Generating Income From 200k?
Discussion
TIGA84 said:
If you had 100k mortgage and 100k offset in the bank and it went under, technically you'd be a creditor of the bank, and a debtor to the creditors?
Theoretically, what would happen then? Zero it and move on?
Or am I being stupid?
That was what I originally thought, but I was wrong.Theoretically, what would happen then? Zero it and move on?
Or am I being stupid?
It is netted off.
So zero it and move on.
jimi said:
Buy classic Ferrari / Aston Martin - leave in storage for 12 -18 months and sell for large profit.
Repeat the above.
Sounds like you're on to something. What about just turning them over quickly so you don't get stung with storage/maintenance and possible depreciation if/when the bubble bursts. We can call it "buying and selling cars"Repeat the above.
e8_pack said:
Sounds like you're on to something. What about just turning them over quickly so you don't get stung with storage/maintenance and possible depreciation if/when the bubble bursts. We can call it "buying and selling cars"
Classic i.e. 60s-90s cars will not depreciate. They appreciate by a couple of thousand a month at the moment. Check out the HAGI index...The idea that I would look at if you are risk averse would be something along these lines:
Use all the amount to offset your mortgage. I don't see any benefit to keeping £15k to 'invest'. The 'risk free' benefit of offsetting is pretty potent. M
I would then consider taking the money that you then are not using each month to fund that £200k element of your mortgage and putting it in a sipp and claiming your income tax back.
Depending on your tax rate and allowance and how close you are to being able to draw down your pension I would then consider using elements of your offset cash to charge the sipp and claw back as much tax as is viable.
There is potential, depending on your personal circumstances to end up with the £200k as cash to give to your children and you get to keep all the tax you have essentially clawed back on that sum. It's likely to be a return that dwarfs any other type of investment once risk adjusted.
Use all the amount to offset your mortgage. I don't see any benefit to keeping £15k to 'invest'. The 'risk free' benefit of offsetting is pretty potent. M
I would then consider taking the money that you then are not using each month to fund that £200k element of your mortgage and putting it in a sipp and claiming your income tax back.
Depending on your tax rate and allowance and how close you are to being able to draw down your pension I would then consider using elements of your offset cash to charge the sipp and claw back as much tax as is viable.
There is potential, depending on your personal circumstances to end up with the £200k as cash to give to your children and you get to keep all the tax you have essentially clawed back on that sum. It's likely to be a return that dwarfs any other type of investment once risk adjusted.
jimi said:
e8_pack said:
Sounds like you're on to something. What about just turning them over quickly so you don't get stung with storage/maintenance and possible depreciation if/when the bubble bursts. We can call it "buying and selling cars"
Classic i.e. 60s-90s cars will not depreciate. They appreciate by a couple of thousand a month at the moment. Check out the HAGI index..."House prices won't drop because they've been going up for the last 6 years" - said by someone in 2007.
I must be old school because if you have 200 k but still have a mortgauge you don't have 200k you owe x amount to someone still.
I know mortgage is the best loan you can have but I always just think it's a big debt I owe.
Suppose this thinking is why I'm not wealthy I don't play the stats about too get best rates possible / juggle cash flow. Just like to try and pay / get rid of all debts **
I know mortgage is the best loan you can have but I always just think it's a big debt I owe.
Suppose this thinking is why I'm not wealthy I don't play the stats about too get best rates possible / juggle cash flow. Just like to try and pay / get rid of all debts **
- I'm not doing too well at it kept going to the pub ! !
walm said:
98elise said:
So if you had 150k mortgage with 100k in an offset account, and the bank went under, you would still owe the bank 150k not 50k?
Actually now I think about it - I have to admit that I am not 100% sure.Scratch that - I just did some Googling.
I am talking b0llocks.
ANY kind of mortgage has the savings automatically netted! (If held with the same bank - so DEFINITELY offsets!)
Only recently has the FSCS given you £85k protection so you can choose to have that NOT offset.
Sorry!
The present income yield on £200,000 (or any other amount) is 4.4% net.
If you are really serious, and want financial independence in the future, it is achievable. Few people seem to bother though, perhaps because they prefer spending to saving, or maybe they just cannot see what is possible. It is probably quite a shock at retirement, when they discover the State Pension is only about £100 per week.
I am happy to give a few pointers, but I am not into teaching this subject.
Suggest that you study the methods used by successful investors. Much easier these days with the internet.
Don't try to guess market movements, by short-term trading.
Avoid funds, or financial advisers.
Self select ISAs are helpful, not initially, but later on when you might otherwise be looking at a large CGT bill. Make sure that you choose ISAs with capped administration fees.
Aim for long-term holdings and gradually build up to having stakes in about 25 big companies. The income from your fund should increase, and will be received from the outset, unlike a pension.
Cash and cash equivalent accounts make people feel safe, but they have an investment that over time is bound to lose money. Inflation is the killer.
Having out-performed the market in 23 out of the last 28 years, it must be possible for others to do the same. Even if you can beat the market every other year, you should feel satisfied. Discipline, patience, don't follow the herd, and try to apply common sense to your investment. Government Stock sounds safe, but remember that capital values go down as interest rates rise. Spread risk. Choose companies that might be boring, but which can survive recessions.
Edited by Jon39 on Monday 18th January 16:21
Jon39 said:
Cash and cash equivalent accounts make people feel safe, but they have an investment that over time is bound to lose money.
If you have 25 reasonably diversified equities, you are going to track the market to a very close proximity.http://www.investopedia.com/articles/stocks/11/ill...
Aaaaand the FTSE 100 is now FLAT over 10 years.
Good luck with outperforming the market. The average fund manager, working full time, with access to all the available data and management teams of his investments, still fails to do it.
VX Foxy said:
Hi Jon - can I email you?
Sorry Foxy, I don't want to deal with emails. Would like to help, but it often tends to become too time consuming.
I mentioned giving a few pointers, and they were provided in the post.
Perhaps watch Mr. Warren Buffett's videos, if you have not already seen them.
Think long-term and use common sense when investing. For example in 2007 when the debt bubble was inflating, don't hold builders or consumer non-essentials. Further back in 1999, so called clever investors followed the herd, and piled into new start technology companies with enormous valuations. They eventually paid the inevitable price. With that temporary herd movement, the market beat me that year, but a look back at the FTSE chart shows what happened next. It was very grim for many.
Edited by Jon39 on Wednesday 20th January 15:36
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