Financial crossroads
Discussion
I've been wondering the last few months where to move forward with regard to my savings/shares/property and general all round investments, so what better place to come than the mighty Pistonheads. Contrary to many people's understanding I feel among all the bull***t and boll***s posted you can get some very very helpful pointers and advice, so I thank you all.
As the title says, I just feel I'm at a crossroads, I normally have a good direction of where to go, but seem to have come to a stop, with no real idea of which way to go. I'll jot down below any info I feel may help you guys offer some suggestions.
I'm 47, married, no kids, own business, earn approx 50-60k a yr, wife works, earns 36-40k a yr.
Home we live in is worth 330k, mortgage of 95k, it's one of the offset type so we have a limit of 150k , so could in theory get 55k at the press of a button. Interest rate on this mortgage is 0.75%
We have 40k of cash savings,sitting in the mortgage Acc, so in effect earring 0.75% interest.
Approx 10k in shares.
Neither of us have any form of pension.
No other debt at all.
My company has no debt, approx 100k in bank, we part own the unit we use outright, 50/50 with my brother who also uses it for his company, value of unit is 250k so 125k is ours. Company assets and goodwill approx 200k.
BTL one is a 2 bed flat, owned outright 50/50 with my mother, value is 200k, and my share of rent is £485 a month.
BTL two is a 3 bed house, value 160k, interest mortgage of 100k which costs £194 a month, rent income is £610 a month.
BTL three is a 2 bed bungalow , worth 170k shared 66/33 with my mother, in my favour, my share of mortgage is £460 and my share of rent is £450, interest rate is 4.2%.
BTL four is a 2 bed cottage ,worth 200k, owned outright with my brother, 50/50, my share of rent is £400 a month
BTL five is a one bed flat, worth 160k, owned 50/50 again with my brother, my rent share is £395
I also own some land , 50/50 with my brother, we are in process of building 4 houses, should walk away with approx 300k before tax if all goes well.
And there we have it, my life on a page. I want to do something with the 40k of savings, as its earning nothing where it is, torn between throwing in a pension, or paying off most of the mortgage on the BTL bungalow that's 4.2%.
Don't really want to buy any more property, 5 tenants is enough to deal with.
I have a cheap way, using the offset mortgage to borrow money, 0.75% at present, and wondered if I could make this work for me in any way, or indeed use any of the equity I have in any of the properties in the same way, to grow my investments .
So many things going round and round in my head, yet I don't really know which way to move forward, as I said earlier, any pointers much appreciated .
As the title says, I just feel I'm at a crossroads, I normally have a good direction of where to go, but seem to have come to a stop, with no real idea of which way to go. I'll jot down below any info I feel may help you guys offer some suggestions.
I'm 47, married, no kids, own business, earn approx 50-60k a yr, wife works, earns 36-40k a yr.
Home we live in is worth 330k, mortgage of 95k, it's one of the offset type so we have a limit of 150k , so could in theory get 55k at the press of a button. Interest rate on this mortgage is 0.75%
We have 40k of cash savings,sitting in the mortgage Acc, so in effect earring 0.75% interest.
Approx 10k in shares.
Neither of us have any form of pension.
No other debt at all.
My company has no debt, approx 100k in bank, we part own the unit we use outright, 50/50 with my brother who also uses it for his company, value of unit is 250k so 125k is ours. Company assets and goodwill approx 200k.
BTL one is a 2 bed flat, owned outright 50/50 with my mother, value is 200k, and my share of rent is £485 a month.
BTL two is a 3 bed house, value 160k, interest mortgage of 100k which costs £194 a month, rent income is £610 a month.
BTL three is a 2 bed bungalow , worth 170k shared 66/33 with my mother, in my favour, my share of mortgage is £460 and my share of rent is £450, interest rate is 4.2%.
BTL four is a 2 bed cottage ,worth 200k, owned outright with my brother, 50/50, my share of rent is £400 a month
BTL five is a one bed flat, worth 160k, owned 50/50 again with my brother, my rent share is £395
I also own some land , 50/50 with my brother, we are in process of building 4 houses, should walk away with approx 300k before tax if all goes well.
And there we have it, my life on a page. I want to do something with the 40k of savings, as its earning nothing where it is, torn between throwing in a pension, or paying off most of the mortgage on the BTL bungalow that's 4.2%.
Don't really want to buy any more property, 5 tenants is enough to deal with.
I have a cheap way, using the offset mortgage to borrow money, 0.75% at present, and wondered if I could make this work for me in any way, or indeed use any of the equity I have in any of the properties in the same way, to grow my investments .
So many things going round and round in my head, yet I don't really know which way to move forward, as I said earlier, any pointers much appreciated .
Sounds like you're in a reasonably good position.
If I were you i'd be looking to start a SIPP and pay in anything over the higher rate tax band (43k i think) to avoid paying any 40% income tax...if your lifestyle allows. If you're not offay with stocks and shares take a look at Vanguards funds (I use the ETFs)....lots of diversification and very low fees will be your friends. You'll be able to get at some of the SIPP money when you're 55.
If you're really worried about tieing the cash up in a pension then start loading up your annual ISA allowance (and your wifes too if possible. While no immediate tax breaks any future income/gains will be tax free which given most of your retirement income from the BTLs will be taxable might come in handy.
You've also got >200k of mortgage debt in your name (couldn't work it out exactly from you post). I'd be looking to start paying that down, particularly the 100k interest only mortgage on the 3 bed BTL. Some may say don't as you might be able to get better returns elsewhere than the interest your paying but personally i'd be looking to head towards early retirement mortgage free. Maybe just keep the offset one as you're on a great rate and you might need some cash at short notice.
If I were you i'd be looking to start a SIPP and pay in anything over the higher rate tax band (43k i think) to avoid paying any 40% income tax...if your lifestyle allows. If you're not offay with stocks and shares take a look at Vanguards funds (I use the ETFs)....lots of diversification and very low fees will be your friends. You'll be able to get at some of the SIPP money when you're 55.
If you're really worried about tieing the cash up in a pension then start loading up your annual ISA allowance (and your wifes too if possible. While no immediate tax breaks any future income/gains will be tax free which given most of your retirement income from the BTLs will be taxable might come in handy.
You've also got >200k of mortgage debt in your name (couldn't work it out exactly from you post). I'd be looking to start paying that down, particularly the 100k interest only mortgage on the 3 bed BTL. Some may say don't as you might be able to get better returns elsewhere than the interest your paying but personally i'd be looking to head towards early retirement mortgage free. Maybe just keep the offset one as you're on a great rate and you might need some cash at short notice.
I actually wouldn't bother doing anything with the £40k. Under the set up you describe you have plenty of exposure to property, plenty of income, an employment income and a business income so I wouldn't see the need in taking on risk to chase any kind of yield in this market.
On a separate note it obviously might be beneficial to divert some income into a pension so as to be more tax efficient. Technically the yield on just clawing your tax back back would exceed anything you could get elsewhere for the risk. Plus you're only a few years from being able to access it.
Also, the commercial property you co own could possibly go into a pension and give some tax benefits?
On a separate note it obviously might be beneficial to divert some income into a pension so as to be more tax efficient. Technically the yield on just clawing your tax back back would exceed anything you could get elsewhere for the risk. Plus you're only a few years from being able to access it.
Also, the commercial property you co own could possibly go into a pension and give some tax benefits?
Ginge R said:
Quattro,
A decent planner would take weeks to get something half decent for you. Is 'moving forward' really as much as issue as where you want to end up?
Not really sure where I want to end up to be honest, retired at 55 would be nice, but I'd never get the wife to do the same, lives for her job. Sadly I expect to work until I drop. A decent planner would take weeks to get something half decent for you. Is 'moving forward' really as much as issue as where you want to end up?
With no kids it's not as if we are building up for their future.
I have an incomplete spinal injury, so although I can just about walk at the moment, with help from crutches, I know that very soon ish, 5-7 yrs I will be in a wheelchair full time.
I know a financial adviser is the way to go, I did speak with one a few yrs ago but he really only suggested what I already knew.
Quattromaster said:
Not really sure where I want to end up to be honest, retired at 55 would be nice, but I'd never get the wife to do the same, lives for her job. Sadly I expect to work until I drop.
With no kids it's not as if we are building up for their future.
I have an incomplete spinal injury, so although I can just about walk at the moment, with help from crutches, I know that very soon ish, 5-7 yrs I will be in a wheelchair full time.
I know a financial adviser is the way to go, I did speak with one a few yrs ago but he really only suggested what I already knew.
This isn't intended to be silly, but why don't you buy yourself something nice. Something that may not be an investment but may well not lose you any money either. I notice your recent post in the 'watches' section. Obviously you like watches, so why not buy a DSSD or a PP Nautilus? That's just two which aren't likely to depreciate much. Or a red or double-red sub? etc etc. With no kids it's not as if we are building up for their future.
I have an incomplete spinal injury, so although I can just about walk at the moment, with help from crutches, I know that very soon ish, 5-7 yrs I will be in a wheelchair full time.
I know a financial adviser is the way to go, I did speak with one a few yrs ago but he really only suggested what I already knew.
You could also do worse than invest - purely for your own pleasure- in a wheelchair toy if that's your future. A Genny, or a Carbon Black. A brilliant chair makes a huge difference to your quality of life. Are you officially disabled? If so you can buy many things (inc any personal car) Vat free which gives you quite a lot of scope to run a nice toy for a year or two and chop it in for most or all of your money back.
Edited by drainbrain on Friday 9th December 17:16
Quattromaster said:
Not really sure where I want to end up to be honest, retired at 55 would be nice, but I'd never get the wife to do the same, lives for her job. Sadly I expect to work until I drop.
With no kids it's not as if we are building up for their future.
I have an incomplete spinal injury, so although I can just about walk at the moment, with help from crutches, I know that very soon ish, 5-7 yrs I will be in a wheelchair full time.
I know a financial adviser is the way to go, I did speak with one a few yrs ago but he really only suggested what I already knew.
Work till you drop? Really? With no kids it's not as if we are building up for their future.
I have an incomplete spinal injury, so although I can just about walk at the moment, with help from crutches, I know that very soon ish, 5-7 yrs I will be in a wheelchair full time.
I know a financial adviser is the way to go, I did speak with one a few yrs ago but he really only suggested what I already knew.
Sorry to read of your situation. I'd be selling stuff, reducing work and doing something fun that I wanted to, in order to enjoy the time I have left.
Ginge - where would the OP (or myself for that matter) find such a "financial counsel" who would hopefully have expertise and experience that would help in such a scenario?
I could certainly do with a "plan", and I'm sure I'm not the only PH'er here in such a situation.
In hindsight I needed such advice 10-15 years ago but instead have made it up as I've gone along...
I could certainly do with a "plan", and I'm sure I'm not the only PH'er here in such a situation.
In hindsight I needed such advice 10-15 years ago but instead have made it up as I've gone along...
UpTheIron said:
Ginge - where would the OP (or myself for that matter) find such a "financial counsel" who would hopefully have expertise and experience that would help in such a scenario?
I could certainly do with a "plan", and I'm sure I'm not the only PH'er here in such a situation.
In hindsight I needed such advice 10-15 years ago but instead have made it up as I've gone along...
In case, like me, you have an inbox for this sort of stuff that you don't always monitor too closely.. you have mail.I could certainly do with a "plan", and I'm sure I'm not the only PH'er here in such a situation.
In hindsight I needed such advice 10-15 years ago but instead have made it up as I've gone along...
Quattromaster said:
BTL three is a 2 bed bungalow , worth 170k shared 66/33 with my mother, in my favour, my share of mortgage is £460 and my share of rent is £450, interest rate is 4.2%.
And there we have it, my life on a page. I want to do something with the 40k of savings, as its earning nothing where it is, torn between throwing in a pension, or paying off most of the mortgage on the BTL bungalow that's 4.2%.
What you are already thinking above seems obvious to me. This will also remove you from BTL tax on mortgage interest that is about to be phased in. This combination has got to be better than earning nothing on the cash.And there we have it, my life on a page. I want to do something with the 40k of savings, as its earning nothing where it is, torn between throwing in a pension, or paying off most of the mortgage on the BTL bungalow that's 4.2%.
And you have your offset mortgage as a emergency fund if for whatever reason it is required.
Thanks for all the tips and pointers folks, in particular Ginge, I think you have exactly highlighted the problem I have, I just don't know where I want to be, so am wasting my time asking for help on how to get there. Lol.
Having a wife who is so indecisive she struggles to decide on what tv channel to watch, let alone where she wants to be in 15/20 yrs time doesn't help.
Replying to some of the other posts, I do know I need some kind of hobby/interests, I need something in my life to give me a buzz, I've been there with fast cars (GTR, S3 and seven replica), I've tried flying, gliding, owned a boat, track days, fishing, and pretty much everything else between. Yet nothing that I want to go back to.
I used to love driving but don't even really enjoy that anymore.
I already have a top spec wheelchair and hand cycle , considering ordering a mountain trike to enable me to get out and about in the countryside more.
Basically it appears I'm a grumpy git with no interests in anything, who has no idea of what he wants or how to get there, to be continued I think.
Having a wife who is so indecisive she struggles to decide on what tv channel to watch, let alone where she wants to be in 15/20 yrs time doesn't help.
Replying to some of the other posts, I do know I need some kind of hobby/interests, I need something in my life to give me a buzz, I've been there with fast cars (GTR, S3 and seven replica), I've tried flying, gliding, owned a boat, track days, fishing, and pretty much everything else between. Yet nothing that I want to go back to.
I used to love driving but don't even really enjoy that anymore.
I already have a top spec wheelchair and hand cycle , considering ordering a mountain trike to enable me to get out and about in the countryside more.
Basically it appears I'm a grumpy git with no interests in anything, who has no idea of what he wants or how to get there, to be continued I think.
Get involved in a local charity? by involved I mean maybe just a couple of donations or buying some stuff they really need. Can be really nice to help local charities as a little from you means a lot to them, and they work very hard at it so you can see it going to good people and it really makes their day.
Seems like you need to be looking for an 'investment' of the sort that produces a non-monetary return. What that should be I don't know, but above is an idea.
Seems like you need to be looking for an 'investment' of the sort that produces a non-monetary return. What that should be I don't know, but above is an idea.
Anyway by far the best investment is to pay down the 4.2% mortgage. You are using post tax money to fund that due to the BTL changes so given approx 50% income tax you'd need to get 8%+ return to beat that from any other investment.
The risk to reward is unbeatable, especially once skewed by income tax considerations.
The risk to reward is unbeatable, especially once skewed by income tax considerations.
sealtt said:
Anyway by far the best investment is to pay down the 4.2% mortgage. You are using post tax money to fund that due to the BTL changes so given approx 50% income tax you'd need to get 8%+ return to beat that from any other investment.
The risk to reward is unbeatable, especially once skewed by income tax considerations.
I agree with this - the imminent removal of tax relief on BTL mortgage interest means that it's got to be worth doing. You can always remortgage again later or sell some of the properties to release cash in the future.The risk to reward is unbeatable, especially once skewed by income tax considerations.
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