[Closed] What to do with 30k?

You can get 20% or 40% immediate return from the tax man by putting it into a pension.

Timescales? Pension makes the most sense as tax relief immediately adds value, as above. You are then locked in if you want to keep those benefits. You and your wife will both have a 20k stocks and shares ISA allowance, we were in a similar position (but have reasonable pension plans) so have invested in Fundsmith in an ISA, has done well the last 5 years, but you would want to commit to at least that time period and not need to withdraw the money at an inopportune time.

Is it better to put it in a pension than pay down mortgage?

You can get 20% or 40% immediate return from the tax man by putting it into a pension.

Not quite true if you've already got the cash.

Stocks and shares ISA is the easy option. Should easily beat 5% and you'll get the tax benefits on the way out rather than on the way in with a pension (which I don't think you can do with money you already have anyway). As TomB I have some in fundsmith which has done around 25% per year so pretty good. Even my slow one ISA has done 10%. These are uncertain times though. Buy to let is an option. My last one cost less than that and returns 8% in rent and there should be some capital growth too. I quite like it as it's more tangible than shares to me but it is a little more work. I don't think it's worth paying off the mortgage with rates so low but it's nice to have it moderately accessible in case that changes. All imo of course.

Spend it all on bikes. By the time you come to sell, they will be worth 5% of what you bought them for.

i haven’t really got the hang of this, have I?

You can get 20% or 40% immediate return from the tax man by putting it into a pension.

”Not quite true if you’ve already got the cash”

Payments into a SIPP will be topped up by 25% almost immeadiately, reversing the basic rate of income tax.

if you’re a higher rate payer, you can re claim the difference on a tax return. So not immediate, but in terms of government ‘giveaways’, it’s pretty darn good. Depending on your income, you can pay in over 2/3 years for maximum relief at the higher rate.

5% return?

🤣🕺🤦‍♀️💦💨

I'd be tempted by premium bonds.  £30 000 should get you a constant return and there is a chance of a big win.

4.3 V8 Vantage - a future classic that's at its lowet residuals right now.

Well, that's what you tell your wife.

Decent Land Rover and stick it in a shed

And when the Land Rover is a pile of rust, you can always sell the shed......🙂

3 new 2CV's.

Secondhand Macan. In brown.

Give it to me. I'll guarantee you a 15% return* or your money back.

Same offer goes out to everyone else.

*for the first three years.

I don't have a big salary monthly but get bonuses which put me in to the 40 percent tax band. If everything went tits up I would like some availability to it. I have an 80k mortgage.

My wife doesn't like work.

Why is 5 percent so emoji laughable bikebuoy?

Buy to let on interest only is still on the horizon but I genuinely don't know if I can be arsed with tennants after asking on here a few weeks back. Our local town has probably reached its peak property wise so can't see a massive increase on capital via that vehicle

which put me in to the 40 percent tax band.

Stick it in a SIPP and get 40% tax back on it. I put every spare penny into my pension each year as the 40% tax back is just too good to ignore.

Because you have to lock it away for a year to get 5%

Have you looked on moneysavingexpert webbie? Most rates are 3-4% unlocked, 5% locked.

Fine if you don’t need it, but what if you do?

Lend it to me and I will pay you 6% interest. Email in my profile if you want more details including what security I can offer .

Stocks and Shares ISA and then buy funds.  I have a number of funds just picked more through guesswork than anything else and they're up 30%.

I'm with Hargreaves and have mainly just bought funds from their "Wealth 150+" list in a variety of markets.

Go and travel the world.

Coke and hookers, surely?

Seriously think about putting at least some in a pension. If you’re a 40% tax payer then if you put in £15k, it will immediately get grossed up by the pension company by the amount of basic rate tax and you can get the higher rate tax back when you do a tax return at year end. That means your £15k contribution (so you’ve still got £15k left over) has actually put £25k in your pension.

That’s £10k for free just by putting it away until you’re 55 (at the earliest).

Then you’ve got tax free gains too. I’ve made a 30% return on mine (#humblebrag) over the last two years by investing in specific stocks and shares (Amazon mostly) and arguably we’re at the end of a long bull market, but even if you get no gain for a few years and hold it in cash in your pension you’ve still made £10k off the bat.

So how do I go about investing in stocks and shares isas, I'm pretty clued up on mortgages etc but have no idea of how to invest in such things as mentioned above. Presuming I don't pay pal gift it to a random "financial advisor".

From the last few weeks track record I’d shove the lot on what Robbie Savages mum predicts for the weekends results on his Premiership show on a Friday Morning on five live.

Or when you say no coke and hookers.... surely if you’re selling, not buying......?

So how do I go about investing in stocks and shares isas

Easy way is to pick a well known fund. Most you need to buy through an investment company. Hargreaves Lansdowne are easy to use and have a big list of products. There are some funds you can buy directly such as Fundsmith and Vanguard. We've got some with both of these. Very easy to set up online. Almost too easy, when spending that much cash. There is a limit of one ISA per year and a max of 20k but if you use your wife's allowance too you can buy two funds and up to 40k. Just be careful as shares can go down. Pretty annoying to lose money as soon as you buy. Long term it should bounce back though.

Bloke I work with has £45k burning a hole in his pocket. Me and a couple of others have spotted a nice flat for £50k he could buy. Means he'd not be renting. Flat is pretty good in nice partof town, outside space and great views.

He's buying a BMW X4. Given that his Yaris has been vandalised 4 times....

A nice flat is £50k and his Yaris gets vandalised? If I had £45k I’d get as far away from there as possible, not be buying property there!

https://www.bike-eu.com/sales-trends/nieuws/2012/10/the-aston-martin-30000-euro-bicycle-10110607

It's got be be equities via funds for c 5 years time horizon.  You may be in the red for the first 2 years as markets move, but the c 4% divi reinvested starts to protect you from capital falls.  After 5 years you are pretty immune from a crash as 5 years worth of reinvested divis is c 20%, and a crash is defined as a 20% fall.

Or put it in premium bonds and wait for the crash, you can get your money out in 1 month.

Once diversified and you start monitoring it you will be surprised at how much the capital values move around, 1 month some sectors are in demand, the next no one wants them.  Just stay in the market.

Good luck, do it via the isa

Stocks and shares even with brexit imminent? (I have no idea how these things work, genuine question)

That was something that concerned me regarding shares, looming brexit and a loathed priminister. I too have no idea about shares, what if these investment companies went bust or whatever they call it. Do they just swallow your money?

Stocks and shares even with brexit imminent? (I have no idea how these things work, genuine question)

Valid question and the simple answer is that nobody knows. I held back on putting some money in for this tax year while I thought about what to do. 20k invested in Fundsmith in April would now be worth just over 23k. The markets can't keep going up (can they??) but while they are going up its a good place to have some money. Personally I wouldn't put every spare penny in there, its good to diversify, but right now I wish I had more in there.

That’s £10k for free just by putting it away until you’re 55 (at the earliest).

While that sounds good, (From other threads, I'm guessing Wrighty is mid fourties?) £15k at 5% for 10 years gets you that £10k - compound interest is wonderful. Plus relatively (within a year) access if your job goes tits up. What rate is a pension claiming to get you, and by how much can you beat that on your own?

Start a pension. It's the smartest financial move you'll ever make. 40% extra free money straight away.

I am in the same boat- well actually a slightly smaller boat (£15k) and was going to ask for advice from the STW hive mind so was pleased to see this thread.

Premium Bonds and waiting for the crash sounds good BUT what about the £ dropping in value with Brexit etc?  Wouldn't being invested in foreign currency/ gold etc be safer?

I have approx £30k invested in Fundsmith/ some other worldwide funds and am wondering if keeping this chunk out of funds might be sensible?

I have my pension in the "ethical" investment option. Apparently it's quite risky, however it's increased by 15-20% a year for the past 4 years (on top of mine and my employer's contributions). I'm happy with it, I've not selected it on a financial basis but if it does well that's great, if it crashes I'll have to make grandad porn or something when I hit retirement.

If you don't have a pension, it seems like it'd make sense. Of course it's totally inaccessible for now. And I now owe my ex a portion of it (she didn't like work either).

Pensions are great if you can benefit from the tax credit, especially 40%. Stocks and shares ISA also pretty good. Find a setup with low dealing charges and invest around 5k at a time over 6 months (or even smaller/longer) to reduce volatility risk.

This would be (has been) my order of priority

1 - start pension

2 - start offsetting mortgage

3 - Highest grossing savings account

4 - Shares

What rate is a pension claiming to get you, and by how much can you beat that on your own?

Not sure what you mean, they are not claiming anything as Pensions are just a fiscally efficient way of saving/investing. You can pretty much invest the same way as if you didn’t use a pension wrapper but unless you want to have access to that cash before you are 55 you would be mad not to use the pension facility as you would forego a 20 or 40% instant uplift (or quasi instant for the pedantics). This  may not last so get it while you can.

"Not sure what you mean, they are not claiming anything as Pensions are just a fiscally efficient way of saving/investing. You can pretty much invest the same way as if you didn’t use a pension wrapper but unless you want to have access to that cash before you are 55 you would be mad not to use the pension facility as you would forego a 20 or 40% instant uplift"

the 20/40% comes at the expense of being told what you can and cant do with your money. the goalposts change.

I have a pension - it has the minimum paid in to receive all he company benefits and the associated tax benifits but i also have my own investments which although don't gain the tax benefits - they are on my terms for my use.

Id be/ am reluctant to lock all my money into a pension.

A stocks & shares ISA is easy to set up and you can invest in the funds you want to, I have one with Hargreaves Lansdown and it was a breeze to set up, I've chosen where my money gets invested and have done nicely so far.

Big advantage is that it gives access to global funds so you can avoid UK ones if you think they'll get hit by Brexit, or go for funds that focus on bonds if you want more security. As you're buying into funds you are spreading risk over a number of individual shares and getting the benefit of fund managers' expertise (fees apply obvs.), all within a tax-free wrapper.

Investments can go up and down etc, etc ...... this is not financial advice ... yada, yada, yada.

Used to have an offsetting mortgage, but in these days of silly low rates, surely you would be better paying the mortgage interest and having your cash work harder for you elsewhere?

Last time I remortgaged, the rates for an offset mortgage were a lot worse than a normal one, plus I seem to recall only being able to get one as "interest only", which didn't interest (hah!) me at the time.

Tbh if it were me i would repay all the debt first, I know it may only be 1 or 2% but you cannot beat the feeling of being debt free.

My self invested investment post yields 5%, any capital movements are academic as I am reinvesting the income, so if shares are low i buy more with the same income.

These I wish i had bought more comments are hindsight trades, a crash will come, then everyone will say i wish I had bought less.  It's a rollercoaster but stay on it.  I know many people cashing out losses, I think markets have always recovered within 12 months.

Back to the suggestion of buy to let interest only - there are new rules coming into force where you will no longer be able to claim relief on the mortgage interest.  Make sure you are fully aware of the changes that are coming.

I knew absolutely nothing about investment, did a lot of research, and ended up with Vanguard. As someone said above, it's almost too easy to setup and give them all your money...

They offer pretty much any plan you can think of. If you have a rough idea of when you want your money back and how much risk you want to take, they will tailor for that.

They're not a British company, and they put your money into a large portfolio of investments around the world, so Brexit would have very little impact, unless of course it affects the global economy.

Stocks and shares make most sense when investing over a number of years because you can potentially lose money in the short term, but also because of the compounding interest. The longer, the better.

Go and travel the world. LOL 30k would not last long

the 20/40% comes at the expense of being told what you can and cant do with your money. the goalposts change.

They've made pensions much more flexible over the last few years. The lifetime cap ($1.03m) is the only negative thing introduced (and you could freeze to avoid the reductions), but with only £30k to invest, I doubt you'll be hitting that for a good few decades....

So, yes you're at the mercy of the Chancellor but recently things have been pretty positive.

How would advice change if one had a final salary pension that will max out allowances, the mortgage was at 0.5% LTV, there was a lump sum and a decent surplus each month?

Property in the Alps maybe?

Diversifying outside the UK feels sensible at the moment and we could enjoy it too.

Or does Brexit make that a worse idea not a better idea?

Quite a few landlords seem to be bailing out, looking on the sales portals ex btl s are obvious.  Then you look at what they paid and like the stock market, the late entrants suffer the biggest losses. Its still got some way to go as interest creep up and landlord reforms bite.  I actually think btl still pays but you have to look hard.

Pick an efficient vehicle; pension or ISA.

Choose an economical platform - charges will eat into your returns in the long term; look at Interactive Investor or iWeb (by Halifax I think)

Choose your investments. If you have a long-term perspective, say 10+ years, global equities to reduce risks; use a low-cost ETF to keep costs down. A 60/40 split of small/large-cap firms.

<span style="font-size: 0.8rem;">Managed funds have higher costs and on average perform less well than ETFs which track the market, and have low costs. Vanguard are a well-regarded ETF provider. </span>

Fundsmith is a managed fund, 1% fees so better than many but not cheap. Their flagship fund has performed well.

You could put the majority into ETFs, and a part into a managed fund if you think you've found a good one and like the interest of following it. But be warned that some very successful funds and their managers have gone on to lose their lustre. And investments that shoot out the lights for a couple of years are unlikely to continue to perform.

Bonds are at risk of rising yields / inflation. But if it all goes pear-shaped then investment-grade bonds are the place to be. So there's an argument for holding some.

Make sure you have #ome liquid assets.

Ps These are examples, by no means the final word.

Have a play with Peer to Peer lending, I am getting around 12% on my 30k investments.

the 20/40% comes at the expense of being told what you can and cant do with your money. the goalposts change

Not really. Just use a SIPP. No one said you had to invest all of your spare cash either.

But personally the less people claim their free money off the tax man, the more for me and the less likely he is to stop the incentive.

For my 2p worth. I popped 10k into a Legal and General Global Index Tracker fund a year back. Its now up by 15 percent. Yep it can and will go down but have a look on youtube for a guy called Lars Kroijer who explains Passive Investing very well. All Wrapped up in a Stocks and shares ISA. BAboom!!!!

Had a similar sum in 2014, walloped it into mortgage, overpay a bit too, means mortgage free in 3.5 years time at age 46. I'm sure there were better financial options, but took the chance that interest rates will rise when I have more money kicking about, and if not, not having a mortgage will be awesome.

Have a play with Peer to Peer lending, I am getting around 12% on my 30k investments.

IIRC you can't put these in a tax free wrapper yet, so the 12% would be subject to 40% tax in the OP's case.

https://www.french-property.com/sale-property/119-VRANB1168

Rockape63's suggestion wins!

Bear-UK who are you getting 12% interest via peer to peer with?

IIRC you can’t put these in a tax free wrapper yet, so the 12% would be subject to 40% tax in the OP’s case.

Funding Circle has recently launched an ISA - doubt you'll get 12% though.

Similar situation, I have no pension and moneysavingexperts said the best thing I can do is put it intp a pension however I dont like locking it up like that or investing it all... so me personally I'm going to keep £10k as safety cash, £10k mortgage overpayment (28years left on it) and the rest into a pension.

I know I will maybe make more by simply sploshing it all in an pension but I dont want to lock up my cash like that until my mortgage is below 60% ltv

I could pay off my mortgage. Then I wouldn’t have to touch the pension funds I originally set up to pay it off after being advised that an interest-only mortgage linked to a pension was the way to go.

Which didn’t include losing the job I had at the time and never having the funds available to keep paying into that pension. I have had others since, linked to other jobs, but I feel that these type of mortgages should be investigated as a miss-selling scandal like PPI.

Count zero, you can complain about that advice. Only concern  is whether you will be time barred regardless of whether complaint is valid.

Anchovies. Many many anchovies.

its all one big humblebrag anyway!

I learned that word recently! 🙂

Slight hijack, but welcome thoughts.

We’re currently selling a property for an elderly parent who is in care - through Power of Attorney.

Care home costs to pay and £30k mortgage to settle will still leave c£250 pot (reducing by £25k pa for care).

Need some funds accessible (for those care costs) and then the balance to hold somewhere which is low risk, with reasonable returns and when ultimately it comes to probate, readily accessible.

Are NS&I Premium Bonds the answer or should I look elsewhere too?

Premium bonds net you c 1.4% but are free of tax.  Not brilliant, but the capital is safe.

Focus on the income gap between care costs and income.  Make sure you claim the care allowance, 58 gbp per week or higher rate 85 i think.  Care allowance is tax free.

So say net income is 15k and care is 25k, you are 10k pa short v the 250k pot.

Just diversify whatever you choose, some will win, some will lose.  You don't really want to be speculating with the pot as the capital cannot be replaced. Ftse s yielding c 4% so there's the benchmark.

If it were me i would ask the care home if you can have a discount for prepayment of say 3 months.

Good luck

Is there a reason why you need it to be low risk? If the house sale had only netted 200k would you be in the shit somehow? If not I'd bung it in shares myself.

If not I’d bung it in shares myself.

Interesting time to be investing....

Yeah, it needs to be low risk as it’s not my money.  We have PoA for a parent, so we can’t see the funds from house sale evaporate! Nor is it in our interest (sister and I) to see any of it at risk at all.

So ultimately need steady returns, and able to access again without too much heartache in a few years (blunt but true, parent is 82, living four years with progressive Lewy Bodies dementia)

Thanks pool man, yes she receives State Pension, Attendance Allowance and a couple of pitifully small private pension payments (£70ish per month in total).

Whilst the pension relief is good, it's not all free money as is being said simply because the likelihood is you'll pay tax on it when you draw it down. In the case of a SIPP there is a 25% tax free element but the bigger gain is from relief at 40% but then only paying c20% on withdrawals if that's your circumstances.

So I bunged my spare £20k (first and last time in my life I’ll get to say that I reckon) into Fundsmith pretty much on the basis of reading this thread about a week or so ago, and it’s already worth, wait for it... £18k!

Now I know that stock and shares are a long term investment and can go up and down etc, but it does make me feel a little anxious... 🙄

Check if there's any kind of cooling off period. I invested in a stock ISA with L & G. It went down and I cancelled after 13 days and reinvested. I couldn't believe my luck.

So I bunged my spare £20k (first and last time in my life I’ll get to say that I reckon) into Fundsmith pretty much on the basis of reading this thread about a week or so ago, and it’s already worth, wait for it… £18k!

Don't sweat it, long term you'll still do OK. Even if you invested at the peak just before each major crash, you'd still be quids in after a few years.

Yes 5 years seems to be the minimum timeframe for equities.  I started 4 years ago ago and the capital values of some stocks are in the red - tobacco for eg - however with divis reinvested i am still 15% up.  Stock market can be a brutal place if companies don't deliver.