As a would be FTB in the near future I have become a keen browser (and now poster) of HPC. I am a 'lay person' in relation to many of those of you who post on HPC so I hope you'll bear with me. As someone in their 30's who doesn't yet own a property but is hoping to in the near future, I am obviously watching carefully activity in the UK housing market and a little selfishly perhaps, praying for a significant downturn.

Due to ill health, I have been unable to work since Sept 2005 and am unlikely to return to work in the foreseeable future. I have been living with my sister in Cornwall for the past year since selling an inherited property near Bristol in Sept 2006. The proceeds of this property were shared equally between myself and my sister. I am considering renting for a period of time (6-12 months beginning around Sept) to see whether the past & expected interest rate rises have the effect on the housing market some of us here are hoping for. I have a capital 'pot' of circa £224k which is currently invested in a cash ISA (£13k), an easy access savings account (£191k) currently paying 5.6% gross p/a and £20k in Premium Bonds (ouch!).

The only other source of income I receive in addition to the interest from my savings accounts (approx. £750/month at current rates) is 'Incapacity Benefit' at circa £85 p/week. I am hoping to rent somewhere for between £500-600 per month which should leave enough in my budget for bills, food etc. I can use the underlying savings capital to cover emergenices and 'unplanned' purchases but hopefully these will be kept to a minimum so as not to affect my income from the interest.

I have seen an IFA (FSA reg'd) who has suggested I COULD get a relatively small 'self certification' repayment mortgage should I want to buy something at around £150k and put a lump sum in a relatively low risk portfolio bond (L&G Commercial Property) drawing a fixed monthly income and retain an amount in easy access savings. Being a BTL'er himself my IFA wasn't, as you would expect, too persuaded by my suggestion that a decline in property values may be imminent. For my part I'd rather hold out and see what £150k would buy in 12 months time as when I do buy, I would prefer to get a little more than for example, a one bed apartment. Having read on HPC today about possible decreases in commercial property values, I also wonder whether the recommended L&G portfolio bond would be a good choice anyway.

So returning to the renting option described above, I would be most grateful for any recommendations in terms of capital investment either with guaranteed income or purely higher interest returns. Please note, I do need to be able to draw regular income (e.g. monthly) from any investment and as much as I would like to take a gamble with a small percentage, I can't afford high risks (e.g. FOREX). I am also aware that I could increase my easy access savings return by switching to HiSave (6.05% currently) and although I am considering this, I am not entirely sure that I would want a large percentage of my financial assets in an online account. My present savings account is managed by phone/post.

Thanks if you've continued reading this far and I hope some of the many financial minds on HPC can advise whether my plan to 'rent & wait' sounds sensible and if possible, offer any other ideas, words of wisdom & experiences.

All the best,
Jon

I guess my initial post was too long and a bit vague so I have a more straight foward question for my situation:

How could I invest £100k+ (low-ish risk) to generate a regular MONTHLY income towards rent & living costs and keep the original capital fairly secure?

Currently I'm getting 5.60% gross in an easy access account. I know I could get 6.05% with HiSave but would prefer to stick with a telephone/post account.

Any advice would be gratefully received...

I think that the lack of replies may be that bloggers are wary, quite rightfully, of giving financial advice without being properly qualified and abiding by FSA regulations. Doing so could expose the respondent to legal risks. There are exemptions used by "agony aunts" in the press but whether or not they would apply to blogs of this nature, I suspect that the uncertainty is enough to deter replies to the specific questions you ask.

Fair point, however there is evidence that people are willing to give advice, albeit some a bit 'tongue in cheek' elsewhere in the investment section of the HPC forum.

e.g. http://www.housepricecrash.co.uk/forum/ind...showtopic=47648

I suspect there are a fair few qualified and otherwise (i.e. outside of HPC) regulated IFA's who partake in the HPC forums but I would not expect to have any comeback on any 'informal' advice given on a web forum, should I wish to act on it. In todays' litigious culture however, I guess there are those that would and therefore I understand your reasoning.

Further to that then, I expect it'd be worth spending some time trawling the 'Investment in General' forum as I'm sure many people have been in the same boat as you over the years. The suggestions may not be 100% up to date but they should give you some ideas.

At the very least in my case if I were fortunate enough to have £200K available I'd probably be happy whacking it in a savings account and living effectively 'rent free' (and then some!) The tax on the interest would be a bit annoying, but there's not much else you can do if you want your money to be instantly accessible, risk-free and earning you monthly interest.

Apart from that, I'd put my S&S ISA allowance over the year into HYP shares. Of course that would only be £7,000 per year, which may be a bit smaller than you'd like, although you did say you only wanted to risk a small percentage of your capital.

Not sure about the Premium Bonds. The effective interest rate is only 3.6%. They make a bit more sense for higher-rate taxpayers. I have the minimum £100 in there just so I have a chance at the jackpot.

These are just the current investment principles I'm following. If I had a wedge the size of yours I'd probably have a word with a financial planner. Someone other than the previous guy you saw - who effectively told you to put all your money into property. But hey, I'm biased too.

my recommendation....

give the money to your sister, claim your sister kicked you out of her house get a free house from the government and relax without having to pay a penny of your inheritance. Buy at a discounted value at some time in the future for cash, when your sister gives you some of the money back....

-repost-

I like the sound of the HYP shares...


Maybe I'll take some of the Premium Bonds cash and put it into HYP shares as I etimate the PB's to have lost around me around £215 in net interest whilst only returning £50 in winnings since first purchasing them in March. Maybe I'll just keep a handful...


I understand there's some 'uncertainty' about commercial property which is why I'm not entirely keen on the L&G Portfolio Bond he'd proposed. Will consult further like you say...


Naughty but nice!!!