What to do with £120k?

[MDS1951]

Thank you very much for starting this topic, spiderbill. I may well be in a similar postion to you in a few months time and some of the responses to your query have chimed with my intention to put the bulk of whatever inheritance comes my way mainly into tracker funds.

[spiderbill]

Thank you very much for starting this topic, spiderbill. I may well be in a similar postion to you in a few months time and some of the responses to your query have chimed with my intention to put the bulk of whatever inheritance comes my way mainly into tracker funds.

You're most welcome MDS. Haven't finalised my decisions yet (life and flu getting in the way recently) but expect to in the next few weeks, at which point I'll post them here.

cheers
Spiderbill

[spiderbill]

I promised I'd report back when I made the decision, so here we are again. This is my second try at writing this - I'd almost finished the first one when the board ate my post and I couldn't get it back. You'd think I'd have learned to write complex posts offline by now!

I actually made the decision about 6-7 weeks ago but wanted to see how it went for a few weeks with before reviewing it and writing this. Perhaps surprisingly it wasn't really what I originally expected to be doing. My plans had previously been along the general lines of an income strategy - trying to build up sufficient income-generating investments to live largely on the resultant income along with a little part-time work and a small draw-down from my pensions. My previous direct share investments had mostly gravitated towards a HYP approach after starting out as more mixed, and have built up a useful stream currently running about 5.1% - although I still have some reservations about HYP from a capital point of view.

However after reviewing my overall investments with an advisor it seems that my pensions are doing pretty well, particularly in the last year, and were worth continuing, so rather than start using their contents as soon as I retire it was suggested that I could live off spare cash (I have around 25k built up in my business which has had tax paid on it already) thus minimising income tax on any part-time consultancy work until I fully retire and until the state pension kicks in in 3 years, and meanwhile invest 80k of the 120k into an OEIC.

This is a higher risk/return one than my existing medium/balanced one and fitted in well with my overall risk profile. (The exisitng one has gained about 50% over 6 years; so solid gains but not wonderful (FT100 TR gained about 66% over that time)). If the new does much better I may even move the old one over, but we'll wait and see.

In the meantime I continued adding around 12k to my individual shares and ITs (for those interested they were Aviva, NG, Vod, HSBC, Schroders, Taylor Wimpey, and KCOM, and Foreign and Colonial - the latter are doing well and I wish I'd bought more at the time). I will max out this year's ISA with a few bed-and-ISA moves to reduce the likelihood of slipping into dividend tax territory. For the next 4/5 years I'll use the ISA allowance to move the OEIC into shelter and simply top up existing shares from dividends.

That leaves around 28k of this pot in reserve for now - I'm still considering the Slovenian business idea and might need capital for that. Otherwise I'll probably buy some more Foreign and Colonial, and/or some VWRL, both of which have been good choices so far.

All told we end up with 40% in property (incl. my main residence), 15% in direct shares, 14% in OEICs, 16% in pensions, and 3% in IT/ETF which will probably rise, and about 12% in cash.

So, maybe not the most sophisticated plan and it's possible I could have tweaked in a bit more growth or mixed in additional pension provision via a new SIPP perhaps, but it seems to cover my needs barring major economic collapse and contains enough diversity to help me sleep at nights. If I'd been in a position to review it all earlier I suspect I'd have opened a SIPP before now if only for future inheritance tax planning, but right now it doesn't seem to be necessary.

So far it's working well - the OEIC has gained 2.5k though obviously that could easily be reversed given Trump trade wars or Brexit lunacy. But it seems fairly resilient to market drops up to now.

One final thing to say is that the process has woken me up a bit more to enjoying some of my assets while I'm still young enough. After mainly being a saver all my life and not having a great need for luxuries, I'm both becoming more relaxed about the future and mentally shifting gears to work out what I can enjoy with it all. That's got to be a good thing.

Hope this discussion has been of use to some of you, though my circumstances may well be different to yours, and thanks for all suggestions - even if I didn't take them they were still useful in my deliberations.

cheers

Spiderbill