£120000 to invest for retirement

karen_aughton

I have £120000 I want to invest for retirement. I want to draw the interest each month. I want to split it into 3 investments. All must be 100% safe, no risk. Short, medium and long term. Where do you suggest I invest and what is my expected interst per month.

plonkee

There is no 100% safe investment. The very safest investment is cash i.e. savings accounts, but you run the risk of it not being eroded by inflation. It doesn't really make that much difference whether it's long, short or medium term if you're just going to keep it in cash.

I reckon you could currently generate £500 a month in interest from a sum like that (doing very approximate figures), but if you want it to last a considerable period of time don't forget that in about 16 years, that £500 will only buy you £250 worth of stuff in today's money - I reckon an income of £200-£300 a month would be a much safer bet for the long term.

Aegis

If you want 100% risk free investments, you have basically 2 options: Northern Rock (until the government removes its protection) and National Savings. Both are 100% backed by the Treasury at the moment, but both will fail to maximise your returns and may see your capital reduce in real terms due to inflation.

You might well be best talking to a pension-specialist IFA to discuss the best strategy to match your needs. That way you'll make sure you plan well for retirement.

dunstonh

£120k in cash will be worth about £84,000 in 10 years if you draw the interest from it so the risk is present on savings accounts.

Its a case of taking a sensible risk and doing a bit of mix and match. You also have to consider taxation and age allowance (where applicable).

If you are talking cash savings then you can draw around 1-2% p.a. and use the rest to cover inflation. If you are talking investments (which your post suggests now) then you can go 4-5% p.a. with the rest averaged out to cover inflation

ratttyo

120k is worth 84k in 10 years. How did you work that out.

so what interest percentage on your savings do you have to get to keep up or beat inflation?

jem16

ratttyo wrote: »

120k is worth 84k in 10 years. How did you work that out.

Try this calculator. RPI at the moment is 3.8%

so what interest percentage on your savings do you have to get to keep up or beat inflation?

At least 3.8% net.

daywalker

jem16 wrote: »

Try this calculator. RPI at the moment is 3.8%



At least 3.8% net.

The problem is, this RPI figure is a load of tosh.
Inflation affects you in different ways depending on your lifestyle surely? This is mortgage, cars (the fuel you put in) the type of food you buy (some food types being hit by price rises far higher than others).
Yes, I'm overcomplicating it and appreciate you are making it simply but the RPI figure cannot be applied to everyone.

dunstonh

ratttyo wrote: »

120k is worth 84k in 10 years. How did you work that out.

so what interest percentage on your savings do you have to get to keep up or beat inflation?

Took a rough calculation to take into account inflation. As inflation is unknown and varies it is impossible to give an exact figure. I just used 70% of the current value. However, if inflation is what many people think it "really" is then you could be looking as much as halving the value in 10 years