Do I need a financial advisor or should i do it myself?

Pat4retirement

Hi,

I am 55, mortgage free and considering retiring early (age 60).  I have a good company pension that I don't want to access until retirement age (63.5).

I want to spend the next 5 years saving enough money to live on until I access my pension.

I have £120K sitting in a Natwest savings account and can save around £3K per month.  Do I need to get a financial adviser to help me maximise my return or is this amount too small to be spending a lot of money with an adviser and I should just find the best savings deals?

I am very risk averse, so am unsure about stocks and shares but I know I can do better than what I am currently.

Any advice would be really appreciated.

Thank you.

Alexland

Pat4retirement said:

I have £120K sitting in a Natwest savings account and can save around £3K per month.  Do I need to get a financial adviser to help me maximise my return or is this amount too small to be spending a lot of money with an adviser and I should just find the best savings deals?

You could shop around cash products or invest in a money market fund which is an ultra low risk S&S investment that cuts out the retail banks in accessing the debt markets so you don't need to frequently switch accounts but either way except a few small promo accounts your return is likely to be lower than inflation so your spending power will diminish each year. Sure you can top up the spending power by contributing more but eventually you will be running to stand still.

Pat4retirement said:

I am very risk averse, so am unsure about stocks and shares but I know I can do better than what I am currently.

Over the long term shortfall risk and inflation are more important than volatility risk. Most of us are used to our money going up and down by thousands each day because we are in no hurry to sell and have an eye on the likely long term returns that a sensible S&S investment should provide.

Do you need an advisor - depends on if you can devote the time to learning more, building confidence and applying yourself. In addition to investment choices it's worth considering if you are optimising your tax position with this money.

Pat4retirement said:

I am 55, mortgage free and considering retiring early (age 60).  I have a good company pension that I don't want to access until retirement age (63.5).

I want to spend the next 5 years saving enough money to live on until I access my pension.

If you intend to use most or all of this money to cover living costs between 60-63.5 then 5 years is a bit short for a traditional S&S multi asset investment in equities and bonds to have a very high chance of a positive outcome however using a pension wrapper for the tax benefits and then investing some or all in a money market fund might be suitable. The tax relief might in some way make up for the poor return on using a low risk/return product with similar likely return profile to cash. Not advice just a pointer of where you might start looking.

Beddie

If you are very risk averse, then you should be going nowhere near stock and shares on a 5 year timeline. You therefore do not need a financial adviser.

There is a separate post about using lots of regular savings accounts, which is a lot of hassle but can earn you more interest. Personally I think it's more effort than it's worth.

For an easier life and decent enough interest, just get a great instant access account (or 2, should really have less than £85k with any one provider for FSCS cover.)

Also, get a cash ISA as you you'll be paying tax on your interest outside it. Put £20k a year into one.

https://moneyfactscompare.co.uk/savings-accounts/easy-access-savings-accounts/?quick-links-first=false

https://moneyfactscompare.co.uk/isa/easy-access-cash-isas/?quick-links-first=false

Good luck with your savings goal.

MX5huggy

You need to read up on pensions. You should pump that £120k into a pension while you have the earnings to cover large contributions. 

Whether you use your company pension or a separate SIPP to do this depends on what the company pension is and how you contribute to it. 

Albermarle

I have £120K sitting in a Natwest savings account and can save around £3K per month.  Do I need to get a financial adviser to help me maximise my return or is this amount too small to be spending a lot of money with an adviser and I should just find the best savings deals?

A financial advisor would normally be happy to deal with a client with £120K and saving £3K per month. However they would only really be interested if you wanted to invest most of it.

Not really sensible to pay a professional just to look at a savings account comparison table that you can do yourself in 5 minutes.

Normally a big bank like Nat West have pretty awful savings rates, so first step is to move it to one of the smaller banks or building societies that pay better rates. All the savings providers in the moneyfacts link in a previous post are UK licenced banks and covered by the FSCS £85K compensation scheme. The fact you may not have heard of some of them is not an issue.

Same for all the savings providers in this list .

Savings accounts: 3.55% easy access or up to 4.6% fixed (moneysavingexpert.com)

You should also consider putting some of the money in a fixed rate savings account.

Also learn about tax on savings

What is the personal savings allowance? (moneysavingexpert.com)

The above is a relatively simple way to at least increase the interest rates you can achieve on your savings.

However you should also take on board the comments about using a new pension, to take advantage of pension tax relief.