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Investing to pay care fees

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This thread follows another I posted in the family section regarding care planning for my mother.
I have a somewhat basic if limited understanding of investments e.g: all my investments are in Equities.
What I need to get my head around is; how could investments be used to fund care home fee's e.g: let's say a property is sold on behalf of a parent and you want to invest the proceeds to help fund the care costs. Given the known downside risks of investments, is this even possible and if so how it be done in terms of suitable products?
I completely get it if my mother had been putting money aside into a tracker or funds for the last 15/20 years but in this case where a property is sold and you have cash proceeds to invest in a relatively short timeframe how is that done usually and how are suitable investment products chosen? Is it simply a case of low equities exposure or defensive/wealth preservation funds being used?
*Just to add I have a deputyship for my mother and have no plans to make any decisions on her finances without explicit approval from the CoP/OPG.
 
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Comments

  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
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    Care annuities are one option.
  • dunstonh
    dunstonh Posts: 119,617 Forumite
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    Given the known downside risks of investments, is this even possible and if so how it be done in terms of suitable products?

    Yes it is possible but nowadays, it is not often considered suitable.  The average life expectancy for someone in a care home is under 2 years.    So, investing into assets that should be held for 5-10 years is generally not considered to be suitable unless there are other justifications.


    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • noclaf
    noclaf Posts: 977 Forumite
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    dunstonh said:
    Given the known downside risks of investments, is this even possible and if so how it be done in terms of suitable products?

    Yes it is possible but nowadays, it is not often considered suitable.  The average life expectancy for someone in a care home is under 2 years.    So, investing into assets that should be held for 5-10 years is generally not considered to be suitable unless there are other justifications.


    Ok this makes sense, I thought as much. It sounds like cash is the safest/most sensible option.
    I'm surprised at the average 2 years life expectancy figure though..my father was in a nursing home much longer...>12 years combined in residential and nursing homes albeit not with Alzheimer's.

  • dunstonh
    dunstonh Posts: 119,617 Forumite
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    noclaf said:
    dunstonh said:
    Given the known downside risks of investments, is this even possible and if so how it be done in terms of suitable products?

    Yes it is possible but nowadays, it is not often considered suitable.  The average life expectancy for someone in a care home is under 2 years.    So, investing into assets that should be held for 5-10 years is generally not considered to be suitable unless there are other justifications.


    Ok this makes sense, I thought as much. It sounds like cash is the safest/most sensible option.
    I'm surprised at the average 2 years life expectancy figure though..my father was in a nursing home much longer...>12 years combined in residential and nursing homes albeit not with Alzheimer's.

    That's averages for you.    I had a client who developed Alzheimer's and died within 3 months of going into a care home.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • noclaf
    noclaf Posts: 977 Forumite
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    dunstonh said:
    noclaf said:
    dunstonh said:
    Given the known downside risks of investments, is this even possible and if so how it be done in terms of suitable products?

    Yes it is possible but nowadays, it is not often considered suitable.  The average life expectancy for someone in a care home is under 2 years.    So, investing into assets that should be held for 5-10 years is generally not considered to be suitable unless there are other justifications.


    Ok this makes sense, I thought as much. It sounds like cash is the safest/most sensible option.
    I'm surprised at the average 2 years life expectancy figure though..my father was in a nursing home much longer...>12 years combined in residential and nursing homes albeit not with Alzheimer's.

    That's averages for you.    I had a client who developed Alzheimer's and died within 3 months of going into a care home.
    Yep, v unpredictable.....my mother was diagnosed >10 years back and even the diagnosis between individuals differs adding more complexity and unpredictability.
  • Sea_Shell
    Sea_Shell Posts: 10,003 Forumite
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    Would a "pots" system work?

    Keep £x cash for the immediate future (1-2 years), then lower risk investments for medium term (3-7 years) and more adventurous funds for the long term (7+ years).

    I suppose it does depend also on the size of total funds available v. annual care costs.   

    There could be a risk of the pot running out in the long term, if it's all kept in cash, or running out in the short term if investments tank.
    How's it going, AKA, Nutwatch? - 12 month spends to date = 2.60% of current retirement "pot" (as at end May 2025)
  • noclaf
    noclaf Posts: 977 Forumite
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    Sea_Shell said:
    Would a "pots" system work?

    Keep £x cash for the immediate future (1-2 years), then lower risk investments for medium term (3-7 years) and more adventurous funds for the long term (7+ years).

    I suppose it does depend also on the size of total funds available v. annual care costs.   

    There could be a risk of the pot running out in the long term, if it's all kept in cash, or running out in the short term if investments tank.
    Makes sense...I would be curious what type of funds could be used for the 3-7 year bucket..maybe something like a VLS 40...I could be completely wrong there, my own investments are 100% Equities so quite heavily skewed to one extreme of the risk spectrum.
  • LHW99
    LHW99 Posts: 5,213 Forumite
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    As a Deputy you have to ensure everything is for your mother's best interests. If she has never invested in stock market funds, it is probably not sensible for you to start to do so on now her behalf. There are independent advisers who specialise in this area, and that may be a good place to start.
  • Bobziz
    Bobziz Posts: 663 Forumite
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    May be worth looking at this if you've not already done so: https://www.gov.uk/guidance/investing-for-someone-as-their-attorney-or-deputy
  • csgohan4
    csgohan4 Posts: 10,600 Forumite
    Ninth Anniversary 10,000 Posts Name Dropper Photogenic
    If your still wanting to invest, after all the reading you have done, I would probably put it in wealth preservation funds and may also consider income funds too, but not equities if it is for care home fees due to life expectancy and investment windows not matching. 

    Premium bonds would be a good shout if your risk averse
    "It is prudent when shopping for something important, not to limit yourself to Pound land/Estate Agents"

    G_M/ Bowlhead99 RIP
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