up.

In the mean time I would buy the maximum you can each of premium bonds.

Alexland

ProDave said:

We have this little thing called COVID doing the rounds at the moment.  As I have mentioned recently stock markets are once again falling due to the second wave, increasing infections and deaths, France Germany and Spain going back into some form of national lockdown, others including us likely to follow.

In my opinion, right now is not the time to be buying equities or funds based on them.  Wait a while, watch the markets, and buy as soon as they start to turn back up.

In the mean time I would buy the maximum you can each of premium bonds.

Yup there's Covid and the risk that sterling rises up if we agree a deal with the EU making overseas mostly US investments worth less to a UK investor. I can't remember the last time there wasn't something that seemed really big to worry about. The best answer I have found is to invest with a suitable asset allocation and take advantage of those opportunities by shifting more into equities when they occur rather than sitting on the bench in cash waiting for things that might not happen as expected. Still each has their own approach but it seems unlikely that those new to investment are going to be able to time the market to their advantage. The data suggests most people get such judgements wrong. Still with enough predictions then statistically some people will make the right calls and be hailed a god for the next decade. Maybe what we are talking about is exactly what will happen.

AlanP_2

I can understand some of the reluctance to invest at the present time by the 3 of you as the world appears to be in economic turmoil if you read a newspaper or listen to the news but it's not as straightforward as that.

First, don't confuse the "economy" with what happens to "markets" as there isn't necessarilly a direct link.

Economies are suffering because of C19, there is no denying that but that doesn't mean that all companies are affected equally, and for some there are benefits to their income and bottom line.

In the US the big tech companies like Microsoft, Google & Amazon have benefited enormously from the impacts of C19 as have the likes of Zoom. Online meetings, increased use of software and cloud services, increased online as opposed to high-street shopping have all contributed to their dramatic growth over the last few months.

The UK media tends to focus on UK markets and economy as you would expect, and the UK does not have large tech companies so UK markets like the FTSE 100 have not recovered as well from the March slump as well as the US markets.

There are also concerns about Brexit, again these affect UK markets and to a smaller extent European markets. To the US and Asia the impact of Brexit is zero, but again if you read some UK media the end of the economy is nigh. 

Far East / Asian markets are performing well as the belief is that countries in that region have generally got a better handle on dealing with C19 than the west has. I read somewhere that China hasn't had a C19 death for quite a while now.

If you have a sensible, global focused equity investment portfolio you are far more likley to have been a winner not a loser over the last few montrhs.

Bonds, to counter balance equities in a portfolio have performed well for a couple of decades now and have helped to offset some of March's falls even for portfolios that are very high in UK equities.

So again, a balanced, structured investment portfolio has done OK despite " We are in the biggest mess for years economically and yet the value of the market is where it is. It can’t carry on....can it ?

Second point, the advice from the IFA about Time in The Market as opposed to Market Timing is sensible and the optimal strategy over an investment horizon of 30-50 years.

The OP was 45 I think and could realistically be living off those investments in 2070 - C19 and Brexit will be part of their great-grandchildren's history lessons. Just think back to the economic situation and world events that have occured during since 1975 during your 45 years of life. Wars, 15%+ interest rates and inflation in UK, Oil Crisis, 2008 crash, Thatcher years impact on UK heavy industry, end of Eastern Bloc, the internet and all the associated tech enhancements that have transformed the way we live today and how we "make" money as a society etc. etc.

Look at how £1000 invested in a broad spread of Equities and Bonds across the globe has performed at that time (if youi can find the source data) and think about how many people missed out on that growth as they were worried about the "current" situation and all the bad things around them and ignored the possibilities that could exist over the next 44 years.

Albermarle

In my opinion, right now is not the time to be buying equities or funds based on them.  Wait a while, watch the markets, and buy as soon as they start to turn back up.

If you ( or I) could be correct in timing investing in this way , we would be sitting on a luxury yacht in the Bahamas, counting our Billions . Future market movements are unpredictable and thinking you can second guess them will only end in tears.

Of course being human it is natural to be nervous about investing large lump sums in one go. In this case the answer is to invest more gradually . In any case with the sums mentioned in previous posts , it will not be possible to invest it all at once in the preferred routes ( pensions, S&S ISA's etc ) and it will have to be spread out over more than one tax year, which will reduce the worry about investing it all at once.

AlanP_2

ProDave said:

We have this little thing called COVID doing the rounds at the moment.  As I have mentioned recently stock markets are once again falling due to the second wave, increasing infections and deaths, France Germany and Spain going back into some form of national lockdown, others including us likely to follow.

In my opinion, right now is not the time to be buying equities or funds based on them.  Wait a while, watch the markets, and buy as soon as they start to turn back up.

In the mean time I would buy the maximum you can each of premium bonds.

FTSE 100 and 250 are up this morning, as are European markets. Asian markets down overnight as were US ones yesterday.

So I guess you must be buying UK and European equties as I type this as they have started to turn back up? No, how much do they have to gpo back up before you buy then, all the way to their previous high, higher, lower?

Good luck with your market timing strategy.

Sebo027

There are no shortage of doomsday profits masquerading as financial advisers, fund managers and websites claiming to offer an "edge" - if only you are happy to part ways with a little bit of cash to get the insight on their limited time offer. When I first took an interest in investing a friend of mine forwarded me newsletters from a chap called Doug Casey. The - almost daily - newsletters were convinced that another financial crash, akin to the 2008 financial crisis, was just around the corner in 2014. And in 2015. And every year since. He claims to have "predicted" the 2008 financial crash was going to happen, and ofcourse that's why joe bloggs should trust him when he says the sky is going to fall. Ofcourse, eventually there will be a crash of some sorts and he will claim he's predicated that right, too. A broken clock is right twice a day, after all. My point is that these guys are two a penny and when you scratch beneath the surface it always amounts to sensationalism with very little objective thought and reasoning. Then there's the media. Statements about "billions of dollars being wiped off the stock market" overnight sound compelling but they do not trouble a disciplined investor. See below.
What if this is different? It's always, potentially different. What if there's another recession, and great depression akin to 1929? Well, spend some time googling that and you will also find that if globally diversified index trackers had been available to the man in the street, he would still have come out with a net gain over the long term (20+ years). 

You have a range of options that can be considered "investments" - investing in a company of your friend who's starting a business doing something he thinks is clever or buying a house on the cheap and hoping the neighborhood experiences gentrification. At the other end you have the option of investing in thousands of companies simultaneously. Bonds, gold, cryptocurrency etc. They all come under the "blanket term" of investing but the risk varies greatly across the spectrum. Everyone has anecdotal stories from friends who "lost a fortune on bad investments" or "made a killing on a stock" but you don't often hear from the less sensational, disciplined investor who has quietly invested for decades. 

At the risk of sounding like a broken record, I would recommend picking up a copy of this book and reading it cover to cover before committing any money to any investments:
https://www.amazon.co.uk/Smarter-Investing-Simpler-Decisions-Financial/dp/0273785370

Sailtheworld

snowcat75 said:

I have spent the last 25 years as a self builder working my way up through projects. I have finished what I consider to be our forever home and sold the previous build which is completing on Friday. So I find myself after decades of borrowing and juggling money to work on the next project clear on all debts and will have around £200k lump left over.
As I'm also going to be Mortgage free It should also be possible to Put around £1K away each month even more.

Your pension provision isn't where you'd like it to be and you don't need any of the cash in the short to medium term - sort of answers your own question.

Thought about spending some of it? Why not take a break?

MaxiRobriguez

COVID has already impacted on European and UK markets, if not the US and China, so there are businesses going on "the cheap" which are global players and offer safe dividends even in COVID era, some of which are 5...6%, so doesn't really matter what the prices are doing at any given moment and, arguably, if they do go down, just buy more.

There's always threats and opportunities when it comes to investing so just be sensible with your asset allocation and challenge your own beliefs regularly. 

Albermarle

Then there's the media. Statements about "billions of dollars being wiped off the stock market" overnight sound compelling 

Yes, even the BBC was still reporting over the Summer , that peoples pensions had been decimated due to Covid related financial crash in the markets . In fact by that time most balanced investments had largely recovered .

tryingtogetmyheadaround

You can tell i'm new to investing with this type of comment..... is a Vanguard 80/20 a "balanced" type investment as it splits the money out over different markets.