7% return on £700,000

adindas

Keep_pedalling said:

None of this should be put in high risk investments, it must be managed for the best interest of your father not to maximise his children’s inheritance (although short term equity holdings is high risk for that as well)

Unless your father is likely to be in care for many years, then his best interests are to get the best care possible and with £700k cash plus pension income and AA available I would not hesitate to to spend a good chunk of that to achieve that end.

He said permanently in another thread in here

https://forums.moneysavingexpert.com/discussion/6526857/deferred-payment-agreement-versus-house-sale

cloud_dog

adindas said:

Keep_pedalling said:

None of this should be put in high risk investments, it must be managed for the best interest of your father not to maximise his children’s inheritance (although short term equity holdings is high risk for that as well)

Unless your father is likely to be in care for many years, then his best interests are to get the best care possible and with £700k cash plus pension income and AA available I would not hesitate to to spend a good chunk of that to achieve that end.

He said permanently in another thread in here

https://forums.moneysavingexpert.com/discussion/6526857/deferred-payment-agreement-versus-house-sale

The average length of stay in care is not particularly long (relatively speaking).  Someone on these boards did post some stats but I don't have access to them.

JohnWinder

You can map out your own circumstances here, just change the input data:

https://engaging-data.com/will-money-last-retire-early/?spend=70000&initsav=700000&age=60&yrs=40&stockpct=60&bondpct=38&cashpct=2&sex=0&infl=1&taxrate=15&fees=0.25&income=0&incstart=70&incend=100&expense=0&expstart=70&expend=72&showdeath=1&showlow=1&show2x=1&show5x=1&flexpct=0&spendthreshold=100&mort=ss

Shedman

cloud_dog said:

adindas said:

Keep_pedalling said:

None of this should be put in high risk investments, it must be managed for the best interest of your father not to maximise his children’s inheritance (although short term equity holdings is high risk for that as well)

Unless your father is likely to be in care for many years, then his best interests are to get the best care possible and with £700k cash plus pension income and AA available I would not hesitate to to spend a good chunk of that to achieve that end.

He said permanently in another thread in here

https://forums.moneysavingexpert.com/discussion/6526857/deferred-payment-agreement-versus-house-sale

The average length of stay in care is not particularly long (relatively speaking).  Someone on these boards did post some stats but I don't have access to them.

There is a statistic that is oft quoted on these boards but which is pretty meaningless and, in my view, misleading that says the average stay in a care home is less than 2 years.  This is simply the mean average i.e. the very simple arithmetical average.  Having looked at an in depth study when researching care home annuities for my MiL it is much more nuanced than that.  There is a very skewed Bell Curve due to the numbers that die within the first 18 months but the curve has a long tail (up to in excess of 20 years).   One significant factor in the early deaths is that the stats include all those going into care with LA funding who understandably are only admitted as a last resort when they are already in significant decline.  Self funders (and those from the higher social groups (ABC) which clearly a significant number of self funders are likely to be) have a much higher mean average length if stay.  And the median average (i.e. the middle number in the data set) for length of stay for all is nearer to 6 years.  

dunstonh

philiphodges said:

We have to sell my father’s house to pay for his care home fees.  Once sold we will have net £700,000.  If we can invest the money and (net) 7% then that will pay the fees without eroding the capital.

Who could take on such a mandate and what investment to generate that sort of yield?

Doable with equities over the long term but short term volatility would make that difficult.

Is in in residential care or nursing care.  Life expectancy needs to be considered.    i.e. no point looking at long term returns if only a short term is likely to be needed.

An annuity should be considered.  It may be ruled out but it should at least be priced up and considered.

There is a statistic that is oft quoted on these boards but which is pretty meaningless and, in my view, misleading that says the average stay in a care home is less than 2 years. 

I disagree because a) posts need to be short; otherwise, they are not read.   b) when looking at investments, terms of up to 20 years are often needed to get closer to the long term average.   So, a snappy short response mentioning the average is useful for context.    yes, it lacks depth but it focuses the mind.         Context can then grow from that.  i.e. what is the life expectancy?  is it a nursing home or residential (the latter could see much longer life expectancy)?

Most subjects cannot be shorted into a few lines of text on a discussion site without losing some context and nuance.

So, with nursing homes, the average is around 2 years and for investments you really need around 10-20 years but the life expectancy could end up being 10-20 years and the investments could make 50% in 2 years.     But they could lose 50% in 2 years and the person could die in 3.

adindas

Shedman said:

cloud_dog said:

adindas said:

Keep_pedalling said:

None of this should be put in high risk investments, it must be managed for the best interest of your father not to maximise his children’s inheritance (although short term equity holdings is high risk for that as well)

Unless your father is likely to be in care for many years, then his best interests are to get the best care possible and with £700k cash plus pension income and AA available I would not hesitate to to spend a good chunk of that to achieve that end.

He said permanently in another thread in here

https://forums.moneysavingexpert.com/discussion/6526857/deferred-payment-agreement-versus-house-sale

The average length of stay in care is not particularly long (relatively speaking).  Someone on these boards did post some stats but I don't have access to them.

There is a statistic that is oft quoted on these boards but which is pretty meaningless and, in my view, misleading that says the average stay in a care home is less than 2 years.   This is simply the mean average i.e. the very simple arithmetical average.  Having looked at an in depth study when researching care home annuities for my MiL it is much more nuanced than that.  There is a very skewed Bell Curve due to the numbers that die within the first 18 months but the curve has a long tail (up to in excess of 20 years).   One significant factor in the early deaths is that the stats include all those going into care with LA funding who understandably are only admitted as a last resort when they are already in significant decline.  Self funders (and those from the higher social groups (ABC) which clearly a significant number of self funders are likely to be) have a much higher mean average length if stay.  And the median average (i.e. the middle number in the data set) for length of stay for all is nearer to 6 years.  

Does common sense apply here?. Unless they have been diagnose with terminal illness I'd rather trust my decision in taking risk in Bitcoin, which I've been doing for a few years now, in a small proportion than believe in these sort of statistics.

Albermarle

Shedman said:

cloud_dog said:

adindas said:

Keep_pedalling said:

None of this should be put in high risk investments, it must be managed for the best interest of your father not to maximise his children’s inheritance (although short term equity holdings is high risk for that as well)

Unless your father is likely to be in care for many years, then his best interests are to get the best care possible and with £700k cash plus pension income and AA available I would not hesitate to to spend a good chunk of that to achieve that end.

He said permanently in another thread in here

https://forums.moneysavingexpert.com/discussion/6526857/deferred-payment-agreement-versus-house-sale

The average length of stay in care is not particularly long (relatively speaking).  Someone on these boards did post some stats but I don't have access to them.

There is a statistic that is oft quoted on these boards but which is pretty meaningless and, in my view, misleading that says the average stay in a care home is less than 2 years.  This is simply the mean average i.e. the very simple arithmetical average.  Having looked at an in depth study when researching care home annuities for my MiL it is much more nuanced than that.  There is a very skewed Bell Curve due to the numbers that die within the first 18 months but the curve has a long tail (up to in excess of 20 years).   One significant factor in the early deaths is that the stats include all those going into care with LA funding who understandably are only admitted as a last resort when they are already in significant decline.  Self funders (and those from the higher social groups (ABC) which clearly a significant number of self funders are likely to be) have a much higher mean average length if stay.  And the median average (i.e. the middle number in the data set) for length of stay for all is nearer to 6 years.  

Good analysis, but I think you can also maybe make a judgement /guesstimate on each individual, if for example a family member is trying to plan ahead for care fees ( like the OP and many others).
So if the person is very old and ill, then a short stay is likely. However if someone has say early onset dementia and is not even 60, it could very likely be a long stay. Of course you can only guess, but useful to have some kind of timeline to work to. 

LHW99

@adindas With PoA you are restricted in your powers (as said above). 

If the person has already set up equity investments, and has previously been investing over a long term, then it may not be immediately necessary to sell those investments.

However, cryptocurrency investments are not for the majority of persons, even when in full health and mental capacity. That is unlikely to be the case with anyone going into care and with an active PoA.

(just in case a new poster thinks that was a reasonable suggestion)

Hoenir

Financial abuse by Family Members holding a POA is far from uncommon. There are remedies if other family members disagree with the course of action taken. Including ultimately recovery of losses. 

Bostonerimus1

With POA you should be emphasizing the comfort of your father rather then saving capital. I would be using annuities and/or saving accounts. The likely stay in a care facility is a couple of years, but I would plan for far longer and assume a life expectancy into the late 90s unless there are compelling health issues to shorten that.