72 yr old with £20k to invest

wjr4

He-man_2 said:

london21 said:

Low risk funds, but is she willing to take risks?

Yes she understands the risks and would be putting it away 3-5 years possibly more depending on needs. 

3-5 years is too short, it needs to be at least 5 years, possibly more. 

Daliah

He-man_2 said:

Daliah said:

He-man_2 said:

Daliah said:

She should not be considering any investment if neither she nor you have experience in investments. She should keep her money in savings. If I were her, I would put the lot into Premium Bonds and dream of a big win which probably won't materialise but at least she still has her cash

Premium Bonds are a safe place for a 72-year old to park £20K in, particularly if £20K is essentially her emergency fund (e.g.how would she pay if the boiler or washing machine packs up, new bed needed, roof leaks etc etc). 

Thank you. She has around £20k spread across easy access and a couple of fixes for emergencies. I definitely wouldn’t park it in premium bonds as aside from the fscs protection I don’t see really the benefit given the odds of winning big. Thanks though 

Money in PBs is as safe as in FSCS protected accounts, and the returns are unlikely to be worse than those from instant access accounts. I would recommend you read up about Premium Bonds on the MSE website, and on the MSE Forum.

Yes I said aside from the protection you get. As as she’s not anywhere near £85k with any one institution the safety aspect of premium bonds is pretty irrelevant to us the premium bonds rate is at 1% according to mse which we could beat in a one or two year fix. 

Premium Bonds are 100% protected as money in NS&I is guaranteed by the Treasury.

That aside, I am not sure why you say "as she’s not anywhere near £85k with any one institution the safety aspect of premium bonds is pretty irrelevant to us". Surely she wouldn't be happy if she lost her £20K, and therefore a deposit guarantee is very relevant to he?

Daliah

He-man_2 said:

masonic said:

Low risk in the current climate is unlikely to return more than cash. Low risk has performed exceptionally well during a period of falling and historically low interest rates, but this cannot continue as the tide turns. If she has essentially a year's expenditure saved up before this money, then investing it could be appropriate, but she'd need to commit to putting it away for more than just a few years. Spending some of it on home improvements would seem like an investment option to prioritise. While it might be difficult to get out of a (presumably) life-long habit of frugality, she may be in a better position now to enjoy the money than in the future.

Thank you that’s very helpful. Have tried to get her to spend it! She might give it to my brother and I instead 🙄

if she does, make sure she and you fully appreciate Deprivation of Assets

He-man_2

Daliah said:

He-man_2 said:

Daliah said:

He-man_2 said:

Daliah said:

She should not be considering any investment if neither she nor you have experience in investments. She should keep her money in savings. If I were her, I would put the lot into Premium Bonds and dream of a big win which probably won't materialise but at least she still has her cash

Premium Bonds are a safe place for a 72-year old to park £20K in, particularly if £20K is essentially her emergency fund (e.g.how would she pay if the boiler or washing machine packs up, new bed needed, roof leaks etc etc). 

Thank you. She has around £20k spread across easy access and a couple of fixes for emergencies. I definitely wouldn’t park it in premium bonds as aside from the fscs protection I don’t see really the benefit given the odds of winning big. Thanks though 

Money in PBs is as safe as in FSCS protected accounts, and the returns are unlikely to be worse than those from instant access accounts. I would recommend you read up about Premium Bonds on the MSE website, and on the MSE Forum.

Yes I said aside from the protection you get. As as she’s not anywhere near £85k with any one institution the safety aspect of premium bonds is pretty irrelevant to us the premium bonds rate is at 1% according to mse which we could beat in a one or two year fix. 

Premium Bonds are 100% protected as money in NS&I is guaranteed by the Treasury.

That aside, I am not sure why you say "as she’s not anywhere near £85k with any one institution the safety aspect of premium bonds is pretty irrelevant to us". Surely she wouldn't be happy if she lost her £20K, and therefore a deposit guarantee is very relevant to he?

Yes I know it’s 100% guaranteed by the treasury. But as is up to £85k per institution by the fscs (there’s a good article on mse worth reading about it). As she doesn’t have balances over and above the £85k and therefore would be fully covered by the fscs anyway, the interest rate would be the deciding factor here between premium bonds and a one or two year fix. 

He-man_2

Daliah said:

He-man_2 said:

masonic said:

Low risk in the current climate is unlikely to return more than cash. Low risk has performed exceptionally well during a period of falling and historically low interest rates, but this cannot continue as the tide turns. If she has essentially a year's expenditure saved up before this money, then investing it could be appropriate, but she'd need to commit to putting it away for more than just a few years. Spending some of it on home improvements would seem like an investment option to prioritise. While it might be difficult to get out of a (presumably) life-long habit of frugality, she may be in a better position now to enjoy the money than in the future.

Thank you that’s very helpful. Have tried to get her to spend it! She might give it to my brother and I instead 🙄

if she does, make sure she and you fully appreciate Deprivation of Assets

She is no where near needing social care luckily and the value of her home would be most significant anyway. 

Audaxer

He-man_2 said:

I was thinking an income fund or one of the pre packages funds but low risk. Any thoughts or things I should be considering particularly?

If she wants to invest the money, a low risk, globally diversified multi asset fund or even some well diversified equity income funds could be a possibility if she wants some regular dividends. However she needs to be aware there will be volatility in the capital balance, so before considering investing I would suggest she does some reading up on this site and Monevator regarding investing in general, and about these types of funds.