I have ISAs, a small pension and 50 thousand in cash. Where should I put some of the cash?

13 September 2021

Question by Mel

I have Isa's worth 60 thousand pounds with Wesleyan. I was a teacher. I lost my husband last year to Motor Neurone Disease. I have a 17 year old daughter. A small (very small) pension and 50 thousand in cash. I have no mortgage. Where do I put some of the cash. I'm keen to invest in nutmeg or wealthify but cautious.

Answered by Jeannie Boyle

Hi Mel

Trying to deal with financial decisions whilst still grieving can be overwhelming. I think you are wise to proceed with caution.

Investing money that you don't need in the next few years should give you a better return than a bank account. However, it means taking some risk with the money - you give up certainty over the value in exchange for potentially higher growth.

Over the long term we can be confident that the returns from stock market investing will be better than a bank account. In the shorter term there is a risk that sudden market falls (Covid, the financial crisis etc) mean you get back less than you invested if you need to withdraw the money quickly.

I suggest you start by thinking about how much of your cash you are likely to need over the next three years. Will you need to help your daughter in higher education for example? In addition to any known spending plans make sure you keep aside enough cash to deal with an emergency. Wesleyan offer investment and cash ISAs so your existing ISAs may provide you with a healthy cash balance.

You could look into topping up your pension with some of the money. If you are still working then you will benefit from tax relief on your payments which will help boost your savings. A basic rate taxpayer would get an extra £25 from HMRC for every £100 they pay in. Now might be a good time to check what benefits you have under the Teachers' Pension so you can start to get clarity on what your retirement income might be.

ISAs are the other tax-free way to save & invest. You can use robo-advice services such as Nutmeg or Wealthify to open an ISA. They will take care of managing the portfolio for you once you have selected the type of investments you would like. The sign up process will include risk profile questions to help you with this. You will hopefully come out of that process with a portfolio that suits your cautious outlook. That means having a lower allocation to shares, which can increase in value but are more volatile, and a higher allocation to corporate and government bonds. These tend not to grow in value as quickly as shares, but their value doesn't fluctuate as much. This helps reduce the risk of loss in your investments.

Most financial advisers offer a free meeting which might be just what you need to talk through some of these options.

Answered by

Jeannie Boyle

Chartered Financial Planner

I'm a Chartered Financial Planner & Fellow of the Personal Finance Society. I work with people in Brighton, London & anywhere in between. My specialism is helping people align their money with their values. Many of my clients share my commitment to protecting the environment and investing to create a better future for our planet. My company, EQ Investors, has won multiple awards for our Positive Impact Portfolios and I have personally been recognised as a leading adviser in this sector.