What to do with £10k: the ultimate plan for a 70-year-old investor   

investment 
An investment plan looking at how to invest £10,000 at in your 70s    

This is the sixth and final part in our series looking at how to invest £10,000 at different ages. Previously we looked at 20-year-old,30-year-old, 40-year old,  50-year-old and 60-year-old investors.

For most in their 70s managing money and investments may still be necessary. Whether you have a big family that you want to take care of, need money for care costs or simply want to supplement your state pension with additional monthly income, there are plenty of ways to invest in your later years.

Below, Telegraph Money outlines three things that most retirees may wish to do with any excess cash.

As a reminder, while we have chosen £10,000 as a starting point, the thought process should remain the same regardless of what you are investing.  For this guide, we have assumed there is no high-cost debt to be paid off, which should be prioritised, and that there are emergency cash savings elsewhere.

Topping up income

If you are fortunate enough to have a spare pot of £10,000, you may want to consider adding it to existing investments, either via a self-invested personal pension or an Isa.

However, there are two considerations here: First, if you have already begun drawing money from your Sipp, then you are only allowed to put £4,000 back into your pension every tax year due to rules called the money purchase annual allowance.

Second, investing via an Isa would be sensible, however, the Isa, unlike a Sipp, falls within your estate and would incur inheritance-tax.

Gill Hutchison of research firm The Adviser Centre, said boosting your monthly income is likely to be an important consideration.

For more cautious investors, she suggested the Ninety One Diversified Income fund managed by John Stopford and Jason Borbora-Sheen. The fund struggled last year but was the only cautiously-managed multi-asset fund that made a profit in 2018. So far in 2020, it has made 0.26pc, while almost half of its peers have made a loss.

For those prepared to accept higher levels of risk, JPM Multi-Asset Income is another option, she said. It pays out regular and high income either every month or every three months depending which share class you buy.

Another option is companies that produce goods necessary for everyday life. Companies selling food, medicines or consumer goods have resilient profits and are able to maintain high dividends no matter how the economy is doing.

Wesley Coultas of wealth manager Walker Crips, said :“No matter what is going on, people still need to eat, maintain their households and if they fall sick, will still require treatment."

Too early to think about care fees?

Paul Gillen of wealth manager Seven Investment Management, said planning for ill health may be an uncomfortable but practical thing to do.

“Care fees can be a huge burden on your family but, by investing for this eventuality, you can grow a lump sum which can go a long way to offsetting the cost.”

Unlike investing for income to use day-to-day in your 70s, building up a pot for care costs can be done in the same way you would invest prior to retiring.

A balanced portfolio which consists of stocks, bonds and alternative assets would be a good idea.  “A popular balanced fund which we hold in portfolios is the Jupiter Merlin Balanced fund,” he said.

Managed by John Chatfield-Roberts and Algy Smith-Maxwell since 2002, the £1.8bn portfolio invests in a selection other funds. It has been among the best multi-asset funds over three, five and 10 years, performing consistently well in all markets.

Passing on something to loved ones

Finally, you may wish to pass this £10,000 on to your family. Making outright gifts is the most effective way to avoid IHT, although you must live for seven years from the date of the gift before it is exempt.

Mr Gillen said investing within Enterprise Investment Schemes, could be an option if you want to combine investing and IHT relief

Oxford Capital Growth EIS invests in a portfolio of early growth British companies run by entrepreneurs in sectors including software, e-commerce, fintech, artificial intelligence, health tech and gaming.

You can only invest in EISs when a fund is raising money, which Oxford is not currently, although it is worth monitoring future raisings.

Another option is to invest Alternative Investment Market stocks, which are also exempt from IHT if the company qualifies for business property relief.

Both of these types of investments are IHT exempt if held for two years or more but normally involve investing is start-ups and small companies, and so are a lot more risky than larger stocks or diversified funds.

Don't forget to enjoy yourself

Something that this newspaper has written about often is the need to enjoy spending the money you have worked hard to save in post-retirement years.

The Institute for Fiscal Studies found last year that on average people draw down just 31pc of their wealth between the ages of 70 and 90, a rate of about 1pc a year. 

So while investing might be something you are looking at, remembering to enjoy the money you have is also important.

Are you a 70-year-old investor? Do you have any tips on how to invest at this age? Tell us in the comments section below.