Reinvesting Lump Sum Inflows
If lump sum inflows, such as tax free cash from a crystallised money purchase or an inheritance, are not spent or set to be saved, they will be deposited to the owner’s default cash account (e.g. John's Cash) where the funds will remain on deposit until needed to fulfil expenses.
In many cases, these funds will be the first source of supplemental retirement income, above any existing pensions, state benefits, and other income sources. This said, you can plan proactively with your client, discussing the benefit of investing these funds or using them to pay down debts, such as a mortgage.
Deposit a lump sum inflow into savings, an investment or a money purchase
To deposit a lump sum inflow into a specific new, or existing investment or savings account (or even a pension, being mindful of annual pension contribution limits):
1. Go to the target account on the Savings, Investments or Pensions - Money Purchase screen.
Note: This could be an actual existing account (one the client has at the beginning of the plan) or a hypothetical future one (an account that you create with a zero balance that will be funded in the future through this transfer).
2. Select the target account in the ledger, or enter a new account with a 0 balance.
3. Expand the Advanced Settings > Transfers / Additional Contributions.
4. In the Transfer at Event drop-down, select the event that corresponds with the lump sum inflow.
5. Select Transfer “To this account”.
6. Amount (of transfer):
Select either "All Available" to deposit all available surplus income after taxes, expenses, and regular contributions.
Select the £ radio button and enter the amount of the future tax free cash withdrawal (this value can be found from the Let's See screen > Detailed Info). If you are entering a specific future value, ensure that you select the "Future Value" radio button above, next to Value.
7. Select From “Surplus”, which is to say, from surplus income.
8. Optional: If you want to ensure that the lump sum is being transferred prior to paying expenses, to prevent any part of the lump sum from being used first to meet expenses, tick the Timing "Transfer Before Paying Expenses" check box.
Otherwise, expenses will be met first, with the remaining funds being contributed/transferred to the target savings or investment account.
9. If you have a recurring lump sum which you wish to reinvest in the same account each year e.g. UFPLS withdrawal from a pension, tick the 'Recur' box and select the event at which you want the transfers to stop.
10. Click OK and then click Update to save your changes.
To view the transfer:
1. Go to the Let’s See charts.
Click the year/bar in which the tax free cash withdrawal is scheduled to occur.
2. The chart legend will appear. Click the Detailed Info link at the bottom of the legend.
3. Click the Investments tab and locate the target account selected earlier.
Depending on which options you selected, you should see the deposit and perhaps additional surplus income deposited into the target investment or savings account.
Other possible ways to use lump sum inflows proactively within a plan include:
Cash Flow Basics - An introduction to the basics of cash flow in Voyant