Got a lump sum redundancy payment

london21

Hi All,

I got a lump sum redundancy payment over £40k and unsure how to invest it.

I am currently invested in index funds (global index funds).

I am currently applying for new opportunities but the economy not the best currently. 

eskbanker

london21 said:

I got a lump sum redundancy payment over £40k and unsure how to invest it.

I am currently invested in index funds (global index funds).

I am currently applying for new opportunities but the economy not the best currently.

Do you have enough readily-accessible cash in savings accounts to see you through until you're earning again, however long that may be, i.e. are you definitely looking to invest it all or would it be prudent to save some or all of it?

If investing for the long term, what would differentiate it from your existing investment pot, i.e. is there any reason to do anything different with it, if your chosen funds suit your objectives, timescales, risk tolerance, etc?

Are you making enough use of pensions if you don't need access to (some of) it until 55+?

london21

eskbanker said:

london21 said:

I got a lump sum redundancy payment over £40k and unsure how to invest it.

I am currently invested in index funds (global index funds).

I am currently applying for new opportunities but the economy not the best currently.

Do you have enough readily-accessible cash in savings accounts to see you through until you're earning again, however long that may be, i.e. are you definitely looking to invest it all or would it be prudent to save some or all of it?

If investing for the long term, what would differentiate it from your existing investment pot, i.e. is there any reason to do anything different with it, if your chosen funds suit your objectives, timescales, risk tolerance, etc?

Are you making enough use of pensions if you don't need access to (some of) it until 55+?

I do have other money available.

I'm in my mid-30s. In my last role, the combined pension contributions from myself and my employer totaled around £107,881. I finished paying off my student loan in 2022, so I started taking my pension seriously. This is the most I've saved so far — my previous two employers contributed about £18,000 combined.

I need to think it through as i have a lot of money invested in index funds currently, global index fund and S&P500.

Emmia

Personally in your situation I'd keep some (half?) in relatively easy access money to tide you over, and would invest the rest.

Do you have (for example) enough cash /easy access savings to cover 6 months expenses e.g. rent, bills, food etc.

Once you find a job you can move the rest of the cash into an investment.

Brie

Emmia said:

Personally in your situation I'd keep some (half?) in relatively easy access money to tide you over, and would invest the rest.

Do you have (for example) enough cash /easy access savings to cover 6 months expenses e.g. rent, bills, food etc.

Once you find a job you can move the rest of the cash into an investment.

This seems a very sensible approach.  And while it might be tempting to stick some in a pension i think that should wait until you know what's going on with a job - once that's done you might add some of the redundancy to your pension pot should you so wish.  Until then you need to ensure the money is accessible in case you do need it.  

Ocelot

In my most recent redundancy I transferred the lump sum to an IA account, and transferred my salary equivalent to my bank account each month from this.

eskbanker

london21 said:

eskbanker said:

london21 said:

I got a lump sum redundancy payment over £40k and unsure how to invest it.

I am currently invested in index funds (global index funds).

I am currently applying for new opportunities but the economy not the best currently.

Do you have enough readily-accessible cash in savings accounts to see you through until you're earning again, however long that may be, i.e. are you definitely looking to invest it all or would it be prudent to save some or all of it?

If investing for the long term, what would differentiate it from your existing investment pot, i.e. is there any reason to do anything different with it, if your chosen funds suit your objectives, timescales, risk tolerance, etc?

Are you making enough use of pensions if you don't need access to (some of) it until 55+?

I do have other money available.

Sure, but that doesn't really answer the question of do you have enough cash available to see you through until you're earning again - obviously there's an element of uncertainty about that so it's up to you how much, if any, you invest at this stage.

I'm in my mid-30s. In my last role, the combined pension contributions from myself and my employer totaled around £107,881. I finished paying off my student loan in 2022, so I started taking my pension seriously. This is the most I've saved so far — my previous two employers contributed about £18,000 combined.

Likewise, that doesn't really answer the question - I wasn't seeking the absolute level of contributions made to your existing pensions, but wondering if topping up might be suitable for whatever your retirement plans are, if you don't have other plans for the money.

I need to think it through as i have a lot of money invested in index funds currently, global index fund and S&P500.

I don't follow - are you concerned that your existing holdings may not be suitable for your objectives, or just that you feel you have enough in your chosen investments and feel the need to do something different?  'Global index fund' could mean various things but if you have global equity trackers and also separate S&P500 holdings then that would imply concentration risk, although whether that's an issue depends on what you're trying to achieve.

Comments above, not intended to be critical but just highlighting that there may have been nuances that you didn't pick up on....

london21

Emmia said:

Personally in your situation I'd keep some (half?) in relatively easy access money to tide you over, and would invest the rest.

Do you have (for example) enough cash /easy access savings to cover 6 months expenses e.g. rent, bills, food etc.

Once you find a job you can move the rest of the cash into an investment.

Good idea.

I had a lot in instant access then moved some to funds in June. 

london21

Brie said:

Emmia said:

Personally in your situation I'd keep some (half?) in relatively easy access money to tide you over, and would invest the rest.

Do you have (for example) enough cash /easy access savings to cover 6 months expenses e.g. rent, bills, food etc.

Once you find a job you can move the rest of the cash into an investment.

This seems a very sensible approach.  And while it might be tempting to stick some in a pension i think that should wait until you know what's going on with a job - once that's done you might add some of the redundancy to your pension pot should you so wish.  Until then you need to ensure the money is accessible in case you do need it.  

Usually out over 2k in penion each month but finding out the news told HR to pause the pension. It was a shock but will pull though.

london21

eskbanker said:

london21 said:

eskbanker said:

london21 said:

I got a lump sum redundancy payment over £40k and unsure how to invest it.

I am currently invested in index funds (global index funds).

I am currently applying for new opportunities but the economy not the best currently.

Do you have enough readily-accessible cash in savings accounts to see you through until you're earning again, however long that may be, i.e. are you definitely looking to invest it all or would it be prudent to save some or all of it?

If investing for the long term, what would differentiate it from your existing investment pot, i.e. is there any reason to do anything different with it, if your chosen funds suit your objectives, timescales, risk tolerance, etc?

Are you making enough use of pensions if you don't need access to (some of) it until 55+?

I do have other money available.

Sure, but that doesn't really answer the question of do you have enough cash available to see you through until you're earning again - obviously there's an element of uncertainty about that so it's up to you how much, if any, you invest at this stage.

I'm in my mid-30s. In my last role, the combined pension contributions from myself and my employer totaled around £107,881. I finished paying off my student loan in 2022, so I started taking my pension seriously. This is the most I've saved so far — my previous two employers contributed about £18,000 combined.

Likewise, that doesn't really answer the question - I wasn't seeking the absolute level of contributions made to your existing pensions, but wondering if topping up might be suitable for whatever your retirement plans are, if you don't have other plans for the money.

I need to think it through as i have a lot of money invested in index funds currently, global index fund and S&P500.

I don't follow - are you concerned that your existing holdings may not be suitable for your objectives, or just that you feel you have enough in your chosen investments and feel the need to do something different?  'Global index fund' could mean various things but if you have global equity trackers and also separate S&P500 holdings then that would imply concentration risk, although whether that's an issue depends on what you're trying to achieve.

Comments above, not intended to be critical but just highlighting that there may have been nuances that you didn't pick up on....

Thanks yes i have enough cash to be ok. I learnt a relative 30k recently will get that back soon also.

I did not put anything in pension witht he payout as 30k is tax free. I am not pleased tbat the pension age keeps increasing but i do put money in due to the tax benefits.

Yes I have over 300k in index funds already.

Will leave in the bank account for now as i just got the payment today.