Investment strategy

piaad

Can I please ask for some ideas about investing £450k from the sale of an inheritance property, it is currently rented making about £1200 per month. I am a basic rate tax payer and looking for a monthly income to supplement a pension. I prefer low risk rather than investments in the stock market and trusts. 

aroominyork

Have you thought about buying an investment property and renting it out?

piaad

aroominyork said:

Have you thought about buying an investment property and renting it out?

I'm uncomfortable with being a landlord, but thank you for the suggestion

wmb194

piaad said:

Can I please ask for some ideas about investing £450k from the sale of an inheritance property, it is currently rented making about £1200 per month. I am a basic rate tax payer and looking for a monthly income to supplement a pension. I prefer low risk rather than investments in the stock market and trusts. 

Well, if you don't want stockmarket investments it's savings accounts and Premium Bonds.

https://moneyfactscompare.co.uk/savings-accounts/

Bravepants

Yes savings accounts and Premium Bonds are your best options. Just make sure that the annual interest rate is greater than the rate of inflation to be sure you won't erode your money's worth in real terms.

PropertyGuru_Wannabe

If I were you I would invest it but if not then you can buy an annuity with the funds so you get paid for X amount of years for it.

jimjames

piaad said:

. I prefer low risk rather than investments in the stock market and trusts. 

There is no reason why all of it needs to be in the same thing. Long term keeping it all in cash isn't low risk either. Even if you had say £100k invested then that would moderate the risk levels with 75% of it in cash but still give you some inflation protection.

You've not given your age but if you're already drawing a pension does that mean you're over state pension age?

InvesterJones

wmb194 said:

piaad said:

Can I please ask for some ideas about investing £450k from the sale of an inheritance property, it is currently rented making about £1200 per month. I am a basic rate tax payer and looking for a monthly income to supplement a pension. I prefer low risk rather than investments in the stock market and trusts. 

Well, if you don't want stockmarket investments it's savings accounts and Premium Bonds.

https://moneyfactscompare.co.uk/savings-accounts/

What about funds? For example, bond funds that pay monthly income?

wmb194

InvesterJones said:

wmb194 said:

piaad said:

Can I please ask for some ideas about investing £450k from the sale of an inheritance property, it is currently rented making about £1200 per month. I am a basic rate tax payer and looking for a monthly income to supplement a pension. I prefer low risk rather than investments in the stock market and trusts. 

Well, if you don't want stockmarket investments it's savings accounts and Premium Bonds.

https://moneyfactscompare.co.uk/savings-accounts/

What about funds? For example, bond funds that pay monthly income?

That's stockmarket.

dunstonh

 I prefer low risk rather than investments in the stock market and trusts. 

You mean low risk investments of the type that recently suffered larger losses than a typical stockmarket crash but with none of the same upside?

In reality, you are looking at very limited options and all have risk when it comes to income provision.

1) cash - shortfall risk and inflation risk and an eventual erosion cycle when it ceases to be enough.
2) fixed interest securities - little more risk than cash but potentially better upside but unlikely to be sufficient enough to avoid inflation risk and shortfall risk.
3) property - you don't want it
4) stockmarket - in the vast majority of periods, it is the best option
5) annuity - gives income security at expense of capital
In reality, a combination of cash, fixed interest securities and stockmarket usually results in the best outcome.

You are just looking at various risks and going too low risk can actually be more damaging than going too high risk.

aroominyork

dunstonh said:

You are just looking at various risks and going too low risk can actually be more damaging than going too high risk.

I think this is the key point, and it's often based on an insufficient understanding of how markets work. For an amount of £450k it could be worth consulting an IFA.