Best use of lump sum from Pension

clairp99

I am wondering what would be the best way to invest my lump sum of £35k which i have just received from my pension.

Having read this site i think i am now planning to pay off mortgage & other debts totalling £12,400 which will then leave a balance to invest of £22,600.

does anyone know of the best way to invest this?

dunstonh

does anyone know of the best way to invest this?

Depends on what you are trying to achieve with the money, your tax position, risk profile and general circumstances.

clairp99

Well im actually posting on behalf of my father. He is now 60 & has to retire in 5 years where he will then only receive £5k a year therefore he is just looking for the best way to receive an annual income which he can live comfortably on as he is currently earning £18k a year and can live comfortably with that

The only thing he can think of is to put it in a high interest savings account but again its which one too choose & are they safe to invest such a large amount?

JimmyTheWig

He should use his £3600 cash ISA limit, as this will pay interest tax-free. He can add to this each year.
The rest can go into a savings account. Read the articles on this site to see the best ones.
The best interest available at the moment is for one year fixed terms. I see no reason for him not to do that with a large chunk of the money.

Savings of up to £35k are safe, so he shouldn't have a problem. If he goes beyond that then he needs to look in to what to do.

dunstonh

He may find that he needs to invest the money rather than use savings accounts as drawing the interest to live on is a sure fire way to lose money in real terms. That £35k could be worth around £20k-£25k in real terms when hes 70 and the interest it will provide will be lower in real terms as well.

Plus, when he is 65, he may find the interest plus his pensions takes him over the age allowance limit and creates an extra tax liability which is currently nearly £800 a year.

EdInvestor

clairp99 wrote: »

Well im actually posting on behalf of my father. He is now 60 & has to retire in 5 years where he will then only receive £5k a year therefore he is just looking for the best way to receive an annual income which he can live comfortably on as he is currently earning £18k a year and can live comfortably with that.

That's a bit confusing. What pension income is he getting now?How much salary?How much state pension is he likely to get when he's 65?