Money, investing, mutuals etc
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pieman
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by pieman » Thu Feb 06 2020 7:32pm
Hi,
Just wondering if anybody can help who has been in a similar situation
My dear old mum has just downsized and bought in a 'retirement village' where she has to pay approx £500 fees a month.
Luckily she managed to end up with about £50,000 through selling her property and buying her new one.
Any ideas where the best place to put her lump sum would be to get the best interest, but so that she can get 'out' £500 per month fees.
She is over 80, but reasonably all there and she can use a computer
Thanks
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rayf
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by rayf » Thu Feb 06 2020 7:52pm
that's about 12% p.a. return that your looking for - anything offering that sort of rate is going to be very risky - look for something safe - backed up by the FCFS compensation scheme - you may be able to get around 2% - possibly more depending on how long the investment is for.
Another consideration is that if you only invest for a year, you may find that the rates will change in a year (up or down!).
disclaimer: This is not advice - just some comments to think about!!
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pieman
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by pieman » Thu Feb 06 2020 9:57pm
Thanks,
Sorry - I didnt actually mean getting £500 interest, just for her to be able to withdraw £500 a month, so not locking it away.
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rayf
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by rayf » Thu Feb 06 2020 10:20pm
well how about investing £6000 on one year fixed - another £6000 on a 2 year fixed rate - another £6000 on a 3 year fixed etc. - leaving £6000 on a variable/easy access account for the first year. Or something like that.
disclaimer: This is not advice - just some comments to think about!!
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Boro Boy
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by Boro Boy » Fri Feb 07 2020 12:07am
Is the £50K you mentioned the total estate? If not is your Mothers estate likely to breach IHT limits? If it is there could be a discussion about establishing a Trust with a loan back capability paying her an income whilst the asset falls outside the estate over the normal 7 year limits.
Importantly have past increases in fees been viewed (as an indication of fee escalation) as the £500 per month now could be £600 next year...?
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BeautifulSunshine
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by BeautifulSunshine » Fri Feb 07 2020 6:32am
Mum gifts you the £50,000, you have a good income, do what you like with the money and honour your word and pay her £500 per month fees (linked to any increases over the years)/
I say, win-win-win.
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pabenny
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by pabenny » Fri Feb 07 2020 7:59am
AAAlphaThunder wrote: ↑Fri Feb 07 2020 6:32am
Mum gifts you the £50,000, you have a good income, do what you like with the money and honour your word and pay her £500 per month fees (linked to any increases over the years)/
I say, win-win-win.
I say lose-lose-lose
1) Depending on your and your mum's income, this would convert income that's tax-free in her hands into taxable income in your hands.
2) If her estate is large enough to fall into IHT and she dies within the next 7 years, all or part of this could be added back to her estate.
3) If she needs local authority support for personal care, such a gift could be treated as deliberate deprivation of assets.
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pabenny
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by pabenny » Fri Feb 07 2020 8:06am
You may be asking the wrong question. At £500/month, £50k will last 8-9 years (depending on investment returns, and price increases). What happens if your mum lives longer than that?
I suggest you check out AgeUK. They can be quite good at providing advice and guidance in this sort of matter.
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BeautifulSunshine
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by BeautifulSunshine » Fri Feb 07 2020 9:44am
pabenny wrote: ↑Fri Feb 07 2020 7:59am
AAAlphaThunder wrote: ↑Fri Feb 07 2020 6:32am
Mum gifts you the £50,000, you have a good income, do what you like with the money and honour your word and pay her £500 per month fees (linked to any increases over the years)/
I say, win-win-win.
I say lose-lose-lose
1) Depending on your and your mum's income, this would convert income that's tax-free in her hands into taxable income in your hands.
2) If her estate is large enough to fall into IHT and she dies within the next 7 years, all or part of this could be added back to her estate.
3) If she needs local authority support for personal care, such a gift could be treated as deliberate deprivation of assets.
In that case, give the £50K to me and I will pay you £500 cash (no questions asked of me of the source).
I say, win-win-win.
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blythburgh
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by blythburgh » Fri Feb 07 2020 10:21am
pabenny wrote: ↑Fri Feb 07 2020 8:06am
You may be asking the wrong question. At £500/month, £50k will last 8-9 years (depending on investment returns, and price increases). What happens if your mum lives longer than that?
I suggest you check out AgeUK. They can be quite good at providing advice and guidance in this sort of matter.
Remember she will have a pension from the state although she does not qualify for pension credit due to amount of savings.
I hope she is getting value for money for that £500. I know someone who is in a similar place, it is in the grounds of a home for the elderly. She had to buy the bungalow and pay £84 per week. This covers an alarm system, a staff member calling in once a day to check on her, window cleaning once a month. And the gardening to keep the total area looking nice but that would have to be done with or without the bungalows in the grounds of course.
Seems to me to be a very high price for what they get. Cannot help but feel as a lot of the home residents will be paid for by the Council (it is a dementia specialist home) that they need the money from the bungalow owners to top up the cost of caring for the permanent residents.
Keep smiling because the light at the end of someone's tunnel may be you, Ron Cheneler
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