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rockerboy

What to do with £150K

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Right, This isn't a brag - I've inherited £150K  (north west), and I don't know what to do with it so I can grow the money for the long term.

I'd really like to hear from those that STR'd and what they found was good and bad i.e. from those that have had experience in "investing" really.

Before anyone gets upset, I apologise in advance, but I have considered buying a new 3 bed houses outright with has a rental income of about £500 (If you like, a return of 4% gross).

This seems to be a good idea as this could be a pension for me and when I die, my son gets a house outright  (I doubt he will ever be able to afford one himself).

Please don't tear me apart...

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The right answer to this will depend on your whole financial situation, what other investments/assets/pension you have. Your family situation, your long term goals etc.

You could either spend some time reading a few good financial investing books and figure it out for yourself, or just spend some money on an 'up-front fee' independent financial advisor who has already read all the books and will go through all the options with you.

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9 hours ago, rockerboy said:

Before anyone gets upset, I apologise in advance, but I have considered buying a new 3 bed houses outright with has a rental income of about £500 (If you like, a return of 4% gross).

A quick check on ft.com shows that some of the biggest companies in the world are currently paying dividend yields over 5% and actually closer to 6%. I'm talking about Shell, BP, Vodafone etc.

Britain has very light taxes on investment income, you can save up to 20,000 GBP a year in an ISA and never pay a penny in tax however well your investments do. Are you married? Then you can both save up to 40,000 GBP a year combined. That should be enough for anybody. Furthermore, even if you save outside of the generous ISA allowance, there is a tax allowance on any dividend income up to a certain level. The vast majority of the population need pay little if any tax on their investment income. The income from your labour is of course a different story.

Even better, the stock market is almost as liquid as cash. No need for estate agents or surveys, or solicitors. You aren't depriving anyone of a home and can sleep with a deep sense of inner peace at night to knowing that you own a small slice of the biggest enterprises in the world.

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I STR'ed 10 years ago and am happily renting still - so the actions I have taken are real.

I chucked 2/3 in various BS accounts.  The aim was not to maximise growth (!), but to ring fence.  I 'played' with shares with the remainder, knowing if I took a bath, I could fall back on the other two thirds, on this basis I could sleep.  The aim was/is not to maximise cash, but to let the market deflate, with me out of it - how wrong I was.

What I would do different is buy shares with an ISA wrapper.  I spent too long on selling in order to negate any CGT gains.  It remains very interesting to see the share price moves.  I would advise you not to buy an over priced house, and stay liquid - but there again, I don't have a dog in the fight.  DYOR please.

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On 12/01/2018 at 11:51 AM, afly said:

I would suggest invest in a pension or investments but you'll get better government support if you buy a house

That would be my tendency, but it depends on when the OP needs the money back by. For me it would make sense to probably stick 50% in an ISA and 50% over a few years into my pension, perhaps using previous unused allowances. But the I get higher/top rate tax relief. At 20% the deal is ok, but not quite as good, so an ISA probably makes more sense.

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On 25/04/2018 at 11:07, happyguy said:

buy a home what will you do when you are retired if you do not own your own place

Learn grammar?

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On 11/01/2018 at 22:45, rockerboy said:

Right, This isn't a brag - I've inherited £150K  (north west), and I don't know what to do with it so I can grow the money for the long term.

I'd really like to hear from those that STR'd and what they found was good and bad i.e. from those that have had experience in "investing" really.

Before anyone gets upset, I apologise in advance, but I have considered buying a new 3 bed houses outright with has a rental income of about £500 (If you like, a return of 4% gross).

This seems to be a good idea as this could be a pension for me and when I die, my son gets a house outright  (I doubt he will ever be able to afford one himself).

Please don't tear me apart...

50k in P Bonds 

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If you are buying a 3 beds for £150k, it does not look like you are buying into an area that is too overpriced. You do however want to leave some money in cash for some unexpected bills - new boiler, wear and tear and insurance to evict a non rent paying tenant. It all depends on your personal circumstance. 

You certainly want to make use of your annual ISA allowance. Not many things in life are 'tax free'. You can purchase some shares with that (Shares).

You can still get the 3 beds by leveraging and let your tenant to service the interest of your debt (Real estate). Leave some money in heart cold cash, some in bonds to cover all major currencies in the world (US dollars, Euros, Janpanese and Renminbi) - whom they all form part of the 'special drawing right' of the IMF - you need the money in safe places i.e. T bills but you also need them to at least beat the inflation. (Cash and Bonds)

If you still have money to spares, people sometime put around 5% of their net worth in commodities as a hedge against inflation i.e. gold, rare metal, or to speculate in the oil futures (Commodities). 

Once you have done that, you have diversified into all five assets classes - real estate, shares, cash, bonds and commodities.

Disclaimers: 

All investments, including real estate, is speculative in nature and involves substantial risk of loss. We encourage our investors to invest carefully. We also encourage investors to get personal advice from their professional investment advisor and to make independent investigations before acting on information.

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Many thanks guys - food for thought

Whilst the heart gets constant messages about buying a house to rent out (infuenced greatly by seeing the continuing effect property porn pressure has, and also listening to peers talking up the virtue of renting out houses at dinner parties),

My head is saying to put it safe for the time being and think and ask more questions.

I'm aware that there is a temptation that as soon as I get a windfall like this,  I have already spent in my head, just because I can.

In other words, because it is the "norm" not to have spare money hanging around (I've been conditioned to it all my life), one always wants to return to the "norm" .

This is the problem for me with suddenly obtaining money - I'm not used to it (who is?).

I'n now thinking that I need to look at the extreme future (>10 years).

I'll have to look into "Isa with shares" - Both "Uncle Kenny" and "Freezer?" agree on this - and I'll be investigating this further (especially if Sterling goes down, which it will)

 

 

 

 

 

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What I should have added, is that I already own a family home, so I guess I already have one asset in an asset class ?

What I should be doing is diversifing into all five assets classes - real estate, shares, cash, bonds and commodities, just as "Reginekierkegaard" has said.

The other nagging bit is about pensions -

I'm thinking of splitting 50% into a pension and the rest into Isas.

Cash and bonds look uninviting atm - commodities look dodgy to me as I know little about the mechanics of it all - don't really trust it being secure anyway (would like to know why someone thinks I'm wrong and why though)

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22 hours ago, rockerboy said:

Cash and bonds look uninviting atm - commodities look dodgy to me as I know little about the mechanics of it all - don't really trust it being secure anyway (would like to know why someone thinks I'm wrong and why though)

Diversification should include asset classes that look uninviting at a given moment, they'll look more inviting when the others aren't doing so well. If something looks dodgy because you don't understand it, you should learn about it.

For most people who receive a windfall, the outcome is net negative. They spend it differently to money they earn and suffer from the financial and emotional consequences. It might be a good idea to start with a look at what goes wrong.

In the meantime, the general advice is don't spend anything for at least six months or so and don't tell anyone about it who doesn't need to know, not even family.

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On 11/01/2018 at 23:06, Habeas Domus said:

The right answer to this will depend on your whole financial situation, what other investments/assets/pension you have. Your family situation, your long term goals etc.

You could either spend some time reading a few good financial investing books and figure it out for yourself, or just spend some money on an 'up-front fee' independent financial advisor who has already read all the books and will go through all the options with you.

There's no such thing as an 'independent' financial adviser these days. There is such a regulatory burden on financial services now that it simply isn't possible or realistic for a financial adviser to scour each and every provider to find the one that best suits their client's needs, so typically they will have their own panel of preferred providers based on what is easiest (or more cynically which pay the highest commission), and in essence reduce themselves to 'restricted' status. 

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On 09/05/2018 at 09:06, darkmarket said:

For most people who receive a windfall, the outcome is net negative. They spend it differently to money they earn and suffer from the financial and emotional consequences.

This is good advice - thanks - might pin it up on the wall.

 

 

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On 09/05/2018 at 12:26, 12345 said:

There's no such thing as an 'independent' financial adviser these days. There is such a regulatory burden on financial services now that it simply isn't possible or realistic for a financial adviser to scour each and every provider to find the one that best suits their client's needs, so typically they will have their own panel of preferred providers based on what is easiest (or more cynically which pay the highest commission), and in essence reduce themselves to 'restricted' status. 

They do exist, they just are not free any more - this website lets you search for local IFAs

https://www.unbiased.co.uk/

Many of them still offer a free "consultation" but you won't get any useful data from them without ponying up a few hundred quid. This is still a bargain compared to the old days of free advice along the lines of Buy this 3rd rate fund which will give us 10% as a backhander

Personally I still prefer to do my own research.

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On ‎08‎/‎05‎/‎2018 at 10:49, rockerboy said:

I'm thinking of splitting 50% into a pension and the rest into Isas.

Cash and bonds look uninviting atm - commodities look dodgy to me as I know little about the mechanics of it all - don't really trust it being secure anyway (would like to know why someone thinks I'm wrong and why though)

Pensions are complex, and tie your money up until late in life.  I wouldn't split money ISA/pension I'd use my whole ISA limits first and only then turn to a pension (unless you can pay an AVC into your work pension and get a matching contribution from your employer) Also there is a 40k limit on what you can put into a pension in any one year (albeit that you can use some recent previous years unused allowances if you haven't already) including any contributions from you and your employer.  

Totally agree with you on bonds and commodities.

Holding some as cash and investing it gradually is not a bad idea.  Imagine how miffed you'd be if you put it all in stocks today and the market fell 20-40% tomorrow (it can do, see 1987, 2008 etc).  If anything a recession looks likely in the next 18 months or so, so holding some in cash (even if you just invest it in stocks later) is a decent hedging your bets strategy.

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If it was me, i'd Max out a premium bond account £50k, put £75k into a pension fund, and stick £25k in a high(ish) interest (locked) savings account.

The premium bonds money you can get at all or a proportion to within 7 days  so i'd use it as a rainy day fund, and you 'could' win a million quid

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  • 407 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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