Investment opinions

Spurmeon2win

Hi all, long time lurker, first time poster here. I’m looking for some opinions/advice on investing a considerable amount of money to make it work for me moving forward.

Firstly some background. My wife sadly passed away earlier this year after a long battle against cancer. Her job had a very generous death in service plan which has since paid out enabling me to pay off the mortgage and all
debt leaving me with a good sum to invest. This is where it becomes problematical (for me) 

I’m nearing 60 and we have 3 young children under 13. As my wife was the main bread winner I was a stay at home dad for a long time pre Covid then when she got ill I became her carer. As a result, I can’t get a job due to school runs etc so I need to live off the interest earned by the capital sum. 

I’ve had a few meetings with my bank and their investment teams and after completing a client profile I’m deemed as very risk averse. I knew this as my attitude to any kind of financial risk has always been tentative to say the least. And this time round my family and me are relying on it so much more.

So I’m looking for opinions on the best way to invest to create an income to take me into retirement and beyond. Talking to the investment team they have come up with quite a few strategies to enable this. My concern is if I lose the lot my only asset would be the house. And that’s the children’s inheritance along with their ISA’s.

As you can probably tell I’m very new to this and the thought of taking the wrong step is giving me lots of sleepless nights

Middle_of_the_Road

Condolences to you the children.
You'll get some helpful replies from more knowledgeable posters, I'm no expert regarding investments, but I have learned from reading on here, that any advice provided by a bank will not be impartial.
Depending on the amount involved an independent financial advisor (IFA) is usually recommended. They will have access to the whole market, unlike a Banks's salesperson.

Investing usually should be a longer term endeavour, ideally 10 year minimum, so you would need to have access to other funds for short term unforeseen events.
You would be very unlikely to 'lose the lot' with broad based investments over the longer term, as the timeframe will allow  the market to recover.

Another point that you might need advise on regarding your wishes that your children inherit your property. In the event you needed to move into long term care, it could be that the property would need to be sold to fund this. 

Spurmeon2win

Thanks for the reply and your condolences. I should have said, I am also meeting with an IFA, who’s also a long time family friend as my wife worked with her for an investment bank for many years. She’s already been sent a copy of the client analysis for when we meet up in August 

Albermarle

I’ve had a few meetings with my bank and their investment teams and after completing a client profile I’m deemed as very risk averse. I knew this as my attitude to any kind of financial risk has always been tentative to say the least. And this time round my family and me are relying on it so much more.

It is a tricky concept to grasp but in fact by being too risk averse, you are actually bringing more risk on to your families future financial situation.

In simple terms a very risk averse person would keep all their money in cash savings. This means in the long term it is most likely that the interest will not compensate for inflation. So even if you did not spend any of it, it would slowly lose value. 

Historically investing money has in the long term brought greater rewards than saving it and easily beat inflation.

Of course how the money is invested is important, and of course in the short and medium term the value can go up and down, but the long term trend has always been up. As already said in a previous post if you stick to mainstream diversified investments the chance of losing it all is zero, but they can still be volatile. The IFA can advise on suitable investments for someone of your age and personality, along with keeping some in cash savings as well.

So be cautious by all means if that is the way you are, but remember taking no risks is the biggest risk of all.

Spurmeon2win

Thanks for the advice so far. I’ll return later this evening to reply properly

dunstonh

So I’m looking for opinions on the best way to invest to create an income to take me into retirement and beyond.

Unfortunately, there is no risk-free option when it comes to income.    Every option has risks and actually taking the lowest investment risk can make it higher risk than taking sensible investment risk.

Talking to the investment team they have come up with quite a few strategies to enable this. My concern is if I lose the lot my only asset would be the house. And that’s the children’s inheritance along with their ISA’s.

Whatever the solution is, it won't be made up of one thing.   It will be a combination.     
Taking the least investment risk (i.e. cash savings) can still see you lose the lot.   Cash doesn't have investment risk but it suffers greater shortfall risk and inflation risk.   At your age, relying on cash for life will see you suffer if you stick solely to cash.   

For example, £100k where you draw the interest as income will have the value of around £67k in 10 years time or £45k in 20 years time.    The interest generated will also suffer with inflation erosion.  So, sooner or later you will start dipping into the balance to top up the income.    Which is in turn will reduce the interest paid requiring you to dip in more.  So, you start this spiral of drawing interest and balance until there is nothing left.

Investments introduce investment risk but reduce the risk of shortfall risk and inflation risk.    

Annuities could also be considered and whilst generically suitable, the commercial terms available may or may not make them viable.   However, as a combination of options, they could play their part.

A local IFA is better placed than a salesforce at the bank.   Bank product ranges tend to be limited and banks have a woeful track record on investments.   Most of the banks have actually stopped giving advice and turned to guidance.  However, guidance puts the ball in your court.   ie. they don't work out what is best for you but they put a range of solutions in front of you to select.       

Realistically, you need someone to help coach and train you on the various risks.      When knowledge and understanding increases, views on risk tend to change.    Nobody would expect you to go gung ho off the scale but it is a sliding scale and its all about considering ALL risks and not just one or two in isolation.

LHW99

Spurmeon2win said:

Thanks for the reply and your condolences. I should have said, I am also meeting with an IFA, who’s also a long time family friend as my wife worked with her for an investment bank for many years. She’s already been sent a copy of the client analysis for when we meet up in August 

It's good you have a IFA ready to meet with (but do make absolutely sure about the I = independent bit). However, sometimes it can be better to keep business (investing your money) separate from friendship.

Not implying anything about the competance of this person, only that money / relationships can become fraught at times.