INVESTMENT CLINIC

I HAVE taken early retirement and received a lump sum of £60,000, which I want to invest for an income to supplement my pension. I haven’t invested before and I don’t want to take much risk. What is my best strategy?

P. B., Doncaster, Yorkshire.

GIVEN you are investing a large sum of money, I would strongly urge you to seek professional advice — especially as you say you have never invested before.

You can find a list of local advisers at or by calling 0800 023 6868. Before you agree on which one to use, make sure you find out how much they charge, as fees can vary greatly.

If you do go it alone, there are certain things you need to consider.

For most people, the best place to start is with a stocks and shares Isa, which allows you to invest up to £20,000 a year tax-free.

There are lots of different Isa providers, but choose one that suits what you want to invest in.

As a cautious investor, you should be looking to invest in funds, as they spread your money over a number of different companies or bonds. Don’t put your eggs in one basket by picking individual shares.

Choose an Isa provider that lets you buy and sell funds cheaply. Charles Stanley Direct doesn’t charge you for trading funds, but there is an annual fee of 0.25 pc of your pot — £50 on a £20,000 investment. iWeb charges you £25 to open an Isa and £5 every time you want to trade funds, although there is no annual fee.

To fill your Isa, select a diverse range of investments. Sophie Kennedy, of adviser EQ Investors, says you should go for a mix of funds that will pay you an income.

She recommends spreading roughly 40 pc of your cash between J O Hambro UK Equity Income and Newton Global Income for shares, which have turned £10,000 into £18,410 and £18,500 in five years respectively.

Roughly 45pc of your money could go into bond funds, she says. She tips Rathbone Ethical Bond and Twentyfour Dynamic Bond, which have turned £10,000 into £13,330 and £13,965 in five years.

Mrs Kennedy says you should consider putting 10 pc in a property fund, such as F&C UK Property, which has turned £10,000 into £12,810 in five years.

For the final 5 pc, consider investing in gold, according to Jason Hollands, of broker Bestinvest.

However, these are just suggestions, and it pays to conduct your own research on funds.

SEND your questions to: Investment Clinic, Money Mail, Northcliffe House, London, W8 5TT.