Retire in 3years - money to invest

Bobon_Time · 13 April 2022 at 8:59AM

I have decided to retire from teaching in 3 years time at 56 years old. My pension will be just enough to continue my current lifestyle (I have no mortgage/debts) but I have money at the moment which is not working for me and I want to invest to increase my monthly pension income in 3 years time when I retire.

£50,000 in premium bonds,

£55,000 (very recent inheritance) sat in bank saving account,

£20,000 in Cash ISA.(not put any money into ISAs this year)

£60,000 in AVC (Prudential),

I also have £200 monthly wage I can invest rather than going into a bank savings account

When I retire I will receive £70,000 in lump sum which will also need investing.

Thanks for any advice.

penners324 · 13 April 2022 at 9:13AM

Pension probably the best option just for the tax element. Either current AVC provider or an easy to open SIPP (Vanguard, Nutmeg, PensionBee, Hargreaves Landsowne).

Albermarle · 13 April 2022 at 9:18AM

In the long term investing in stocks and shares should produce a better return than savings accounts . However in the shorter term ( < 5 years ) you could find investments actually making a loss if your were unlucky. Also in the long term investments should beat inflation although at the moment that is not happening .
So for money you might need ( for emergencies or for income in less than 5 years ) you would be better to keep this in cash.

Then you can look at investing . You have two basic decisions to make .
At what risk level to invest.
Whether to invest via a pension ( usually a good idea due to the tax relief) or via a Stocks and shares ISA or outside any tax shelter ( maybe necessary due to the amounts involved or a mixture of all three.
I am not an expert on the Teachers Pension scheme but maybe you could add more to the AVC?

If you are going to DIY invest , you will need to start some reading/learning . Regularly reading this forum is a good start as similar sorts of questions get asked every day .

Thrugelmir · 13 April 2022 at 11:37AM

There's options to use the pension wrapper without taking taking undue risk. Unfortunately little can be done to protect against inflation in the short term. Keep building the pot until such time as you reach your personal objectives. In the future annuities may again be a viable option and provide an alternative source of guaranteed income. The long drawn out bull market does appear to be at the final stage of euphoria. As the cheap money punch bowl is finally removed off the table .