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Using capital to generate income

Last post 22/12/11 at 00:28 by mistletoeandwhine, 23 replies
Post started by albertdog on 14/12/11 at 15:10

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  • albertdog avatar
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    Posted by: albertdog 14/12/2011 at 15:10
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    I have received compensation for injuries I sustained in a car accident, nearly three years ago.  Altogether, it comes to about £150K.  Contrary to my expectations, I have made enquiries at most of the high street banks and building societies, but none have shown much interest.  I wondered if anyone else had any idea?
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    Posted by: Cervinia 14/12/2011 at 21:01
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    albertdog:

    I have received compensation for injuries I sustained in a car accident, nearly three years ago.  Altogether, it comes to about £150K.  Contrary to my expectations, I have made enquiries at most of the high street banks and building societies, but none have shown much interest.  I wondered if anyone else had any idea?

     

     

    Property rental?

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    Posted by: mistletoeandwhine 15/12/2011 at 18:02
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    Given the record of the high street banks for poor investment advice, you should think yourself lucky they didn't show an interest!  They probably thought you were from Watchdog or something.

    The poster above might be referring to buy-to-let but this would be no good if you needed quick access to the money.

    I'd suggest putting it into a high-interest account until you decide what to do with it.  No-notice accounts will generate around 3% interest so you'll be earning £450 a month before tax.

    You can research things like unit trusts yourself on sites like morningstar and trustnet or you can pay an IFA to do it for you. If you're going to pay for advice, always ask about charges and commission. Advisors usually suggest a portfolio of investments, in savings, bonds, unit trusts, shares and so on but if you like researching that kind of thing you can run your own portfolio. The theory behind it is to have a spread of investments so that if one goes bad you haven't lost everything.
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    Posted by: lindenlea 16/12/2011 at 16:29
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    With inflation on the high side and interest rates poor why not spend some of it - things are only getting more expensive so think about what you might need or enjoy. Should you change the car, would you like to improve your home with a conservatory for instance or a new porch or patio or driveway or kitchen.

    Apart from that I agree with mistletoeandwhine.
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    Posted by: albertdog 16/12/2011 at 21:29
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    Thank you for your advice, everyone.  As I am now disabled, buying things like cars, etc does not appeal.  I really need to generate some income from the money, as other than state benefits, I have no other money coming in.  Since TP have lost the records from ILEA, my pension has a fourteen year gap in it.  If I took the reduced pension, based on my contributions with other LEAs, I would have to settle for that; hopefully, attempts being made by my union, MP, etc to get this matter will bear fruit.

    I contacted banks and building societies, not for stocks and shares based investments, but for savings account, income bond, and the like.  Only Santander bothered to reply, but considered £150k too small a sum to engage their interest.
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    Posted by: autismuk 16/12/2011 at 22:03
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    albertdog:

    I have received compensation for injuries I sustained in a car accident, nearly three years ago.  Altogether, it comes to about £150K.  Contrary to my expectations, I have made enquiries at most of the high street banks and building societies, but none have shown much interest.  I wondered if anyone else had any idea?

     

    With your £150k, how do you want to maintain the value of your lump sum ?

    You could (i) try to maintain its real value (ii) try to maintain its value, but discount inflation or (iii) let it dwindle away over a period of time?

    For how long does this cash have to keep you going ? You could be 40 or 60, for example and it would make a significant difference.

     

     
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    Posted by: autismuk 16/12/2011 at 22:09
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    mistletoeandwhine:
    The poster above might be referring to buy-to-let but this would be no good if you needed quick access to the money.
     

    Not really practical to achieve a decent rate and have quick access. Buy to Let may not be such a bad idea if  you can find the right property. The problem with B2L are stupid levels of gearing and/or buying houses at loopy prices because, supposedly, boom and bust had ended.

    mistletoeandwhine:
    I'd suggest putting it into a high-interest account until you decide what to do with it.  No-notice accounts will generate around 3% interest so you'll be earning £450 a month before tax.

    Anything offering that rate will limit withdrawals or have a special bonus rate, or be an ISA, which is too small for £150k. In practice the best I can find is 2.75% , £343 before tax. Inflation is somewhat higher than that :(

    mistletoeandwhine:
    You can research things like unit trusts yourself on sites like morningstar and trustnet or you can pay an IFA to do it for you. If you're going to pay for advice, always ask about charges and commission. Advisors usually suggest a portfolio of investments, in savings, bonds, unit trusts, shares and so on but if you like researching that kind of thing you can run your own portfolio. The theory behind it is to have a spread of investments so that if one goes bad you haven't lost everything.

    Good advice. Don't trust IFAs any more than you would a FA employed by (say) NatWest.

     

     
  • magic surf bus avatar
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    Posted by: magic surf bus 16/12/2011 at 22:37
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    albertdog: At some point I hope to inherit a sum from my late mother's estate that I will be looking to invest as a way of plugging the holes in my pension provision created by supply teaching. I'm thinking I might go for a mixture rather than chucking it all in the same type of investment. Options I've so far considered are:

    Buying more pension direct from TPA, but this only pays off after about 10 years of being a pensioner.

    Putting most into some sort of 5 year bond, maybe NS&I, that will see me through to around 57, after which I'll be considering retiring.

    Investing a portion of it directly in gold, the price of which has surged during the recession, and will probably continue to rise for some time to come, though it does have its ups and downs.

    Speculating on the price of certain collectables that can be bought relatively cheaply now in the hope that they will increase in value in future years.

    Spending some of it on equipment and stock that will enable me to earn money as a sideline. In effect, a small business start up.

    Investing a portion in the shares of far eastern manufacturers, or in companies that have patents on newly-emerging technologies, or are significantly involved in developing renewable energy sources - all potential areas of growth.

    One rather off the wall thought I had was finding out how you indirectly invest in foreign government bonds like Italy or Spain, which are currently attracting high interest rates, although there could be a risk of default here.

    It's worth remembering in your case that the FSCS savings guarantee scheme only covers one authorised institution up to £85,000, so don't go chucking it all in one bank, and keep an eye out for who owns each bank.

    Home improvement looks like an option too - property prices have to start going up again at some point.

  • albertdog avatar
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    Posted by: albertdog 17/12/2011 at 12:17
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    I will be 62 on Wednesday.  I have investigated paying more into the TP, but was told that this could only be done if I was still contributing to it and at least five years away from claiming the pension.  Giving the difficulties I am having with TP regarding the loss of records for ILEA, that is not something with which I would feel happy doing.  At what I am amazed is that none of the high street banks or building societies are interested in taking the cash and putting into a savings account.  Years ago, if you went along with £100, they would gladly put it on deposit for you; now it seems that £150k is just too small for them.  As I said, only Santander replied to my enquiries but only to say that the sum i had to offer was not worth it.
  • mistletoeandwhine avatar
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    Posted by: mistletoeandwhine 17/12/2011 at 13:14
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    Not really practical to achieve a decent rate and have quick access. Buy to Let may not be such a bad idea if  you can find the right property. The problem with B2L are stupid levels of gearing and/or buying houses at loopy prices because, supposedly, boom and bust had ended

    I'd already made the point about quick access.  Rents are rising, so it may offer a decent return for some.  Its a long-term investment so it might suit the OP if he has children he would like to inherit the property.  Houses aren't at 'loopy prices' any more so that doesn't appear to be relevant.  You need to calculate what return you would get after the monthly mortgage, tax, agency fees and maintenance are taken off.
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