Mr Morris could invest in a multi-asset investment strategy for his children’s savings, as the terms are 11 and 13 years respectively, once the buy-to-let property has been let out and the cost of the mortgage payments and other costs are known. Then the surplus net income from the rental property could be used to fund monthly payments into a stocks and shares Nisa. He should also set aside money for an emergency fund as he is using his existing £20,000 of savings to fund the buy-to-let property.
Martin Bamford, managing director, Informed Choice
An eight-year time frame is typically long enough to consider exposing capital to investment risk. A multi-asset investment strategy can help to manage risks as the negative correlation between different asset classes will result in less volatility than backing a single asset class, while still offering the opportunity to beat returns from cash. Before investing, Ms Stone should compare this option with the repayment of any mortgage debt on her flat and might also want to boost the size of her cash savings.
Any investment risk they take should be minimal with only six years before they want to buy a house together using the funds. A multi-asset investing strategy should limit exposure to equities to no more than 50 per cent of their portfolio at outset, steadily reducing this as they approach the investment goal and moving funds into cash to avoid the consequences of any market crash shortly before they need the capital.
With two different investment goals, Mr Morris could use separate multi-asset investment strategies to expose his savings to investment risk, with the aim of achieving better than cash returns. He will benefit from pound cost averaging by investing regularly. Investing the existing value of his Isa portfolio in a range of investment asset classes will help manage risks over the long term. He should consider allocating this portfolio between UK and international equities, fixed interest securities and commercial property funds.
John Stirling, chartered financial planner, Walden Capital
On the surface it appears that Ms Stone is quite well positioned, with a modest pension and a small emergency pot. A multi-asset investment in an Isa, aligned with her attitude to risk, seems like a good choice, but she needs to be aware that no one can predict the future. If her eight-year plan to invest in property is a definite timed commitment, then any form of asset-backed investment may fail to deliver what she is looking for on the right date.
