£20k - what to do with it?

jpsartre

I've come into some money unexpectedly - about £20k. I'd like to invest it for the benefit of my future self when I retire in 25 years time but have no idea what's the best way to go about it. Should I let my bank invest it, put it in a stock and shares ISA, savings ISA, something completely different? Just trying to get an idea about the options and if anything stands out as being obviously the best way to go. I've got zero experience with these kinds of things. Basically I'm looking for:

• a long term investment, 20-25 years.
• something that's low-risk in the long term.
  
• something that requires minimal participation on my part.

El_Torro

If you are currently a higher rate tax payer and you plan to retire at 58 or later it makes sense to put the money in your pension. If you contribute to a pension via salary sacrifice it makes sense to up your contributions and use the £20k to live off. Then when the money runs out reduce your contributions. 

If you are a basic rate tax payer and you want to access some money before you're 58 then a Stocks & Shares ISA might make more sense than a pension. Depends on your circumstances, you haven't given us much to go on.

If you invest in a global tracker or multi asset fund then a 25 year horizon should see very healthy returns. There will be a lot of volatility during those 25 years (both up and down) so whether that's low risk in the long term or not is up to you to decide. Investing in a fund that is globally diversified also requires very little participation on your part.

sebtomato

Best you transfer it to me, and I will take care of it for you. No need for paperwork or red tape.

ColdIron

jpsartre said:

I've come into some money unexpectedly - about £20k. I'd like to invest it for the benefit of my future self when I retire in 25 years time

How is your pension provision?

Daliah

How much is in your emergency fund?

jpsartre

El_Torro said:

If you are currently a higher rate tax payer and you plan to retire at 58 or later it makes sense to put the money in your pension. If you contribute to a pension via salary sacrifice it makes sense to up your contributions and use the £20k to live off. Then when the money runs out reduce your contributions. 

If you are a basic rate tax payer and you want to access some money before you're 58 then a Stocks & Shares ISA might make more sense than a pension. Depends on your circumstances, you haven't given us much to go on.

If you invest in a global tracker or multi asset fund then a 25 year horizon should see very healthy returns. There will be a lot of volatility during those 25 years (both up and down) so whether that's low risk in the long term or not is up to you to decide. Investing in a fund that is globally diversified also requires very little participation on your part.

Thanks, that's very helpful info. I'm 43 and don't plan to retire until my late 60s. I'm happy to leave the money alone until then. I'm a basic rate tax payer although my wife pays the higher tax rate so it might make sense to up her pension contributions (I realise this means I'm effectively handing over the money to her).

How does one go about investing in a "global tracker or multi asset fund"? Is it something my bank can do for me?

To answer some of the other questions - my current pension saving basically is the 20k. I've not had a pension contributing income for many of my adult years (relatively speaking) due to postgrad studies and other circumstances. I've now in a position where I'm much more financially stable with a higher income (again, relatively speaking) and more secure employment where I'm contributing towards my pesion but I'm conscious of the fact that I need to start thinking about the future.

jpsartre

sebtomato said:

Best you transfer it to me, and I will take care of it for you. No need for paperwork or red tape.

Sounds great. There's a small fee of £499 to transfer the funds. I'll PM you my details and as soon as I receive it I can get the money straight to you.

Olinda99

£20k is not a fortune - maybe premium bonds ?

eskbanker

Olinda99 said:

£20k is not a fortune - maybe premium bonds ?

Premium Bonds have their place, but they really aren't suitable for retirement funding in 25 years time, given their overwhelming likelihood of losing significant real-terms value over that sort of period - investing within a pension or other wrapper is far more sensible!

Olinda99

... but less fun !

Daliah

jpsartre said:

How does one go about investing in a "global tracker or multi asset fund"? Is it something my bank can do for me?

Don't use a bank, for 2 reasons: if they offer investments at all, their charges will be higher than you have to pay, and they might have a limited range of investments. They'll sell you what they will make most money from.

You can easily set up an S&S ISA yourself, and then buy the global tracker or multi-asset fund yourself. For example, you could go for a Vanguard ISA, and one of their Lifestrategy or Target Retirement Funds. For a slightly more expensive option, you could use a robo-investor, such as Wealthify.