What Would You Do With £400K Cash?

[longtomsilver]

I understand your dilema. Looked at blue chip stocks a while back - supposedly a "defensive" investment strategy.

So ....

FMCG : OK, but IMO in times of hardship people go less for branded goods and more for the cheapest own brands.

Mrs Posh works for a FMCG company and you'd be surprised how much own brand goods are sourced from the big brands. I know this is the case with my wife's company.

[Butthead]

Can you give us a list of the blue chip stocks you mean?

It's very easy to say just buy stocks, after all the bad ones drop out of the index and are replaced. So the index looks good even if you were unfortunate enough to pick a dog. The stock market hasn't done anything since 2000 and five years ago someone might have classed bank stocks as blue chip.

I'm not averse to the idea but which ones? National Grid hasn't done very well recently

I wouldn't pick stocks because I don't know enough about all the companies and I don't have the time to research them and then keep them under review. I'd buy a mix of funds, probably including but not limited to these two.

http://www.trustnet.com/Factsheets/Factsheet.aspx?fundCode=PPHI&univ=U

http://www.trustnet.com/Factsheets/Factsheet.aspx?fundCode=N3F73&univ=U

Within those funds you've got god-knows how many holdings, enough for one complete company failure to have only a minimal impact, and as you can see yield is around 4% for the IP High Income and 5% for Newton Global Higher Income.

National Grid has a dividend yield of around 6% and is up 10% on the year!? It's a very defensive stock so I believe it gets bought into when the market falls and the reason it has suffered in the last few weeks is people sell it again to buy riskier things as the market rises.

[cells]

haha, thought crossed my mind too... it's really debilitating and she'd rather have her health and career (accident happened during teacher training) than the lot she's been handed. I wouldn't be able to put up with her.

vodka is on my list maybe however I don't want to sound TFH

assuming she had died in the accident, i believe since she has no dependants the insurance company would have no liability to pay?

odd fracking world

damaged sholder = £400k

dead = £0

[cells]

It's pretty awful TBH she's had 30 or so operations - there's quite a cluster of nerve bundles in the shoulder and as far as medical intervention this is the end of the line.

Loss of both arms above the elbow (£230,000)

Seems she got a good deal, double the money for half the arms.

Sorry to be an **** but when you know some people work 100h weeks practically slaves for less than she will get in interest it just seems ...odd

My take on it.

£400k. Firstly spend some of the moeny on proper doctors if it is remotely possible to help her regain use or reduce pain etc.

My mum has back problems and has had two operations on the spine and they give her all sorts of medicines.

however my brother plays a lot of football and recomended his phyiso who helps out the amatures with injuries

fella charges £40 for a session and my mum feels quite a lot better for a few days after sometimes a few weeks.

so firstly try mend what can be mended if it can be even if it means spending hundreds of thousands on it

second if she is 23 she is still practically a kid so dont get too hitched up with this guy. he probably isnt the one but will play his cards to get himself some of the pie either way

after that, emigrate for best bang for the buck if that is a possibility.

£400k will be equivlant to £4m in many reasonable countries.

if not.

£200k modest home

£200k BTL

[longtomsilver]

assuming she had died in the accident, i believe since she has no dependants the insurance company would have no liability to pay?

odd fracking world

damaged sholder = £400k

dead = £0

I feel your frustration. We work very hard ourselves just to put a roof over our head and on the surface it looks like she's had it handed to her on a plate. She is in constant pain compounding this her shoulder pops out doing or trying to do almost trivial things, none of this is likely to change.

[The Eagle]

Sorry to be an **** but when you know some people work 100h weeks practically slaves for less than she will get in interest it just seems ...odd

They have a choice, she doesn't.

Put aside your envy and put yourself in her position before making these unfair comparisons.

[Democorruptcy]

I wouldn't pick stocks because I don't know enough about all the companies and I don't have the time to research them and then keep them under review. I'd buy a mix of funds, probably including but not limited to these two.

http://www.trustnet.com/Factsheets/Factsheet.aspx?fundCode=PPHI&univ=U

http://www.trustnet.com/Factsheets/Factsheet.aspx?fundCode=N3F73&univ=U

Within those funds you've got god-knows how many holdings, enough for one complete company failure to have only a minimal impact, and as you can see yield is around 4% for the IP High Income and 5% for Newton Global Higher Income.

National Grid has a dividend yield of around 6% and is up 10% on the year!? It's a very defensive stock so I believe it gets bought into when the market falls and the reason it has suffered in the last few weeks is people sell it again to buy riskier things as the market rises.

I realise National Grid is a defensive stock but dropping about 5% recently while the market has gone up more than that seems a bit of a stretch. I assume it is partly to do with the bad weather in the US costing them.

If the OP has such a negative slant on sterling isn't the approach to buy shares on a foreign stock exchange?

If he is right about sterling and picks good shares he wins twice, via capital growth on the shares and currency appreciation.

If he is half right it might level out to no loss.

If he buys the FTSE although some firms have income from abroad, his return is in sterling. If the shares increase but sterling devalues in real terms he might only be level.

[Mrs Bear]

Serious question, a mates girlfriend has just been awarded an out of court settlement for an shoulder injury (car accident). She'll never be able to work full time again because of the pain+medication - finishes work January 14th. Hoping to work 2/3 days a week from next year bringing in ~£750 month.

Her partner (my mate) has a £158k mortgage on a £140k house (in his and his EXs name) so I warned her not to just clear the ac**rd mortgage as the ex might make a charge on the equity. Told them at the minimum to get ex partners name off (take a hit on ex's half of the negative equity £9k) reduce the mortgage to take advantage of the 60% LTV 2.99% (currently playing 6.45%) and return ~£90k back to the pot, so now ~£350k spread this over a basket of currencies (1/3rd £, 1/3rd NOK, 1/3rd ? - can purchase bonds in denominated currencies i.e. Norwegian Government 10year paying 2.5% protects by the double taxation treaties) and wait until...

house prices in the UK fall by ?20% next year and then purchase her dream home but rent out (holiday lets) as an income until they are in a position to move there themselves (messy ex partner/children involved).

This couple plan to marry themselves so are fairly stable.

All I could tell them - with certainty is that GBP is toast.

Would just point out that Income from holiday lets is often wildly over-estimated.

[longtomsilver]

Would just point out that Income from holiday lets is often wildly over-estimated.

Thank you. It's a question of where to park your money as we batten down the hatches during the oncoming storm... I found out yesterday that my brother-in-law has recently purchased a 3 bed holiday home on the Norfolk coast paid for in cash out of his law firm. My sister is planning on building a website with a view to holiday lets, makes me angry... especially as she took my £600 washing machine from my parents house (I have a wing) without my say so, thieving gypsies.

[Butthead]

I realise National Grid is a defensive stock but dropping about 5% recently while the market has gone up more than that seems a bit of a stretch. I assume it is partly to do with the bad weather in the US costing them.

If the OP has such a negative slant on sterling isn't the approach to buy shares on a foreign stock exchange?

If he is right about sterling and picks good shares he wins twice, via capital growth on the shares and currency appreciation.

If he is half right it might level out to no loss.

If he buys the FTSE although some firms have income from abroad, his return is in sterling. If the shares increase but sterling devalues in real terms he might only be level.

I take your point on sterling, and the OPs about the possibility of falls. The thing is, if you think sterling will fall because the UK is a basket case then you probably agree that Europe and the US are basket cases too. So do you decide to invest outside of all these markets? Are you going to recommend a young financially unsophisticated person invests what is probably a once-in-a-lifetime lump sum in less developed/emerging markets? That's quite a big call to make.

The two funds I put forward as examples both have overseas investments, the Newton fund moreso of course, so there's an element of currency diversification within them. It's also true that many FTSE 100 companies derive a lot of income internationally, which as you point out protects from sterling weakness too. You might focus more on funds with a greater overseas bias if you're conviction regarding sterling is strong, for sure, but a UK based collective investment that pays the income in sterling seems convenient.

Re. National Grid, I don't think you can look at a two or three month period and decide a stock is performing badly. I don't know much about the company or what might cause it's stock to fluctuate in value but a 6% yield from a defensive stock looks quite appealing. Think about that against BTL. You'll be lucky to find a decent BTL yielding 6%, and you'll have to find tenants/deal with voids/maintain the property etc. Or you can invest in a huge safe non-cyclical company and receive 6% for doing nothing... makes BTL look pretty daft doesn't it?

[Democorruptcy]

I take your point on sterling, and the OPs about the possibility of falls. The thing is, if you think sterling will fall because the UK is a basket case then you probably agree that Europe and the US are basket cases too. So do you decide to invest outside of all these markets? Are you going to recommend a young financially unsophisticated person invests what is probably a once-in-a-lifetime lump sum in less developed/emerging markets? That's quite a big call to make.

The two funds I put forward as examples both have overseas investments, the Newton fund moreso of course, so there's an element of currency diversification within them. It's also true that many FTSE 100 companies derive a lot of income internationally, which as you point out protects from sterling weakness too. You might focus more on funds with a greater overseas bias if you're conviction regarding sterling is strong, for sure, but a UK based collective investment that pays the income in sterling seems convenient.

Re. National Grid, I don't think you can look at a two or three month period and decide a stock is performing badly. I don't know much about the company or what might cause it's stock to fluctuate in value but a 6% yield from a defensive stock looks quite appealing. Think about that against BTL. You'll be lucky to find a decent BTL yielding 6%, and you'll have to find tenants/deal with voids/maintain the property etc. Or you can invest in a huge safe non-cyclical company and receive 6% for doing nothing... makes BTL look pretty daft doesn't it?

I was just trying to give the OP some food for thought as it was him (not me) who said

"All I could tell them - with certainty is that GBP is toast"

Yet everything in the thread was directed at sterling denominated assets. It seems bizarre to me that people are often so negative about sterling but see the answer as to buy a house in the UK.

Must admit I would agree that sterling could well be toast in the not too distant future, though I do not see how just because of that, the US is also toast.

[petetong]

400K for a buggered shoulder, she must have had a good solicitor. You get less for losing a leg. Guess it's loss of earnings.

[winkie]

Put it on red.

[northwestsmith2]

Put it all in shares, £400K should return a good profit and retain the capital.

[Bruce Banner]

Put it all in shares, £400K should return a good profit and retain the capital.

That depends on when you put it in and when you take it out.

[Willy_D]

Maybe the stock market is not a good decision for money investing. Because there you can lose your money.

I think, it will be more useful to invest money in such companies as intofarm.com, realty in big cities or in a gold and silver.

And the best option will be separate money and invest one part in gold, one part in realty, etc.

Also one way for investing money is a real business, but it consider some kind of risk too.

[longtomsilver]

Put it all in shares, £400K should return a good profit and retain the capital.

I see this girl on Friday...

My advice will be £67k across to her boyfriends mortgage bringing LTV down to take advantage of 2.99% deals (monthly payment will reduce from £894 to ~£225).

Bonds are paying derisory rates 2-2.5% tops and there should be no need to use a fund manager as there is enough money to spread over a wide basket of global equities focussing on 4-5% yields, diverse and defence areas that will give critical mass. i.e. 100 stocks at £3,300 each and setting some of the yield aside for individual companies to go pop without losing overall momentum.

For now I have recommended that she split the money across four bank accounts (with separate banking licences) and hold in AAA bonds to hold out for a staged release into stocks as company share prices trend down (I.e. I like rexam but I liked then more when I personally bagged them at £2.60 a share) no hurry but wholly invested that might yield £12k per annum net to invest half again in two more stocks or lower the average price of underforming stocks in portfolio if there is no apparent underlying weakness to the business, might even suggest the two companies be young, dynamic firms that may do very well. Onus is to concentrate on capital growth, taking an income of £6k (same as the bonds) but mostly relying on her other halfs salary so long as he remains gainfully employed (£28k).

So net monthly income of £2,283 with fixed out goings of ~£800 leaving £1,500 for love, life and laughter. IMO that's loads!

[Butthead]

I see this girl on Friday...

My advice will be £67k across to her boyfriends mortgage bringing LTV down to take advantage of 2.99% deals (monthly payment will reduce from £894 to ~£225).

Bonds are paying derisory rates 2-2.5% tops and there should be no need to use a fund manager as there is enough money to spread over a wide basket of global equities focussing on 4-5% yields, diverse and defence areas that will give critical mass. i.e. 100 stocks at £3,300 each and setting some of the yield aside for individual companies to go pop without losing overall momentum.

For now I have recommended that she split the money across four bank accounts (with separate banking licences) and hold in AAA bonds to hold out for a staged release into stocks as company share prices trend down (I.e. I like rexam but I liked then more when I personally bagged them at £2.60 a share) no hurry but wholly invested that might yield £12k per annum net to invest half again in two more stocks or lower the average price of underforming stocks in portfolio if there is no apparent underlying weakness to the business, might even suggest the two companies be young, dynamic firms that may do very well. Onus is to concentrate on capital growth, taking an income of £6k (same as the bonds) but mostly relying on her other halfs salary so long as he remains gainfully employed (£28k).

So net monthly income of £2,283 with fixed out goings of ~£800 leaving £1,500 for love, life and laughter. IMO that's loads!

I like the strategy, but would question the tactics.

She might enough money to buy individual stocks without using a fund manager, but does she have the expertise?

Do you?

Who will keep the stocks you choose under review to make sure they're still right in years to come? (If you/her, see above).

The cheapest trading platforms charge around £10 per trade. 100 stocks at £10 equals... doesn't that seem a lot?

What about costs for selling, costs for reinvesting dividends, etc?

Finally, you use the word 'advice'. Advice in the context of selecting investments to buy has a lot of legal implications, are you aware of these and comfortable with them?

Not having a go, just offering a different perspective.

[longtomsilver]

I like the strategy, but would question the tactics.

She might enough money to buy individual stocks without using a fund manager, but does she have the expertise?

Do you?

Who will keep the stocks you choose under review to make sure they're still right in years to come? (If you/her, see above).

The cheapest trading platforms charge around £10 per trade. 100 stocks at £10 equals... doesn't that seem a lot?

What about costs for selling, costs for reinvesting dividends, etc?

Finally, you use the word 'advice'. Advice in the context of selecting investments to buy has a lot of legal implications, are you aware of these and comfortable with them?

Not having a go, just offering a different perspective.

£9 a trade works out at 0.2% not a day trading strategy so should be fine.

I have very good understanding of the stock market having previously worked for a large America investment bank (think bull for a number of years and also a Japanese stockbrokers, 8 years in total.

From 2009-2010 (18months) I consistently made £500-£1k profit per month on my £40k STR fund. My own virtual portfolio (bought a house at wife's insistence) would have been up 40%. Alas we had a house instead and are down £10k lol

edit: without giving the game away I occassionally worked with a guy in prime brokerage principally concerned with the securisation of good companies turning them to poo while he made a mint. my strategy would be to look at companies a million miles away from this approach.