Selling our house and how to live off the equity?

consumerpower

Hello,

Very exciting we are selling our house, and going travelling round the world. In total (includng our savings) we will have approx £150K and we would like to spend 100K travelling the world over five yrs (or until it runs out).

But I have no idea of where to start regarding, where to keep it, how we can earn the maximum interest, how can we have an annual drip feed of money etc? Was thinking of going to see a fianacial adviser?

Would really appreciate any help

jon3001

My first thoughts are to look at moving it out of GBP and into hard currencies: EUR, CHF, JPY.

purch

My first thoughts are to look at moving it out of GBP

I would agree with that 100% .............. I wouldn't necessarily agree with the soft/hard argument to a huge degree, but the balance of probability in my mind would be for Sterling to depreciate in real terms over the next year, and as you will not need to spend the currency as you intend to travel, holding your funds in a readily/easily exchangable currency would be a sensible idea.

The Euro is likely to hold it's value better than GBP, and it is easily exchangable all over the world so it might make a good choice initially

CLAPTON

For the money you need to access over the next five years you should save this in various savings acccounts... its too short a time to consider investing in stock and shares.

If you are travelling the world then consider internet accounts as this means you can manage them anywhere in the world. These combined with debits cards will allow you to withdraw money for your travels.

Its worth you both opening nationwide current a/cs (flexaccount) as they do not charge any foreign transaction fees when you withdraw cash using their debit card.
Similarly it worth getting their credit card for emergency use.

Nationwide don't offer the best saving rates but they are not too bad if you don't want to keep swapping money around. The best a/cs invariably drop their rates after six months or so.

Also you need at least one other bank a/c each in case your nationwide debit card is refused anywhere.

consumerpower

Thanks, do you think we should go and see an indepent financial advisor?

Or do you think we could do enough research & manage it ourselves?

jon3001

CLAPTON wrote: »

Its worth you both opening nationwide current a/cs (flexaccount) as they do not charge any foreign transaction fees when you withdraw cash using their debit card.
Similarly it worth getting their credit card for emergency use.

If you want a back-up credit card then the Post Office Mastercard also has 0% forex load.
http://www.postoffice.co.uk/portal/po/jump1?catId=19400177&mediaId=34100665

dunstonh

Thanks, do you think we should go and see an indepent financial advisor?

IFAs are investment advisers. You dont want to invest so there is little an IFA can do for you apart from perhaps the £50k that you dont intend to spend in the 5 years.

ormus

i would keep enough for say 1st year spending. invest the rest in the top 25 FTSE companies.
average (long term) stock market return is approx 12%.

you can sell and withdraw as and when required. and still have the 50k plus invested after the 5 yrs.
put any cash into an (instant access?) account with high/best rates.

see the motley fool website for general investment guide/advice.

jon3001

ormus wrote: »

i would keep enough for say 1st year spending. invest the rest in the top 25 FTSE companies.
average (long term) stock market return is approx 12%.

I think investing 80% of the spending money is very risky for a 5yr horizon. I'd say no more than 10%. You could go higher if you don't mind cutting your trip short if the investments turn sour.

Aegis

ormus wrote: »

i would keep enough for say 1st year spending. invest the rest in the top 25 FTSE companies.

I'm sorry, but this really strikes me as some pretty bad advice. Investments should be for a minimum term of 5 years to smooth out the downturn. If next year is as bad for the FTSE as some people are predicting, the total amount available to spend over the next 5 years could effectively drop from £150000 to £120000, at which point everything they wanted to withdraw to spend would effectively be costing them 20% more than it should have done! Even if the investment then grows for the next 4 years, the overall result could easily still be a net loss in real terms.

average (long term) stock market return is approx 12%.

You can't apply long term averages to short term investments. Long term averages smooth out a lot of the volatility, which can be extremely significant in the short term.

you can sell and withdraw as and when required. and still have the 50k plus invested after the 5 yrs.

Or they might find themselves with nothing at the end of 5 years. A single bad year at thew start combined with selling assets regularly could easily result in that much difference with an investment strategy such as the one you mentioned.

put any cash into an (instant access?) account with high/best rates.

This is what they should be doing with all the money they plan to spend in the next 5 years, plus a contingency value. Anything left over could be safely invested, though I would suggest a better strategy than just buying shares in the top FTSE companies...

see the motley fool website for general investment guide/advice.

Do they really have advice like this on their site?


To the OP: you are not in an ideal position to be investing the majority of this money. You hopefully would be able to benefit from tax-free interest on your savings accounts if you split the money between you (and you might not need to pay tax as a non-resident anyway... Ask a tax specialist about that one!), so you should be able to get an instant access account for your short-term savings, and a fixed account or two for your medium term savings, all paid tax free. While it may not reach the dizzying heights of a stockmarket investment, your money will not run the very real risk of being worth less than it was initially when you need it, unless inflation runs rampant in the next few years.

Others have suggested changing the currency. This may be a good idea, but someone with more expertise in the matter would be able to advise ytou better on this particular subject. Certainly the Nationwide and Post Office cards would be a must for their commission-free spending in foreign currency.

Anything left over from your budgeting could be put into stocks and shares to grow while you are away. Best to talk to an IFA about that if it's a sizeable sum, otherwise you can probably read through some of the threads here for an idea of how to invest for growth.

Good luck!

purch

but someone with more expertise in the matter would be able to advise ytou better on this particular subject

..............we just did !!! :rotfl: :eek: :rotfl: