I'm selling my house - where do I place a lump sum of c.500k for maximum return?
20 April 2021
Question by Anna
I am selling my house, am in my sixties, where do I place a lump sum of around 500k for maximum return?
Answered by Robin Keyte
Anna this is a very broad question as return is dependent upon the amount of investment risk you are prepared to take and your capacity for loss if things do not go as well as you might hope.
Other key considerations are the length of time for which you can invest and whether you will need to raise an income from the money to meet rental costs if you no longer own your home.
You should also consider whether you have any loans / debts that could be repaid and if there is any planned future capital expenditure you need to hold some cash back for like replacing a car etc.
Armed with this additional information you should be able to identify how you might invest in an appropriate manner apportioning the money to loan repayments / planned capital expenditure, accessible savings and investments.
In general, the more risk you are prepared to take and the longer the period of time you are prepared to invest, the more likely you are to benefit from a return ahead of inflation.
When making investments, it is always wise to ensure you keep a reasonable cash reserve in an accessible account.
Please also keep in mind Financial Services Compensation Scheme (FSCS) protection.
If the property sale proceeds are deposited with banks and building societies it will benefit from FSCS protection on the whole for the first six months under the Temporary High Balances cover.
After 6 months the protection reduces down to £85,000 for deposit taker.
The best deals for easy access savings accounts appear to be around 0.4% to 0.5% per annum gross with fixed rate bonds not much better, between 0.5% and 1.1%.
Otherwise if you wish to consider investment with some exposure to global shares, please note UK registered unit trusts and open ended investment companies (OEICs) have FSCS protection at £85,000 per fund provider, so a portfolio using UK based OEICs and unit trusts spread equally across seven different fund providers should provide a full amount of FSCS protection.