"I'm not in the least bit worried about my money, but I always want to make more, and that's why I want to keep investing." Noreen Pierce-Brett is 92 and has been retired for almost 50 years. She's still investing in the stock market because she likes having a little bit more than the income her retirement fund gives her. A former engineer, she's got a decent income from her private and state pension, but she supplements this further using the returns from her cautious investment bond portfolio.
She's got 17 great grandchildren, so she could do with the extra income if she wants to treat them. And she sometimes goes on trips to Cornwall where there is a memorial chair dedicated to her late husband, so she needs a bit extra when she wants to do that, too.
She's been investing in the stock market for many decades and her tactic of riding it out for the long term, and not panicking when markets are troughing, has served her well in the long run.
But she'd probably make a lot of financial advisers very nervous if she asked them for help. Why? Because she has already outlived most of her peer group. Also, the life expectancy for a female aged 92 in 2013 is four years, according to the GAD life expectancy tables. This means many of them would deem her too old for equities to be a sensible investment, because it's well known the minimum sensible time horizon is around five years.
But is she really too old for stocks and shares? When you consider inflation, which is higher for the elderly than for the rest of the population, it seems to make sense to have a healthy dose of equities to boost your returns - say 50 per cent - in your 70s and 30 per cent in your 80s. However, morbid as it might be, you should not ignore how long you might have left to live. Adrian Lowcock, senior investment analyst at Hargreaves Lansdown, says having some equities in your portfolio isn't the issue - it's having too much.
How much is too much?
If you know your younger beneficiaries will hang onto the equities in your portfolio when you die, they have a continuous horizon, and this means you can afford to take on the extra risk. The problem arises if the equities have to be sold after you die. Whether this is the case or not really depends what other assets you have in your estate. Remember if your estate is worth more than £325,000, your beneficiaries have to pay 40 per cent inheritance tax to the government on everything above this amount within six months of your death. If you've got other liquid assets in the portfolio that can be used to pay this that's fine, but if you don't, this will mean selling some or all of your stocks and shares to foot the bill if they don't have other money themselves. Equities are valued as part of your estate on the day you die, but they can continue to fluctuate wildly in value, and could be worth significantly less if your beneficiaries are forced to sell them off a few weeks or months afterwards.
Give your beneficiaries Aim shares
Eighty-two-year-old Dr Robert Haddow, a retired radiologist from Lincolnshire, is planning to invest heavily in Alternative Investment Market (Aim) shares that qualify for business property relief. This means that his estate will avoid paying inheritance tax on them when he dies, which would please him as he wants to pass on as much money as possible to his three daughters. He likes investing in mining stocks anyway, although he admits he has been an "unsuccessful" investor in the past. He was 15 when he bought his first share in Scottish Agricultural Industries (which subsequently became ICI), and as a young investor he was often tempted to buy the riskiest shares hoping to get rapid returns - but more often than not, he didn't. He has his eye on a number of mining shares on the Aim market, which are still highly risky, but should not count as part of his estate when he dies (as long as they qualify for business property relief at that time), so his three daughters should be able to take them on without any tax implications. He has to live another two years for the shares to be exempt from IHT, but he's exceptionally fit for his age.
Although he still plays tennis every day, the main reason why he's investing is to cover the cost of a care home, should he need to go into one at some point in the future.
Power of attorney
Both Mrs Pierce-Brett and Dr Haddow are perfectly able to look after their own affairs at the moment, but they have both given power of attorney to their children. This means that if their health does deteriorate they'll have the piece of mind that they'd have someone they trust to take care of their money. "In case I go completely crackers, I've given both my daughters the power of attorney," says Mrs Pierce-Brett.
Minesh Patel, chartered financial planner at EA Financial Solutions, says keeping beneficiaries "in the loop" is very important when planning what to do with the money and assets of someone in their 80s or older. "You might want to invest in some complex investments, but if your beneficiaries don't understand them it might make things difficult if they have the power of attorney and end up making big decisions about your investments later on."
It costs £130 to register each lasting power of attorney, and registering both types of lasting power of attorney costs £260. Anyone on means-tested benefits or a low income may be exempt from the charges.
