The topic of money and our thoughts and feelings around the subject are often quite emotive, and the source of any large amounts of money we receive may well add to this. Clients that have inherited large sums of money often talk to us about the added responsibility they feel to ensure the money is invested wisely; it doesn’t feel like their money and they are also conscious of perhaps how hard their benefactor worked to accumulate the money in the first instance. Perhaps you are a business owner in receipt of the proceeds of a lifetimes work, or a retiree in receipt of your tax free lump sum and want to ensure your loved ones are taken care of if anything happens to you? Whatever the story is behind the sum you have to invest, the worry about getting it right – or perhaps more accurately: not getting it wrong – can lead to more than a few restless nights sleep.
Clearly not everyone who finds themselves in receipt of a large sum of money to invest has sufficient financial competency, which we can define as: a person’s mastery of (at least to a reasonable level) the knowledge and skills required to make sound decisions in the areas of personal finance. Of course it is quite possible to be financially competent in some areas – such as managing cash flow and budgeting your income and expenditure – but have very little knowledge when it comes to more specialist areas such as managing investments or estate planning for example.
So if you are not the next Warren Buffett or George Soros in the making, the burning question that you might now be asking is this: how should I invest this large amount of money? Well the first comment to make is likely one that will disappoint, and that is very simply: there is no simple straightforward answer! Still, very true all the same, as the way that any money you have is to be invested will de dependent on a number of factors. Here are some considerations to start with:
These are just a few of the key considerations you might want to ask yourself before you commit to any type of financial plan. If you have any non-mortgage related debt, you would probably be best advised to clear this before doing anything else; prioritise the debt with the highest interest first. If you also have a mortgage you might want to reduce the balance, as this will potentially save you thousands of pounds of interest. Check the details of your mortgage documents to find out how much you can pay without any penalty being applied. If you have not made use of your ISA allowance for the tax year then you could open either a cash ISA or a stocks and shares ISA. The allowance for 2016/17 is £15,240 per person.
Of course the larger the sum that you have to invest, the more things that you will be able to use it for. If you don’t have the knowledge or experience to create your own financial plan; perhaps the desire; or the hours of time to painstakingly invest researching a broad range of financial topics, then the most sensible approach is to speak to a financial planning professional that can provide you with the services that you need.
At First Equitable we have a diligent process that is designed to ensure you get the very best advice possible. We take great pride in helping clients achieve positive outcomes and it is our firm belief that these results are best achieved by helping to educate our clients so that they feel empowered when making such financial decisions.
If you have an amount of money to invest; smaller or larger, and would like to receive some helpful advice in a language you can understand, please complete our contact form and an adviser will be in touch to discuss your needs.