Edward is aged 78. He lost his wife 18 months ago after a long illness. He is currently reasonably healthy although he does suffer from arthritis. His only income is from a previous employer’s pension and widower’s benefits that amount to £12,500 per annum gross.

Just prior to her death, his wife inherited a sum of £235,000 from a relative. These funds were all passed on to Edward through his late wife’s will. His wife had not made other gifts to anyone else during her lifetime or on her death.

The funds are currently held on deposit at the Townshires Bank. He agreed with the bank to allocate the maximum amount into a cash mini ISA in 2009/10. Apart from this, Edward has only a small sum of £1,500 held in a current account used for everyday expenses. He spent most of the couple’s savings looking after his wife whilst she was so ill. He owns his own home outright. This has recently been valued at £175,000.

Having discussed his situation at length with his son and daughter, he wants your help with assembling a portfolio that will provide him with a regular guaranteed secure income. He hopes that the portfolio can provide him with a further income of £5,000 per annum net. At the same time, he understands the effects of inflation and is prepared for some of his investments to be placed in asset backed products. A figure of 30% of the portfolio has been agreed but nothing must be placed in high risk funds.

He wishes his portfolio to be diversified and as tax efficient as possible. He has also requested that at least 25% of the available funds be retained in investments that can be easily accessed within 3 months without capital loss in order to pay for any possible future care fees. Within this overall percentage figure, he has stipulated an emergency reserve of £12,000.