Cash Ladder

20122013

masonic said:

20122013 said:

masonic said:

Is this the only money you will have to live on over the next few years?

Yes, (as I am looking to invest the rest of my money but  I am unsure whether I should keep a 5 year or a 3 year cash ladder, as my btl should have sold in 3 years time, if not I will reduce the price on the Btl so it will sell and I should still get 3 years spending money from the sale.

So then if the sale completes within 3 years, which seems likely, your year 4 and 5 cash/investments just become year 7 and 8? Or do you have a pension or other assets to support you before then?

If your investment horizon is only 3-5 years then the level of risk you could take in investing the cash is quite limited, and so would be the potential extra returns. However, if the two years money can truly be invested for the long term, then I wouldn't see this as particularly risky.

I plan to invest my 'year 4 and 5 cash/investments'  for 9 - 10 years. 

As a backup I have my small ex-work pension (Scottish Widow)  and I will be able to access it.  I was going to leave it as is but now I am thinking of withdrawing it and put it into S&S, as I have had no income this year so still have my tax allowance. I am not sure whether this will make more sense than selling my S&S or my S&S ISA when my cash ladder runs out, . 

masonic

In that case choosing to invest it would be reasonable. I think its unlikely the property would remain unsold that long if you aren't holding out on some price that isn't realistic.

20122013

masonic said:

In that case choosing to invest it would be reasonable. I think its unlikely the property would remain unsold that long if you aren't holding out on some price that isn't realistic.

That's positive to know. My asking price will be realistic, I think most buyers are expecting a lower price (will likely to make a loss, thinking of selling next year as I have already used up this year's CGT allowance.

Your earlier reply asked about my pension I am trying to figure out when the fund from my property sale runs out,  do you mean I should sell my pension first (to make us of my personal allowance)?  and after that I can either aim to live off my S&S ISA investments then my S&S as I was hoping to move some within the ISA wrapper.  as I only have a world index ACC fund and may need to change it into a INC fund?

Working out whether I have enough money for the next 40 years as I am worry about it (not great with numbers etc)  As I need approx £25K pa  (excl state pension) for the next x 40 years not sure £1.2million will be enough to include inflation. 

Eco_Miser

If you have unwrapped S&S you should be selling enough each year to make full use of the Capital Gains Tax allowance (£3000). You can use the proceeds to either live on (reducing your cash ladder needs), or invest in S&S ISA, or invest in a slightly different investment (see bed and breakfast rules). Otherwise the potential CGT builds up and you find yourself paying lots when you have to sell the investments.  

masonic

20122013 said:

masonic said:

In that case choosing to invest it would be reasonable. I think its unlikely the property would remain unsold that long if you aren't holding out on some price that isn't realistic.

That's positive to know. My asking price will be realistic, I think most buyers are expecting a lower price (will likely to make a loss, thinking of selling next year as I have already used up this year's CGT allowance.

Your earlier reply asked about my pension I am trying to figure out when the fund from my property sale runs out,  do you mean I should sell my pension first (to make us of my personal allowance)?  and after that I can either aim to live off my S&S ISA investments then my S&S as I was hoping to move some within the ISA wrapper.  as I only have a world index ACC fund and may need to change it into a INC fund?

Working out whether I have enough money for the next 40 years as I am worry about it (not great with numbers etc)  As I need approx £25K pa  (excl state pension) for the next x 40 years not sure £1.2million will be enough to include inflation. 

Using your pension up to personal allowance (and any tax free portion associated with it) is a good thing to prioritise over S&S ISA. The latter is a valuable thing to hang on to as it is a more flexible product.

£25k from £1.2m is a 2% withdrawal rate, so yes a global mixed equities/bonds portfolio would have a close to (if not) 100% success rate when backtested over historic 40 year periods. You could even take half the money and buy an inflation linked annuity at about that level of income. Annuity rates these days are good, so it is worth considering using one to guarantee at least some of your income (alongside state pension).

20122013

So my aim will need to have a minimum  return of  £1.2m and need to consider inflation.

 

I will leave the current All world fund as is and then invest into 'global mixed equities/bonds'

It would be great if I can understand the index linked gilts but I have delayed in investing so less time in the market. As I understand the plus points for the index linked gilts (is inflation linked and CGT free) Finger cross I can get similar result with the options I am choosing. 

Appreciate your point of having some guarantee income.  About the annuities, any reason why they are good these days? As I was thinking to invest all into the 'global mixed equities/ bonds' for first 11 years and then use some of that return to buy annuity. Maybe  I should consider doing do 50/50 next year. but not sure if I do this option i can still achieve the minimum return I'd require.