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How best to invest £20,000 from an endowment policy

Penny | Peterborough| 09/08/2018 | 0

  • Stocks and Shares ISA
  • Cash
  • Online Investment Platforms
  • Life Insurance

Penny's question in full

I've got £20,000 from an endowment policy (astonishing, I know), and I'm looking into how best to invest to get a reasonable return without excessive risk. Any thoughts much appreciated!!

Danny Cox's Response

Do you have a clear idea as to when you might want your money back? This will give you a considerable steer on how you should be investing.

Under 5 years, you should stick with cash – the returns won’t be great, but it's too short a period to give the ups and downs of the stock market a fair chance for success.

For timescales beyond this, a stocks and shares ISA will give you plenty of choice and completely tax free returns.

Use an investment platform service as this provides the greatest choice of investment, research, tools to help you choose, and mobile apps so you can check how your money is doing on the move.

A popular low cost approach would be a passive fund which tracks the UK stock market, the FTSE All Share. Active fund managers are more expensive, but have the potential to give you better (and worse) returns that a tracker.

Equity income funds work well for first time investors, as they invest in companies which pay much of their profits to shareholders, known as dividends. Reinvesting rather than spending the dividends has proven a good investment strategy to boost returns.

Our Expert

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Danny Cox

Danny has over 27 years’ experience in personal finance and helping people make the most of their money. Amongst his awards is the coveted Money Management Financial Planner of the year and he is one of only 1% of advisers who are qualified as both Chartered and Certified Financial Planner.

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