Invest or just save
Discussion
Due to us bucking the trend and having cleared dept and stayed in a modest house but progressing into better and better paid jobs we have about 50k kicking around in a joint savings account. My view is to leave it where it is as the returns through ISA and decent current accounts equate to less than a heavy weekend away... However, I thought I'd ask the question here as whilst we don't want to loose the money we would consider some longer term investments where some rough riding may be needed for a longer term gain.... Any advise?
You'd be mad not to something a bit better than a standard open access ISA IMO. You're at the point where financial advisors will talk to you so that might be an idea. I have a similar(ish) amount and have split it 50% in a cash ISA, about 20% in a FTSE tracker stocks and shares ISA, 10% is earmarked for fundingcircle or similar, and the last 10% is in an open access savings account in case of coke and hookers.
Never bothered about money before but since we have a small amount now I agree we need to do something. Mortgage is still to much for that to clear but the repayments are well within my comfort zone so not bothered. If pushed we can add 2k mth to the pot but life needs living in case we die tomorrow (no kids so no worries there either).
Have you stress tested your mortgage first? Rates unlikely to go up anytime soon, but if they did, what would the impact be? Reference that reduction in your pot and the gain to The Treasury, against net gains you'll make if your funds do as you hope. It isn't sexy investing but the best way to make money is not to lose money.
I never get FTSE tracker, it means no choice even when it's pretty obvious that investigating in something isn't a good idea. Oil recently, pretty obviously it was going to be on its way down for a while over recent weeks.
But first use surplus money to pay off your mortgage, we did that years ago in about 12 years, if you do it starts to gather speed because year subsequent payment you make is a little more capital and a little less interest and it starts to gather pace. Each time we made another payment it all started to accelerate and the years of payment started to drop away. Only when we had done that we they started to save elsewhere.
But first use surplus money to pay off your mortgage, we did that years ago in about 12 years, if you do it starts to gather speed because year subsequent payment you make is a little more capital and a little less interest and it starts to gather pace. Each time we made another payment it all started to accelerate and the years of payment started to drop away. Only when we had done that we they started to save elsewhere.
If you have £50K to invest, beware the use of an IFA. Not saying they are all crocks, but I have a "mate" who would re-mortgage his head Grandmothers Grave, if he could. He can't because he already has (Probably)
The normal way to use £50K is LEVERAGE it into £100k and purchase a BTL in a student city.
The normal way to use £50K is LEVERAGE it into £100k and purchase a BTL in a student city.
Surely it will depend on your mortgage rate. If you can beat that rate via an investment then you're better off going for the latter; if/when rates rise then re-evaluate. Our mortgage is 2.2% but we have investments in our ISAs making more than that. It's even more helpful if one of you isn't working, as any (non-ISA, obviously) savings income in her/(his) name is tax-free.
Whilst it is true that you might get more interest than you pay on ISA the advantage of paying off your mortgage is that after each payment you are, hopefully, able to pay for the same amount a higher portion of your debt, not just the interest.
So on day one it may be 99% interest and a tiny amout of debt you pay and it slowly makes progress over time until towards the end you are paying off a lot of debt and little interest. That's partly why it can be very useful to to do as the first stage.
Personally it worked for me, 12ish years to pay off the mortgage and today our investments are into 7 figures.
So on day one it may be 99% interest and a tiny amout of debt you pay and it slowly makes progress over time until towards the end you are paying off a lot of debt and little interest. That's partly why it can be very useful to to do as the first stage.
Personally it worked for me, 12ish years to pay off the mortgage and today our investments are into 7 figures.
HenryJM said:
I never get FTSE tracker, it means no choice even when it's pretty obvious that investigating in something isn't a good idea. Oil recently, pretty obviously it was going to be on its way down for a while over recent weeks.
If you work out anything else that's obvious let us all know please!BobToc said:
HenryJM said:
I never get FTSE tracker, it means no choice even when it's pretty obvious that investigating in something isn't a good idea. Oil recently, pretty obviously it was going to be on its way down for a while over recent weeks.
If you work out anything else that's obvious let us all know please!You must have made a killing.
What's your price target?
Did you buy back in at $50 or is it going much lower from here?
walm said:
BobToc said:
HenryJM said:
I never get FTSE tracker, it means no choice even when it's pretty obvious that investigating in something isn't a good idea. Oil recently, pretty obviously it was going to be on its way down for a while over recent weeks.
If you work out anything else that's obvious let us all know please!You must have made a killing.
What's your price target?
Did you buy back in at $50 or is it going much lower from here?
So right now I'm out of oil, maybe in coming weeks or months my views may change but I'm more after a more solid growth that will grow for me over six months or more, then I'll review. Looking into something this morning/this afternoon/this hour, making a judgement, changing it.... that's not my world.
But equally seeing something in FTSE that's invested because it's in FTSE makes little sense, if I think I'd rather get out of investment I'd rather do it than wait for it's value to drop enough to get it out of 100 before I do it.
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