Lump Sum Investments - Get advice on investing your lump sum
Just received a lump-sum of cash from the sale of a property / inheritance / windfall? Wondering how to best invest the money?
Your bank will almost certainly try and offer you investment advice when they see a large lump sum entering your account. Banks will regularly use knowledge of large account inflows to sell their own investment services, so be wary and don't be taken in by their offers. There can be a conflict of interest.
It is recommended that you seek advice from an independent financial advisor who can take you through your options and maximise your investment potential.
Your Priorities
Identifying your priorities are important as you consider a lump sum investment.
Growth & Income Investing
One important question to ask before making your investment is whether you are primarily investing for income or whether you are looking to make a growth investment. Maybe you'd like to have a bit more income for that annual holiday or to have a little to invest for children or grandchildren. Or perhaps you'd prefer to to see a growth in your lump sum investments.
Risk & Return
It is also important to consider potential trade-offs between risk and return with any lump sum investment. Are you risk-loving or are you more averse in your investment attitude? An independent financial advisor would be happy to discuss your options with you.
Flexibility & Return
Rather than leaving the money lying as a lump sum investment in your current account or even a savings account with a poor rate of interest, you may want to find something with a better return.
Of course, it is important to weigh up your priorities with regard to flexibility before making such decisions. Certain investments may offer higher rates of interest but they may also require that you lock away your lump sum for a specified length of time.
But beware: banks and building societies can sometimes use the following tricks to attract savings. Quite often, their highest quoted rates are dependent on bonuses that are linked to withdrawal restrictions. And the account may offer a very poor rate of interest unless you make regular deposits and maintain a minimum balance. Interest paid on cash savings is also subject to taxation, so it makes sense to use any available tax-efficient investments, like a SIPP or an Investment ISA.
As always, it is important to shop around to find the best rates and always be careful about any terms & conditions, hidden charges and misleading statements. Getting sound independent investment advice can help you avoid such issues.
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