LUMP SUM INVESTMENTS
Deciding how to invest a lump sum can be a confusing and uncomfortable experience.
Interest rates on Bank Deposits are so low as to be negligible, especially after DIRT (Deposit Interest Retention Tax) has been deducted.
But if you do commit some of your hard earned savings to a longer term investment, how can you be sure it is the right one?
At Scollard Financial Services we follow a set process to help you arrive at the right decisions:
Step 1 - Divide your savings into different categories:
- How much do you need to keep readily available as an emergency fund? (3 - 6 months living expenses are normally recommended as a minimum).
- Are there any known expenses coming up that need to be provided for? (eg. change the car next year, a big holiday, a childs wedding etc).
- How much extra do you want to keep back to cover unforeseen events?
- The remaining balance can then be considered for longer term investment.
Step 2 - How much risk are you prepared to take (if any) to generate the opportunity for higher returns?
We will assess this in two ways. Firstly, by completing a formal Risk Profile Questionnaire which will provide a guideline result, and secondly by discussing and exploring your own attitude to financial risk in detail.
Step 3 - What timeframe do you wish to invest for?
How long are you prepared to tie up this part of your savings for? Remember that, depending on the option you choose, you may not have any access to it until maturity.
Step 4 - Do you require a regular income from your investment?
Do you wish to drawdown some of the investment returns during the term to supplement your income, or are you happy to leave it to grow until the maturity date?
Step 5 - Succession Planning
Have you made arrangements for your investments to be included in your will, to be distributed in accordance with your wishes on your death? There are ways to mitigate potential Inheritance Tax Liabilities which your loved ones may face in that event. See our Succession Planning page for further details.
Please contact us if you would like to arrange a free, no obligation consultation.