How to invest 35000 for a small regular income

eskbanker

macman said:

if you want zero risk and do not want to invest, then you are limited to savings accounts only at around 3.5% at present.

If you want zero risk then it would be better to read back through the earlier posts in the thread in order to understand why there is no such thing as a 'zero risk' option, so it isn't a meaningful phrase or aspiration....

mooneysaver

The best you can make risk free at the moment is 3.5% in a fized term savings account

Heedtheadvice

I do wish thise who post with 'zero risk' statements would also define what they mean by that. I fully expect that they mean zero risk to the capital sum or possibly zero risk to the interest rate changing. In the extreme it is possible neither are true for savings accounts but agree it is very unlikely.

As has been pointed out by several good posters there is nothing that is absolutely zero risk but there is a whole scale of risk levels. They vary in scale, likelyhood and impact on things like capital (presevation or keeping up with inflation), income rate (level of and variability), volatility of the whole lot!.

Some risks will be acceptable especially given timescales and the potential rewards for taking higher risk.

It is good that posters explore and explain as often the question asked is simple (as in the first post) but too simple to give a good suggestion as to the answer.

Some might ask, get a simple answer (such as Kassy might give) but then regret having not understood implications or realising the wrong question has been asked. Others might be perfectly happy with the simple answer.

The only way of finding that out is to ask question, give relevant info, pose scenarios give alternative options, point out pitfalls etc. Far too easy to underthink important issues!!

I am always reminded of the tourist question of a local in Ireland 'how do I get to Dublin' which gets the answer 'if you want to go to Dublin, I wouldn't start from here'. Not an analogy for this thread but if considered could well lead to more questions and a better response!

Albermarle

mooneysaver said:

The best you can make risk free at the moment is 3.5% in a fized term savings account

Apart from the fact that after 12 months your money will be guaranteed to be worth around 7% less.

mylifemyrules

I have no problem with risking a bit of it maybe 5000 or so and investing it for probably 10 to 12 years but I do also want to save some and put some towards more mortgage. Does anyone know what might be better a stock's and shares ISA or a bond? 

xylophone

I've come into a inheritance of 35000, Ideally I want to invest it in a way that would give me a small regular income as I'm ill and can't work.  I'm not sure if such a thing is possible but hopefully someone can give me a idea. Do you have any advice please on what type of investment could do this for me. I have no debts (apart from mortgage which has 97000 left on it) 

Above is where this started.

And below where we've reached.

I have no problem with risking a bit of it maybe 5000 or so and investing it for probably 10 to 12 years but I do also want to save some and put some towards more mortgage. Does anyone know what might be better a stock's and shares ISA or a bond? 

You could consider a stocks and shares ISA  - maybe Vanguard would suit.

https://www.thisismoney.co.uk/money/investing/article-9752413/Be-single-minded-pick-ONE-multi-asset-fund.html

https://www.vanguardinvestor.co.uk/

You might then consider reducing your mortgage by the amount you desire.

As for a bond....a word with many meanings.... at the very simplest, a savings account with a fixed term - is this what you mean?

https://www.comparethemarket.com/savings-accounts/fixed-rate/

https://moneyfacts.co.uk/savings-accounts/fixed-rate-bonds/

mylifemyrules

xylophone said:

I've come into a inheritance of 35000, Ideally I want to invest it in a way that would give me a small regular income as I'm ill and can't work.  I'm not sure if such a thing is possible but hopefully someone can give me a idea. Do you have any advice please on what type of investment could do this for me. I have no debts (apart from mortgage which has 97000 left on it) 

Above is where this started.

And below where we've reached.

I have no problem with risking a bit of it maybe 5000 or so and investing it for probably 10 to 12 years but I do also want to save some and put some towards more mortgage. Does anyone know what might be better a stock's and shares ISA or a bond? 

You could consider a stocks and shares ISA  - maybe Vanguard would suit.

https://www.thisismoney.co.uk/money/investing/article-9752413/Be-single-minded-pick-ONE-multi-asset-fund.html

https://www.vanguardinvestor.co.uk/

You might then consider reducing your mortgage by the amount you desire.

As for a bond....a word with many meanings.... at the very simplest, a savings account with a fixed term - is this what you mean?

https://www.comparethemarket.com/savings-accounts/fixed-rate/

https://moneyfacts.co.uk/savings-accounts/fixed-rate-bonds/

Yes thank you that is what I mean. I currently overpay 50 a month on my  mortgage. 

eskbanker

Albermarle said:

mooneysaver said:

The best you can make risk free at the moment is 3.5% in a fized term savings account

Apart from the fact that after 12 months your money will be guaranteed to be worth around 7% less.

Strictly speaking, the money is more likely to be worth over 10% less, given that OP is looking to generate income from it and so would presumably be accessing the interest monthly rather than leaving it to compound.

However, 10% real terms value loss would be partially offset by that 3+% income, so yes, the net effect would be in 7% territory as you say.

Perhaps also worth noting that 3.5% is the AER, which assumes that the interest is left to compound, so withdrawing the interest every month would drop the interest rate to the gross 3.45%....

mooneysaver

eskbanker said:

Albermarle said:

mooneysaver said:

The best you can make risk free at the moment is 3.5% in a fized term savings account

Apart from the fact that after 12 months your money will be guaranteed to be worth around 7% less.

Strictly speaking, the money is more likely to be worth over 10% less, given that OP is looking to generate income from it and so would presumably be accessing the interest monthly rather than leaving it to compound.

However, 10% real terms value loss would be partially offset by that 3+% income, so yes, the net effect would be in 7% territory as you say.

Perhaps also worth noting that 3.5% is the AER, which assumes that the interest is left to compound, so withdrawing the interest every month would drop the interest rate to the gross 3.45%....

The other reason to choose AER is that they are FSCS protected, which means your money is protected and the 3.5% is totally risk free (better bet than going for slightly higher interest without the protection IMO).

eskbanker

mooneysaver said:

eskbanker said:

Albermarle said:

mooneysaver said:

The best you can make risk free at the moment is 3.5% in a fized term savings account

Apart from the fact that after 12 months your money will be guaranteed to be worth around 7% less.

Strictly speaking, the money is more likely to be worth over 10% less, given that OP is looking to generate income from it and so would presumably be accessing the interest monthly rather than leaving it to compound.

However, 10% real terms value loss would be partially offset by that 3+% income, so yes, the net effect would be in 7% territory as you say.

Perhaps also worth noting that 3.5% is the AER, which assumes that the interest is left to compound, so withdrawing the interest every month would drop the interest rate to the gross 3.45%....

The other reason to choose AER is that they are FSCS protected, which means your money is protected and the 3.5% is totally risk free (better bet than going for slightly higher interest without the protection IMO).

I think you're missing the points I was making - the reference to AER was highlighting that someone such as OP depositing a lump sum in a savings account in order to generate income doesn't receive the AER as such but the (slightly) smaller gross rate, because of not leaving the interest in the account to compound.

And I'm certainly not advocating that OP invests rather than saving in a FSCS-protected deposit account, but the issue that you (and others) seem to be missing is that doing so isn't "totally risk free" - there is no risk of capital loss but there is clearly inflation risk, as discussed above and on the first page or two of this thread....