Financial Advice & Tips

Q: I've got around £330k coming from an inheritance very shortly. would you be able to recommend two types of investment portfolios to maximize the income i can create from it, but also provide some potential for growth please? I’m hoping to achieve around £15k - £18k gross a year... one portfolio of a high risk nature, the other low risk please.

A: If you don’t want to take risks with your inheritance, a gross income of £18,000 equates to a yield of less than 5.5%, which can be achieved by keeping your inheritance in savings accounts – even some variable rate accounts are paying in excess of 6%. If you haven’t done so, you could invest some in cash ISA – you can invest up to £3,600 each tax year. The best cash ISAs are paying over 6%. For the best rates go to www.moneyfacts.co.uk. Depending on how much tax you pay, you might also want to consider National Savings Certificates. They are tax free and you can invest up to £15,000 in each issue; however, they do have to be held for a fixed period of time. The rates on the fixed rate savings certificates are not particularly competitive at the moment therefore I wouldn’t recommend investing just now. Rates on the index linked certificates are more attractive because your investment increases in line with the Retail Prices Index (RPI) plus guaranteed interest on top of this meaning your savings keep their real value against inflation plus earn a little bit extra. Current issues are paying RPI + 1.00% if inflation is a concern to you these could be attractive, particularly if you are a higher rate taxpayer.

Looking at a higher risk portfolio; there is insufficient information for me to make any recommendations; for example, your age, investment goals, attitude to risk, ethical considerations, tax position, etc. In addition, I would not recommend anyone attempt to put together an investment portfolio of equities and other assets, unless they really understand the investments they are investing in. And just as savings accounts need to be reviewed regularly to check that you are getting the best rates available, other investments require regular reviewing to ensure the asset mix is appropriate for your needs and objectives and also to weed out any that are underperforming in their sector. With such a large sum to invest my advice would be for you to get advice from a good independent financial adviser (IFA). A good place to start is IFA Promotion website www.unbiased.co.uk, which will give you a list of IFAs in your area. But don’t just go to the first one on the list, shop around, visit their offices, ask questions – good IFAs normally offer a free exploratory meeting that allows you to get a feel for them and identify if you feel comfortable with them – if you don’t feel comfortable, walk away.

Answered by:

Donna Bradshaw
IFA
IFG Group Plc