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What's the best way to invest a life insurance payout?

scorpiostar
by scorpiostar 25 September 2008  |  Comments 1 comment  |  Love Love  0 loves

My mother-in-law was recently widowed. The life insurance pay out cleared the mortgage debt and left her with approximately £50,000. This sounds like a lot but it's all she has to live on apart from her very small state pension and a small occupational widow's pension so it's vital that she invests it wisely. Her pension income takes her just over her personal tax allowance making her a basic rate tax payer so any advice on managing her tax liability would also be appreciated.

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Comments (1)

  • manzanilla
    Love rating 410
    manzanilla posted

    If she has any debts, she should clear them. She should max out her cash ISA allowance for this year (£3,600) and put an equal amount in an easy access savings account for next years allowance. These are tax free.

    Coventry BS does a good rate instant access account for over 50s, on the internet or by post.

    Work out how much extra she needs to live on each month to be comfortable, then invest the rest half in a 1 year bond (I suggest Anglo Irish) and half in a 2 year bond (I suggest Cheshire BS).

    When the 1 year bond expires, take out enough for the next year's cash ISA and extra for living costs then invest the rest in another 2 year bond.

    Posted on 25 September 2008 | Love Love  0 loves Report

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