Investing a large sum for an income

longwalks1

Theoretically speaking.  If you were 55 years old, with no savings, no debt and worked part time taking home £900 a month, how would you best invest £200k for a regular income?

Open to all suggestions, am interested to know peoples recommendations.

xylophone

best invest £200k for a regular income?


Do you mean using stocks and shares? Deposit accounts?  Pension?  ISA?

longwalks1

sorry, any of the above.  Have no preference at present

dunstonh

am interested to know peoples recommendations.

Insufficient information to go on. 

There are around 30,000 investments that can be held on a modern investment platform and a near infinite combination.     It takes more information to be filtering down the options to work out what tax wrappers, investments you should use.  Then there are quite personal things like investment knowledge, understanding, likely behaviour, chosen investment strategy & drawdown strategy (i.e. yield, total return, bucketing, floats, guardrails, ratcheting, floor and ceiling, boundaries etc).

What is best for one person wont be best for another unless they have an exact match on all things.

We need more info.

grumbler

I think the main question here is how reliable this "regular income" has to be and what happens to the capital.

E.g. it can be an annuity if you don't mean to get the capital back.

EthicsGradient

Also needed as info: is there a minimum income from this that is needed, or is it a question asking "what's the best income that could be generated that would probably keep up with future inflation, but which might, with an unlucky market, not keep up?" Knowing the £10,800 from salary, we don't know the total income needed (eg is there rent to pay, or just living costs?)

xylophone

Cash savings with monthly interest.

https://www.thisismoney.co.uk/money/saving/article-1583868/Best-savings-rates-Monthly-income-saving-accounts-html.html

wmb194

longwalks1 said:

Theoretically speaking.  If you were 55 years old, with no savings, no debt and worked part time taking home £900 a month, how would you best invest £200k for a regular income?

Open to all suggestions, am interested to know peoples recommendations.

Lots of options and it isn't all or nothing but they depend on the amount of risk you want to take.

You could play with the filters on Trustnet e.g., looking at bond/equity funds. The higher the yield the junkier and higher risk they will be but they will plod away and many pay a monthly income (usually classed as interest).

https://www.trustnet.com/fund/price-performance/o/ia-unit-trusts-and-oeics?assetclass=MXAS&norisk=true&sortby=Yield&sortorder=desc&PageSize=25

LHW99

Do you have an autoenrollment pension at work? If so, possibly increasing your contributions to that (getting the additional tax refund into the pension) and using some of the £200k to live on could be an option.

Also to check your SP (read all the wording,not just the first bit) in case you might need to buy some extra years.

https://www.gov.uk/check-state-pension

Linton

Do you need the income to rise with inflation? Inflation matching is expensive but essential in the very long term.
Do you wish to retain the capital, perhaps for a spouse or as an inheritance?
Do you want the income for a restricted period or to last out until you die?
Do you want the income guaranteed?

To give you some tough idea of what sort of income may be possible without taking wild risks…

Fixed rate annuity: about £11k per year guaranteed until you die but would use up all your £200k.  It could be significantly more if you have a reduced life expectancy.

Inflation matching annuity: about £6k per year rising with inflation until you die, and again would use £200k.

Diversified investment portfolio: at least £5k-£6k per year rising with inflation and possibly a significant sum left over for your beneficiaries, but no guarantees.

Cash interest: currently about £9k per year but could be significantly less or a bit more in 5 years time. No inflation matching, no long term guarantees. You would retain your £200k but its value is likely to be significantly reduced by inflation.

longwalks1

Thank you everyone, apologies, I realise I gave you very little helpful info regarding how it would be invested etc.  I will find out more information and get back to this thread in due course.  
Thanks again.