I’m almost 66 with only a state pension. I'm about to sell a property and would like to invest - please may I have some advice
18 October 2021
Question by Stan
I’m almost 66 have no private or company pension: so state pension only. However, I own 3 buy to let properties, one of which I’m about to sell. After tax I’ll receive about £190k. I’d like to buy a fund or funds where I could take an irregular draw down when needed. Any advice please.
Answered by Andrew Neligan
Investing the proceeds from the sale of your buy to let property is a good way to spread the risk around the world and through different asset classes (that's what financial planners like myself call 'diversification').
Without knowing specifics about your situation you should consider the following:
- If you have mortgage debt you might be better placed paying it off or reducing it.
- Make sure you have enough in savings to cover known and unknown ad-hoc expenses. You wouldn't want to sell an investment at a loss to cover a cost.
- The more you can spread the investment around the world the better. There are a broad range of global equity (stock market) funds to choose from.
- Include some government bond funds to provide some protection for when stock markets crash (nobody can tell you when it will happen but it will some time).
- When stock markets do crash the most important thing is to stay patient and disciplined rather than panicking and selling out. When stock markets crash they do recover soon enough so you don't want to have sold at a loss and miss the recovery.
- Keep charges as low as possible. A good way of doing this is to invest in index funds (also known as trackers or passive funds).
- I can't provide specific advice on which companies to choose but there are lots of direct to investor platforms available to consumers that allow them to invest at low cost with the ability to draw down as needed.
- Use your Share ISA allowance (£20k pa) to benefit from the tax savings. Each tax year you can move investments from the non-ISA to the ISA so you can increase the tax efficiency of your investment over time.
I hope this helps.
Chartered & Certified Financial Planner.
Typically, I work with individuals and couples who have got to the point in their lives that they have important questions about money they want answering. They may be thinking about retirement in the next 5 to 10 years but they are worried they won’t have enough so they want to make sensible decisions now. Or, they really want to retire sooner, but either they don’t know if they can afford to, or they are afraid they will make decisions that they may later regret.