In our weekly series, readers can email any questions about their finances to be answered by our expert, Rosie Hooper. Rosie is a chartered financial planner at Quilter Cheviot and has worked in financial services for 25 years. If you have a question for her, email us at money@inews.co.uk.
Question: I am 73, single and in relatively good health. Should I invest £20,000 into an ISA or is the market too volatile or risky at the moment because of the conflict in Iran.
Answer: It is very sensible to pause before deciding what to do with a £20,000 lump sum, especially when markets feel jumpy and the news is full of gloomy stories.
A lot of people assume that once they are in their seventies, investing is automatically “too risky”. In reality, the right answer depends much more on your health, your plans and your overall finances than on this week’s headlines.
You are 73, single and in relatively good health. That combination matters. You might easily have 15 to 20 years ahead of you, and possibly longer. That is a long time for your money to be working in the background. Over that kind of period, the risk that often gets overlooked is inflation.
Cash feels safe because the balance does not go down from day to day, but over 10 or 15 years rising prices can quietly erode what your savings will buy. In that sense, doing nothing can carry its own sort of risk.
An ISA is a very useful wrapper because it keeps things simple from a tax point of view. Inside an ISA you do not pay tax on interest, dividends or investment gains, and you retain flexibility if your plans change. The bigger question is not “ISA or no ISA?” but “what kind of ISA, and what do I want this £20,000 to do for me?”
If you think you might need the money within the next three to five years, a cash ISA has attractions. Your capital is stable, you can usually access the money fairly easily and you are less exposed to the ups and downs of the market. The trade-off is that over longer periods the interest you earn may struggle to keep up with inflation, so it is more about security than growth.
If this is money you could leave invested for at least five years, a stocks and shares ISA can still make sense at 73. Investing does not have to mean big swings or sleepless nights. You can choose a cautious or balanced fund that mixes shares with bonds and other steadier assets. These funds aim for moderate growth with smoother movement than a pure share fund. They will still go up and down, but the bumps should be more manageable.
You also do not have to invest the whole £20,000 in one go. If the idea of putting it all into the market at today’s prices makes you nervous, you could drip the money in gradually over, say, six to 12 months. That way you automatically spread your entry point across different market levels and take some of the emotion out of the decision.
It is also a good moment to stand back and look at your finances in the round, rather than viewing this £20,000 in isolation. Do you already have an emergency cushion in cash to cover unexpected expenses? Are your day-to-day living costs mostly covered by secure income such as the state pension and any other pensions?
If your essentials are covered and you have a reasonable cash buffer already, you may be in a stronger position to take some measured investment risk with this lump sum. If, instead, your savings are your main safety net, you might want to keep a larger slice in cash and invest only what genuinely feels surplus.
At your age, it is also worth thinking about inheritance tax. From April 2027, pensions will form part of your estate for inheritance tax purposes. This change means that even estates which would previously have been non-taxable may now become subject to inheritance tax, making it important to start planning for ways to mitigate IHT, as well as considering where to invest the £20,000.
ISAs already count as part of your estate for inheritance tax purposes. That means it can be helpful to think about whether, over time, it makes sense for you to spend, save, invest or even gift parts of your wealth, rather than simply letting everything build up inside your estate.
You might decide, for example, that some of your wealth is there to support your own quality of life, some might be invested for the long term, and some may eventually be passed on. Thinking this through now can make the decision about where to put £20,000 feel less abstract and more connected to your real priorities.
Above all, try not to let fear of volatility be the only factor driving your choice. Markets will always move around. The real questions are how long this money needs to last, what role it plays in your life, and how comfortable you are with seeing its value fluctuate along the way. An ISA gives you a flexible framework to work within. Once you anchor the decision in your own needs rather than the day’s headlines, the “too risky or not?” question becomes much easier to answer.
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