Really basic question about investments.

[Imtoooldforallthis]

We have quite a lot of savings, this is instead of a pension and are in the process of retiring. In many ways I am a risk taker but not when it comes to money. I don't know what to do with it as I don't want to risk it. We have maximum premium bonds. So my stupid question is, with investments are you risking the whole amount or just the interest. And if its the whole amount what would you do with a large sum that is really your pension pot. We are talking about 200k at the moment with another 300k to follow in the next couple of years.

With investments, you risk the whole amount. If you are close to retirement, then leaving it in a low-risk investment is probably the right thing to do. Sticking it into the stock market or index funds is probably not a good idea close to retirement, you need at least five years in the markets to make it worthwhile and reduce risk. Has all your pension been invested in bonds your entire working life? I would see an investment advisor, you still want to be making a return on your eventual £500k over the years you will be retired.

You could also look at buying an annuity with some of your capital to provide a secure income stream, either for a fixed term or for the rest of your lifetime.

No private pension only state pensions. Annuities seem a really expensive way of getting an income, but maybe its something worth looking at again.

Annuities are right for some people, especially those who do not want to take risk with their money.

If you are prepared to take some risk, then you could use a multi-asset fund with a blend of shares, bonds and other fixed interest. Have a look at Vanguard Lifestrategy 40%, and Vanguard Lifestrategy 60% as examples. The percentage is the amount of equities - company shares. The higher the equities the better the long term performance should be but the greater the risk - it is more volatile, so it goes up and down in value more. That is not a problem if you are not taking money out, but you will be, so you also want a large cash buffer so when market is down, you don't take out from the fund.

You already have a large cash buffer - the premium bonds, plus you may have some cash in a bank account.

meaningfulmoney.tv/UG8 is a podcast episode about investing in retirement which may be useful to you.

Thank you for the advice, I will have a look at that podcast.