What to do with £350k
Discussion
Hello all.
This isn't for me (I'd love to be in this position!), I'm asking for family members.
A recently retired couple are thinking of selling their house they rent out. They expect after capital gains tax they'd have about £350k left.
What would be the best way to invest this? They'd be looking for relatively low risk investment with a monthly return.
Both drawing pensions, one under the income tax allowance, the other in the 20% bracket. They are mortgage and debt free.
Thanks
This isn't for me (I'd love to be in this position!), I'm asking for family members.
A recently retired couple are thinking of selling their house they rent out. They expect after capital gains tax they'd have about £350k left.
What would be the best way to invest this? They'd be looking for relatively low risk investment with a monthly return.
Both drawing pensions, one under the income tax allowance, the other in the 20% bracket. They are mortgage and debt free.
Thanks
Fill their ISAs (£20k each - my choice would be something like a Vanguard LifeStrategy low-cost LS100)
Fill their PBs (no idea if they have any - up to £50k each).
That uses up to £140k
& the rest?
They could potentially pop £2,880 each into a pension (which HMRC will boost to £3,600)
Gift their offspring 3K (total) to avoid any IHT issues....more if they fancy their chances living 7 years.
Go on a world cruise...perhaps with any offspring - live a little.....
Pop the rest into a couple of general investmant accounts (savings), with a view to chucking £40k into ISAs next April.
Nice position to be in!
Fill their PBs (no idea if they have any - up to £50k each).
That uses up to £140k
& the rest?
They could potentially pop £2,880 each into a pension (which HMRC will boost to £3,600)
Gift their offspring 3K (total) to avoid any IHT issues....more if they fancy their chances living 7 years.
Go on a world cruise...perhaps with any offspring - live a little.....
Pop the rest into a couple of general investmant accounts (savings), with a view to chucking £40k into ISAs next April.
Nice position to be in!
Pretty much as above, but then buy a UK gilt with any funds remaining, on a timescale and yield to suit them
A near risk free investment, as long as you hold until maturity and the main gain has the added advantage that is free from CGT
https://www.yieldgimp.com/
A near risk free investment, as long as you hold until maturity and the main gain has the added advantage that is free from CGT
https://www.yieldgimp.com/
Edited by PoorCarCollector on Friday 12th July 12:04
Paul Lazzaro said:
Hello all.
This isn't for me (I'd love to be in this position!), I'm asking for family members.
A recently retired couple are thinking of selling their house they rent out. They expect after capital gains tax they'd have about £350k left.
What would be the best way to invest this? They'd be looking for relatively low risk investment with a monthly return.
Both drawing pensions, one under the income tax allowance, the other in the 20% bracket. They are mortgage and debt free.
Thanks
Probably not enough information to be able to answer really. But I would comment that as I understand it, the idea of wanting a "low risk" investment at age 65 is no longer as recommended as it was.This isn't for me (I'd love to be in this position!), I'm asking for family members.
A recently retired couple are thinking of selling their house they rent out. They expect after capital gains tax they'd have about £350k left.
What would be the best way to invest this? They'd be looking for relatively low risk investment with a monthly return.
Both drawing pensions, one under the income tax allowance, the other in the 20% bracket. They are mortgage and debt free.
Thanks
i.e. if you are 65, you might well live for another 30 years, in which case, you don't have a short term investing horizon, you have a long term investing horizon,
In which case, given you have pensions etc that provide the actual "income" you need, then the sensible play is probably to invest with a 20 year view and not a 3 year view which probably means a fair percentage in equities.
In which case, I'd stick it in an index tracker in whichever tax free wrapper you can and if you want to "drawdown" 4% p.a. then you can do that to.
As said above, fill any tax free wrapper available and then invest the rest and don't get twisted about the CGT thing. Its a tax on gains after all . I for one have made in past few years WAY over any stupid guilt returns in simple tracker and that would be the case even if I were paying highest rate of CGT
Don't let the tail wag the dog
Don't let the tail wag the dog
The one that is below the Personal Allowance has some scope here, PA is £12570, every one except the high earners gets £1000 Savings Interest allowance, but there's also an extra £5000 Savings interest Allowance available, Now to earn £6000 in savings interest plus the difference presumably from State Pension to Tax Free Allowance is the more entertaining problem.
AFTER maxing out ISA's to secure future tax free income, that leaves a bit more than £300k x 7% offers additional income of £21k....reducing this to £80k at 7% would offer £5600 income, probably about right, the remainder is the issue to keep the taxmans hands off it!
7% is easily available via Structured Products, I use this place.... https://www.moneyworld.com/savings-investments/str... .....but others are available.
AFTER maxing out ISA's to secure future tax free income, that leaves a bit more than £300k x 7% offers additional income of £21k....reducing this to £80k at 7% would offer £5600 income, probably about right, the remainder is the issue to keep the taxmans hands off it!
7% is easily available via Structured Products, I use this place.... https://www.moneyworld.com/savings-investments/str... .....but others are available.
PM3 said:
As said above, fill any tax free wrapper available and then invest the rest and don't get twisted about the CGT thing. Its a tax on gains after all . I for one have made in past few years WAY over any stupid guilt returns in simple tracker and that would be the case even if I were paying highest rate of CGT
Don't let the tail wag the dog
The problem is, the OP said relatively low risk, hence Gilts being an excellent option and they also said they wanted a regular income from it (did you read the post fully?)Don't let the tail wag the dog
I personally would recommend the stock market for many, but not for someone looking for low risk, especially in retirement years, as per the OP
Edited by PoorCarCollector on Friday 12th July 13:00
PoorCarCollector said:
PM3 said:
As said above, fill any tax free wrapper available and then invest the rest and don't get twisted about the CGT thing. Its a tax on gains after all . I for one have made in past few years WAY over any stupid guilt returns in simple tracker and that would be the case even if I were paying highest rate of CGT
Don't let the tail wag the dog
The problem is, the OP said relatively low risk, hence Gilts being an excellent option Don't let the tail wag the dog
I personally would recommend the stock market for many, but not for someone looking for low risk.
Personally I consider most world / developed world trackers as being in the reasonable long run as relatively low risk. I rationalise it as only being risky if I NEED some of the money or all at some fixed time in future , Don't specifically need all or most, no terrible risk.
My very aged mother likes guilts . She will die with it all, and has missed out on decades of huge return potential, or just spending. Her IFA is also " lovely" too . gggggggghrrrrrrrr
PM3 said:
I do at least half agree with you. Problem often is people run this .....Oh I want to invest, good return but low risk....fairy tale . Its all relative.
Personally I consider most world / developed world trackers as being in the reasonable long run as relatively low risk. I rationalise it as only being risky if I NEED some of the money or all at some fixed time in future , Don't specifically need all or most, no terrible risk.
My very aged mother likes guilts . She will die with it all, and has missed out on decades of huge return potential, or just spending. Her IFA is also " lovely" too . gggggggghrrrrrrrr
Exactly, old people love stability and yes, it is often at a large financial cost longer term, but, it is safe and stable and it's their money after all. Personally I consider most world / developed world trackers as being in the reasonable long run as relatively low risk. I rationalise it as only being risky if I NEED some of the money or all at some fixed time in future , Don't specifically need all or most, no terrible risk.
My very aged mother likes guilts . She will die with it all, and has missed out on decades of huge return potential, or just spending. Her IFA is also " lovely" too . gggggggghrrrrrrrr
I gave up trying to tell my late parents.
It's all about balance, a finger in all pies and then wind down the riskier side, the further into retirement you get.
Would love to see some of the suggestions.mikeiow said:
Fill their ISAs (£20k each - my choice would be something like a Vanguard LifeStrategy low-cost LS100)
Fill their PBs (no idea if they have any - up to £50k each).
That uses up to £140k
& the rest?
They could potentially pop £2,880 each into a pension (which HMRC will boost to £3,600)
Gift their offspring 3K (total) to avoid any IHT issues....more if they fancy their chances living 7 years.
Go on a world cruise...perhaps with any offspring - live a little.....
Pop the rest into a couple of general investmant accounts (savings), with a view to chucking £40k into ISAs next April.
Nice position to be in!
VLS 100 at retirement age ?Fill their PBs (no idea if they have any - up to £50k each).
That uses up to £140k
& the rest?
They could potentially pop £2,880 each into a pension (which HMRC will boost to £3,600)
Gift their offspring 3K (total) to avoid any IHT issues....more if they fancy their chances living 7 years.
Go on a world cruise...perhaps with any offspring - live a little.....
Pop the rest into a couple of general investmant accounts (savings), with a view to chucking £40k into ISAs next April.
Nice position to be in!
At retirement age I'm not sure 100 % equities is the way forward, perhaps roll them back 40 years :-)
VLS60 at the minimum I reckon but agree with the rest.
DT1975 said:
VLS 100 at retirement age ?
At retirement age I'm not sure 100 % equities is the way forward, perhaps roll them back 40 years :-)
VLS60 at the minimum I reckon but agree with the rest.
Fair comment, although as mentioned above, they might have 25-30 years ahead of them.At retirement age I'm not sure 100 % equities is the way forward, perhaps roll them back 40 years :-)
VLS60 at the minimum I reckon but agree with the rest.
I'm personally less keen on the lower LS funds due to their UK bias, but each to their own.
As also mentioned above, not enough details to know what they *need* from this money….always the options to have a split around several funds.
Or indeed investigate taking out an annuity if they want ‘risk free’ money from it. Not my preference, but it’s not my money!
Purchased Life Annuity.
No risk and assuming they're 60+ you'd get 6-7% on a level basis, which is kind of like just using the cash for 30yrs on a 4% interest rate. Difference is the money won't run out if you live a long time.
Added bonus is only a smaller part of it is liable to income tax, so either no tax or something like 5-10% on the gross sum if you're a basic rate taxpayer.
If not for all of it, at least for part.
No risk and assuming they're 60+ you'd get 6-7% on a level basis, which is kind of like just using the cash for 30yrs on a 4% interest rate. Difference is the money won't run out if you live a long time.
Added bonus is only a smaller part of it is liable to income tax, so either no tax or something like 5-10% on the gross sum if you're a basic rate taxpayer.
If not for all of it, at least for part.
lancslad58 said:
Get some professional advice from someone who is qualified to give advice.
I'd say this is sensible though you're into the whole "percentage of invested assets forever" thing with most advisors.At the very least be very careful of suggesting things to family.
You're a rock star when peoples money is making 20% a year.
Don't put yourself in a situation where there's a downturn and the charge is "well you told us we should do this".
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