My husband took redundancy 12 months ago and is looking for a new role.
We hope he will be working again within the next 12 months. I am a stay-at-home mum with two school-age children.
We are currently in a rental property (paying £2,000 per month) and our total monthly outgoings including rent is approx £4,500.
If you have regular monthly outgoings to fund, how can you turn investments into income
We own a house overseas worth approx £300,000 and have joint savings of £250,000.
My husband also has US$525,000 in a UK-based account. We have no income other than child benefit and a very very small amount of saving interest but no stocks, shares, bonds etc.
How are we best investing our money, as our foreseeable future does not include a salary/income and we would like to make the most of what we have in savings? NK, via email
Simon Lambert, of This is Money, replies: A monthly income of £4,500 is £54,000 a year. If you use the multiply by 25 rule, which is used by those in the Financial Independence Retire Early movement, known as FIRE, then you could work out a rough amount of investable wealth you might need to supply that indefinitely.
In your case, multiplying £54,000 by 25 delivers a £1,350,000 total (although bear in mind this is a rule of thumb not a precise method).
You have £250,000 in savings, an overseas property worth £300,000 and $525,000, which amounts to £410,000 at today’s exchange rate), so a total of £960,000.
But as mentioned above, those hoping to achieve FIRE status are looking to have enough to provide for them indefinitely, whereas you appear to be filling a gap.
You don’t mention how long you expect your husband to not be working for, or your nationalities.
Your question indicates that at least one of you may originally be from overseas, perhaps the US, and there may be a reason why your husband imagines he will not be earning for some time. That could be due to a decision to change careers, take on training or education, for health reasons, or to take time out.
Drawing on family finances to cover a gap in earned income can be a tricky task and in such a situation most people say that they do not want to run down their savings.
It may be that to match your £4,500 target, you need to do this, as you would struggle to find investments that will deliver a high enough income without taking too much risk.
While you are renting a home in the UK and incurring living costs here, you do have substantial assets. These include your savings, your husband’s large US dollar denominated sum in a UK account, and also an overseas property worth £300,000.
The latter could prove to be a reliable source of income if you let it and may manage to cover at least some of your monthly rental bill here in the UK.
One option could be to try to make up some of the shortfall between your desired income and what you can achieve with some paid work – this need not be full-time or employment, it could be freelance or consultant work.
As for whether investing for your desired income is achievable, we asked a wealth manager for their thoughts.
Sophie Kilvert, private client manager, Seven Investment Management, replies: This is a tricky one – finding £54,000 per year is no easy task.
Firstly, I suggest keeping around two years’ worth of annual expenditure, so around £100,000, in cash.
This will provide a cushion should it take time for your husband to get back into work.
You should consider investing the rest, according to your risk profile. So you and your husband need to talk about your attitude to risk and potential reward, and it might be worth talking to an adviser to help you assess this.
I’ve spoken to plenty of investors who think they are at the higher risk end of the spectrum, but when asked if they would be prepared for at least a 50 per cent loss, they quickly change their mind. So this needs careful thought.
If you think you are a high risk investor, do you have the courage of your high risk convictions.
And if you are a very low risk investor, given your goals, does it look more like reckless caution? An adviser can help you with all these issues.
Wealth Check is This is Money’s new series focusing on those with larger sums of money to manage or invest.
It will look at what people need to consider for lifetime savings and investment pots, inheritances, business sales and other big money life events.
As part of it, we will get professionals to answer your questions.
If you have a question that you want answering send it to firstname.lastname@example.org with Wealth Check in the subject field.
What puzzles me the most is why are you holding so much in US dollars? I have two points to raise on this score.
Are you US citizens living in the UK? I cannot tell this by your email, it is simply your currency exposure which makes me question this. If so, you need specialist advice before investing in the stock market.
The US Passive Foreign Investment Company tax regime makes it really difficult for Americans in the UK to invest tax efficiently, due to the UK’s taxation of non-UK funds.
If you are not planning a move overseas, I struggle to see why you are holding so many dollars.
If you want to convert them to sterling, I would consider doing so over a period of time to help iron out currency fluctuations.Bear in mind also that March and into April may have extreme fluctuations in the price of sterling, when Britain leaves the EU.
The information provided by our experts is for the purposes of this article and is not personal financial advice. If you are at all unsure of the suitability of an investment for your circumstances please seek advice.
Nothing in this response constitutes regulated financial advice. Published questions are sometimes edited for brevity or other reasons.