Best way to invest £190k to generate a monthly income
Discussion
Armitage.Shanks said:
Right so the guy's 70 and been dropped £190k? Working on living until 85 (and that's a finger in the air for anyone and to be active) why not just play it safe draw down what's needed?
It amazes me that people in their 70s are intent on making and making more and more money and not taking the advantage of spending it before its too late. Unless they feel obligated to passing the estate on.
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My thinking to. It amazes me that people in their 70s are intent on making and making more and more money and not taking the advantage of spending it before its too late. Unless they feel obligated to passing the estate on.
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The chap is 70 & has £190k he doesn't want to erode the capitol because he wants it to last forever and is expecting to pass money on as inheritance.
If this is the case shouldn't the focus be on structuring the entire estate in order to reduce any potential IHT situation in the future as the £190k could be quite significant an you'd be darn pissed off if a relative lives sparingly for years only for the tax man to nab most of it!
It's not unrealistic for a healthy 70 year old to be thinking about living beyond 90 and when you have no capacity to earn monry protecting the capital you have is surely a primary concern.
Perhaps its worth looking into buying an annuity, for the benefit of being fully informed as much as anything.
Perhaps its worth looking into buying an annuity, for the benefit of being fully informed as much as anything.
98elise said:
How about a number of high dividend yield FTSE 100 shares? Direct line yield 8% 
There are various strategies that are based on high yielding FTSE 100 shares (e.g. https://www.fool.co.uk/investing-basics/the-high-y... but they have suffered in the last decade (IIRC) as the index itself hasn't done that well (on risk/return basis) compared to global alternatives, and the value factor has also underperformed. (Capital depreciation may not be a concern if income is sole priority).mrwonderful said:
if you're interested my brother used to be an asset manager for Investec and now runs his own wealth management firm. He could get you 15k a year with that amount. More than happy to pass his details on even if you just want some advice and a 5 minute chat?
The irony is strong with this one.NickCQ said:
Not really relevant if the owners aren’t trying to let them out though, is it? Versus redundant commercial property where there is no occupier demand of any kind.
Exactly. if i had £190,000 to invest it would not be on marginal, tertiary commercial property. Retailing shifts very quickly, so it's easy to find that nice unit on a high street soon become vacant, or tatty arcade. There's a reason yields on this stuff are over 10%. Put it into a 1,500 sq ft light industrial unit maybe, but after agent's fees, say 10% and bugger all rental growth it will be a 10% ARY, and the equated will be really crap.
Small commercial property investments can work, if you are picky and can move very quickly, but for many, it ends up a nightmare, with poor returns, extended voids, nightmare tenants and unforseen cap ex.
Derek Chevalier said:
How on earth would he do that at relatively low risk?
He sets up and manages HMO's in desirable areas, gets the licences etc, nothing genius, new or completely risk free, he's just quite good at it. All the tenants are all independent so if a room is empty for a month it's not the end of the world. He generally buys them on interest only mortgages so you only need around £40-50k to get into it and still get back £11-12k a year as well as growth in the property. He has a few and sets them up for other people and never has any real issues other than the odd boiler packing in. I'm not sure exactly how but he sets them up in a company to help with the tax changes they've brought in. I'm not claiming to be an expert, i really know naff all! Anyone has any questions i'll ask him!!!mrwonderful said:
He sets up and manages HMO's in desirable areas, gets the licences etc, nothing genius, new or completely risk free, he's just quite good at it. All the tenants are all independent so if a room is empty for a month it's not the end of the world. He generally buys them on interest only mortgages so you only need around £40-50k to get into it and still get back £11-12k a year as well as growth in the property. He has a few and sets them up for other people and never has any real issues other than the odd boiler packing in. I'm not sure exactly how but he sets them up in a company to help with the tax changes they've brought in. I'm not claiming to be an expert, i really know naff all! Anyone has any questions i'll ask him!!!
I'd be interested in having a chat with him. Genuinely.PM me please....
aka_kerrly said:
The chap is 70 & has £190k he doesn't want to erode the capitol because he wants it to last forever and is expecting to pass money on as inheritance.
If this is the case shouldn't the focus be on structuring the entire estate in order to reduce any potential IHT situation in the future as the £190k could be quite significant an you'd be darn pissed off if a relative lives sparingly for years only for the tax man to nab most of it!
I'm not sure where the 'obligation' is to pass on money as though it's a rite of passage via inheritance. If this is the case shouldn't the focus be on structuring the entire estate in order to reduce any potential IHT situation in the future as the £190k could be quite significant an you'd be darn pissed off if a relative lives sparingly for years only for the tax man to nab most of it!
mrwonderful said:
Derek Chevalier said:
How on earth would he do that at relatively low risk?
He sets up and manages HMO's in desirable areas, gets the licences etc, nothing genius, new or completely risk free, he's just quite good at it. All the tenants are all independent so if a room is empty for a month it's not the end of the world. He generally buys them on interest only mortgages so you only need around £40-50k to get into it and still get back £11-12k a year as well as growth in the property. He has a few and sets them up for other people and never has any real issues other than the odd boiler packing in. I'm not sure exactly how but he sets them up in a company to help with the tax changes they've brought in. I'm not claiming to be an expert, i really know naff all! Anyone has any questions i'll ask him!!!Edited by Armitage.Shanks on Friday 7th December 23:29
I don’t think there is any rush to invest in anything lump sum wise at the moment. We are clearly in the middle of a hiatus, rebasing or fundamental shift in asset values. Cash is becoming more valuable at present.
No harm in placing a lump sum on a reasonable deposit somewhere safe and spending 2019 watching and learning and waiting to see which way we are going to go.
During that period also focus on the tax aspect to ensure the least amount is paid. The pension wrapper is particularly of note depending on specific age, income and activity to date as paying a lump sum into a wrapper could potentially give an instant 20% return which could then start to be drawn. Other areas to consider are whether replacing a child’s mortgage or personal debt with your own loan could produce a good return and family benefit etc etc.
The consumer landscape as well as the global macro landscape looks to be changing and it seems unlikely that asset values are going to race away but more likely they decline.
If the property market is of interest then as a cash player I would be more focussed on short dated lease properties that rent at the lower end of the market. The State underpins a lot of risk and if debt is becoming less scarce then there will be less competition for these types of properties and fewer people to renew the leases. Just make sure you dump them for £1 before the lease expires.
No harm in placing a lump sum on a reasonable deposit somewhere safe and spending 2019 watching and learning and waiting to see which way we are going to go.
During that period also focus on the tax aspect to ensure the least amount is paid. The pension wrapper is particularly of note depending on specific age, income and activity to date as paying a lump sum into a wrapper could potentially give an instant 20% return which could then start to be drawn. Other areas to consider are whether replacing a child’s mortgage or personal debt with your own loan could produce a good return and family benefit etc etc.
The consumer landscape as well as the global macro landscape looks to be changing and it seems unlikely that asset values are going to race away but more likely they decline.
If the property market is of interest then as a cash player I would be more focussed on short dated lease properties that rent at the lower end of the market. The State underpins a lot of risk and if debt is becoming less scarce then there will be less competition for these types of properties and fewer people to renew the leases. Just make sure you dump them for £1 before the lease expires.
Sheepshanks said:
Those who got into it 20+ years ago are making out like bandits - based on purchase price, which isn't the way yield is calculated, but seems a fair enough way of loooking at it to me.
You've said it - BTL is for those who are looking to hold for 20 years+ imo... With inflation raising prices while eroding the mortgages etcselmahoose said:
Just out of interest, is there anyone who thinks this represents a worrying picture of commercial property as a lettable commodity?
Glasgow+40 = the entirety of Central Scotland ie from tiny kiosks and offices to huge industrial units ie most of Scotland's commercial property.
https://www.rightmove.co.uk/commercial-property-to...
Is 1316 to let a seriously high number/percentage?
hmmm
Try looking for a lo-cost shop to rent in Glasgow. Say up to £600pcm. See many? I had to go to page 15 before I found ANY. And that was a dump in a war zone.
Maybe they're there but just don't advertise on RM. Yep. And do you know WHY?
I tend to agree with your view that small commercial units that are in areas where the economy is fundamentally underpinned by the benefits economy probably offer the best opportunity in the property market at present. We do have the shake out of this Universal Credit fiasco to consider though as that has the potential to reduce local spending power. Glasgow+40 = the entirety of Central Scotland ie from tiny kiosks and offices to huge industrial units ie most of Scotland's commercial property.
https://www.rightmove.co.uk/commercial-property-to...
Is 1316 to let a seriously high number/percentage?
hmmm
Try looking for a lo-cost shop to rent in Glasgow. Say up to £600pcm. See many? I had to go to page 15 before I found ANY. And that was a dump in a war zone.
Maybe they're there but just don't advertise on RM. Yep. And do you know WHY?
Edited by selmahoose on Wednesday 5th December 22:26
But where we will probably always disagree is that the reason yields are higher is not necessarily all due to risk but probably much to do with the mindset that is required to source and manage such a portfolio. You have that mindset but my view has always been that the average investor simply does not. It’s the same with residential BTL at the lowest level, it takes a certain mindset and skill to set those properties up correctly or you end up paying way over the odds in maintaining them.
It’s generally good practice for investors to stick to what they know andnnaturally understand rather than diving in amongst those that do and financing the learning curve out of their own pocket.
NicoG said:
mrwonderful said:
He sets up and manages HMO's in desirable areas, gets the licences etc, nothing genius, new or completely risk free, he's just quite good at it. All the tenants are all independent so if a room is empty for a month it's not the end of the world. He generally buys them on interest only mortgages so you only need around £40-50k to get into it and still get back £11-12k a year as well as growth in the property. He has a few and sets them up for other people and never has any real issues other than the odd boiler packing in. I'm not sure exactly how but he sets them up in a company to help with the tax changes they've brought in. I'm not claiming to be an expert, i really know naff all! Anyone has any questions i'll ask him!!!
I'd be interested in having a chat with him. Genuinely.PM me please....
Not sure why nobody has addressed the fact that the OP's father lives in a country other than UK, and presumably wants an steady income in that country.
With this in mind, owning property directly in a country other than the one he lives in is a ridiculous idea. If he really wants exposure to property, he should:
Buy a fund or REIT, that (due to scale) will be paying far less to manage a portfolio of properties than he will for one, and (with all REITs) he will receive 90% of the net rental income, which would probably exceed the net proceeds of his single shop/flat etc. and/or
Consider buying one or more property/(ies) for holiday lettings etc if he lives in a holiday/beach/ski resort and wants to pay a manager or manage himself, but we cannot assume that he does.
Given that he has some kind of income currently so this is in addition to that income, and with very few other facts, I would suggest he splits his money between:
Premium Bonds, which are seen as secure and should provide a low but stable tax-free income, with the potential for larger wins and guaranteed return of capital if/when required
Equity income funds, with allocation in favour of the currency that his expenditure is in, so IUKD (sterling), IDVY (EUR) and/or one of the many Dividend Aristocrats funds available for USD. All have low management charges and IDVY currently pays out more than 6% yield according to the key facts page at ishares.
With this in mind, owning property directly in a country other than the one he lives in is a ridiculous idea. If he really wants exposure to property, he should:
Buy a fund or REIT, that (due to scale) will be paying far less to manage a portfolio of properties than he will for one, and (with all REITs) he will receive 90% of the net rental income, which would probably exceed the net proceeds of his single shop/flat etc. and/or
Consider buying one or more property/(ies) for holiday lettings etc if he lives in a holiday/beach/ski resort and wants to pay a manager or manage himself, but we cannot assume that he does.
Given that he has some kind of income currently so this is in addition to that income, and with very few other facts, I would suggest he splits his money between:
Premium Bonds, which are seen as secure and should provide a low but stable tax-free income, with the potential for larger wins and guaranteed return of capital if/when required
Equity income funds, with allocation in favour of the currency that his expenditure is in, so IUKD (sterling), IDVY (EUR) and/or one of the many Dividend Aristocrats funds available for USD. All have low management charges and IDVY currently pays out more than 6% yield according to the key facts page at ishares.
A more PH solution would be to buy an awesome cigarette boat and enjoy the thrills and spills of couriering fine North African resin across the Straights.
Excellent double digit ROI, wonderful little hobby for a retired gentleman and with zero downside as the worst case scenario is that we’ll be paying all your living costs going forward.
Excellent double digit ROI, wonderful little hobby for a retired gentleman and with zero downside as the worst case scenario is that we’ll be paying all your living costs going forward.
DonkeyApple said:
A more PH solution would be to buy an awesome cigarette boat and enjoy the thrills and spills of couriering fine North African resin across the Straights.
Excellent double digit ROI, wonderful little hobby for a retired gentleman and with zero downside as the worst case scenario is that we’ll be paying all your living costs going forward.
Chris Craft Stinger 390x Miami Vice or Wellcraft 38' Scarab KV?Excellent double digit ROI, wonderful little hobby for a retired gentleman and with zero downside as the worst case scenario is that we’ll be paying all your living costs going forward.
Derek Chevalier said:
DonkeyApple said:
A more PH solution would be to buy an awesome cigarette boat and enjoy the thrills and spills of couriering fine North African resin across the Straights.
Excellent double digit ROI, wonderful little hobby for a retired gentleman and with zero downside as the worst case scenario is that we’ll be paying all your living costs going forward.
Chris Craft Stinger 390x Miami Vice or Wellcraft 38' Scarab KV?Excellent double digit ROI, wonderful little hobby for a retired gentleman and with zero downside as the worst case scenario is that we’ll be paying all your living costs going forward.
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