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How should we invest our Premium Bonds?

11 July 2018

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Question by Melanie

We have £100,000 to invest, which is in Premium Bonds at present . We need it as serious illness has changed our lives completely. We have been advised to invest in a Capital Investment Bond from Wesleyan, but fees seem high to me - 0.3% and 1.7% management and on-going advice. Also a Stocks and Shares ISA. I'm considering Wealthify or other online funds. Can you help? We can invest for income stream, as only money is a very small pension. Many thanks.

Answered by Holly Mackay

Sorry to hear that you're dealing with the fallout from illness, Melanie.

My sense in relation to your question is that 1.7% for on-going financial advice, is on the high side.

However £100,000 is a lot of money. You don't need extra hassle on your plate at the moment.

I think it is worth considering getting some professional financial advise.

This doesn't have to mean that you sign up to an ongoing relationship, and you should be able to ask a financial adviser for a couple of hours to speak to them, on a consultancy basis. This will perhaps give you a clearer sense of the way forward.

I'm worried to send you online to manage this, because of a few things.

- Firstly, it's clearly not your comfort zone.

- Secondly, you mentioned that you're investing for an income stream - Some of the robo advisers or online funds you mentioned don't really specialise in this.

Most DIY investors who are investing for an income stream, will look at what we call Equity Income Funds. The problem is that you have to go online and pick and choose these yourself.

I suspect that's probably going to be a step too far out of your comfort zone, reading between the lines of your note.

To move from Premium Bonds to investments could well be a sensible move, if the time frames you're looking at are at least five years.

However investing for an income stream is not the simplest thing to manage yourself online, so I'd really suggest you try and find a financial adviser.

Find one who will be able to charge you an hourly fee to walk through this specific issue with you, and give you the peace of mind I suspect you would like.

Answered by

Holly Mackay

Founder and CEO of Boring Money

I’ve worked in investment markets for over 20 years. I started out at Merrill Lynch Investment Management and worked at a few big names before setting up my first business in 2008.