Looking for options on what to do with £130k

JonnyMC

Hello, I am 56 years old and currently work 5 days, 40 hours a week in a job I enjoy.

I would like to reduce down to 3 or 4 days a week at work over the next few years and enjoy a bit more free time.

I managed to save up and pay my mortgage off a couple of years ago and I am now debt free and earn more money than I spend.

I have recently inherited around £130,000.

Question is, how can I make that money give me an income?

I have considered:

1. Leave it in various ISA's and bank accounts where it is currently earning around £95 per week interest.

2. Buy a house or flat and generate income by renting it out but this can be problematic.

3. Invest the money in stocks and shares, the risky option.

Any other options or suggestions please?

Thank you.

TheBanker

I am surprised you think investing is more risky than a buy to let property. Personally I would not want the hassle of managing a property (and if you pay an agent to do it, then your income reduces). Do you want the hassle of finding tenants, dealing with repairs, and having periods of no income when the property is empty or the tenants don't pay? Plus if you buy a property now, there's a reasonable chance it will drop in value over the next few years.

Cash deposits are not without risk either - although interest rates are currently high, so is inflation. You might generate a good income over the next year or two, but your cash and income will reduce in real terms due to inflation.

Which leaves investing... Over the long term it's likely to be the best (and perhaps least risky) option, but it really depends what other arrangements you have. As you're 56, knowing what savings and pensions you have will probably help people give some ideas. 

It's not all or nothing, you might decide to keep some in cash and invest some. 

sevenhills

You need to use your maximum ISA and SIPP allowances. You should then invest it in either unit trusts, ETFs or individual shares.
I bought shares in BT last week, but individual shares are more risky. But investing it in accounts paying 5% less than inflation wouldn't be for me.

gascar

I'm in a similar position, but a bit older. I'm considering using Stocks and Shares Isas I have, to invest in ETFs which are doing well - like one which contains a lot of Microsoft, Amazon, Apple etc (though I wouldn't fancy Tesla).

Another approach would be to copy Warren Buffet - most of his dosh is in 5 stocks. And another would be to go for something like S&P 500, or Russell 2000.

American because it's done better than the uk in the last few years, and I can't think of reading of any UK ETF which has done so  well. If you invest in US stocks direct, bear in mind,( as far as I've seen) they take 15% off your profit in tax.

I don't think comments on any of these will be irrelevant to you, JonnyMC.

Actually, 130k is probably enough to get some tech advice from an IFA. A lot of facts are out there, but do you really want to find and remember them all?

dunstonh

Another approach would be to copy Warren Buffet - most of his dosh is in 5 stocks. And another would be to go for something like S&P 500, or Russell 2000.

Going 100% into S&P500 or other would be bad quality investing. 

wmb194

gascar said:

If you invest in US stocks direct, bear in mind,( as far as I've seen) they take 15% off your profit in tax.

You're referring to the 15% dividend withholding tax (30% if you don't complete a W8-BEN form). There is no US withholding or tax due on capital gains (profit).

gascar

Appreciated, wmb194.  I'll start my own thread  ;-)

TeaBee72

I suppose the sensible option is diversification… spread your money accross each of your suggestions. 

The risk of all three failing is a lot lower than an individual one which you could have all your money in.
Depends how risk averse you are too ?

mooneysaver

If you're nervous about investing I would go for a lower risk investment such as a GIA or mortgage trust. The Scottish Mortgage trust seems to be a popular low risk high return option often cited on this forum though I have never used them myself.

retiringtoosoon

Maximising pensions is the correct answer 

gascar

If you want to put it into a pension , you can carry forward unused allowance from the 3 previous tax years, which I assume will be your income in those years - unless you're paying onto a company scheme, then you need someone who can work it out!

Doing that won't give you any more income right now, of course.

Some people are very happy with an Air BnB property - depends where you live.

House prices are falling so you might snag a bargain, ready for the rise when rates fall back.