Where to invest £250k for 1 year.

[cymtriks]

drainbrain said:

Please don't take offence at the question, but do you take that 6% every year as income before tax or after tax ?

Everything was reinvested for three of the last four years. The gains are before tax based on "what do we have now minus expenses" versus "what we had then".

[ellroy]

So it's not income, but total return, and if you're not taking too much risk, and net of costs in the current climate, it's not a bad return at all. However, still not an approach to take with a one year time horizon.

[Yipper]

NickCQ said:

I think a spare £250k would be better invested directly in your children's educations through independent schooling rather than indirectly by trying to game the state catchment system.

This.

Private education is far superior to public education.

Stick the remaining 150-200k in your pensions (get 20-50% immediate tax bonus) and a high-dividend investment fund(s) for liquidity. Buy-to-lets bought with cash rarely make much, if any, money and can take ages to sell if you need cash fast.

[sidicks]

Yipper said:

This.

Private education is far superior to public education.

Stick the remaining 150-200k in your pensions (get 20-50% immediate tax bonus) and a high-dividend investment fund(s) for liquidity. Buy-to-lets bought with cash rarely make much, if any, money and can take ages to sell if you need cash fast.

1. You only get tax relief up to the amount of tax you've paid.
2. why do you want high liquidity and high dividends within an investment wrapper you can't access until retirement?

[Jockman]

drainbrain said:

How about a nice commercial property with a blue chip tenant on a long FRI lease managed at 5%+vat. by an experienced commercial agency?

Are you advising OP to go down the pension route?

[drainbrain]

Jockman said:

drainbrain said:

How about a nice commercial property with a blue chip tenant on a long FRI lease managed at 5%+vat. by an experienced commercial agency?

Are you advising OP to go down the pension route?

If he'd prefer the pension to get the rent rather than his current account I suppose he could buy the property thru a pension but why would he?

[CarlosFandango11]

drainbrain said:

Jockman said:

drainbrain said:

How about a nice commercial property with a blue chip tenant on a long FRI lease managed at 5%+vat. by an experienced commercial agency?

Are you advising OP to go down the pension route?

If he'd prefer the pension to get the rent rather than his current account I suppose he could buy the property thru a pension but why would he?

To pay less tax, at the expense of not being able to withdraw cash from the pension until he's 57.

[sidicks]

drainbrain said:

If he'd prefer the pension to get the rent rather than his current account I suppose he could buy the property thru a pension but why would he?

Tax relief and tax free returns, hence much higher overall returns.

[drainbrain]

CarlosFandango11 said:

To pay less tax, at the expense of not being able to withdraw cash from the pension until he's 57.

Eh?

So how is a stupidly excessive lifestyle to be funded without any income to pay for its monthly instalments?

[drainbrain]

sidicks said:

Tax relief and tax free returns, hence much higher overall returns.

Is this another "live for tomorrow" plan? Where today's just a rehearsal?

[NickCQ]

drainbrain said:

CarlosFandango11 said:

To pay less tax, at the expense of not being able to withdraw cash from the pension until he's 57.

Eh?

So how is a stupidly excessive lifestyle to be funded without any income to pay for its monthly instalments?

Progressive liquidation of the portfolio? Whether your gains come in the form of cash yield or appreciation you can still access it...

[drainbrain]

NickCQ said:

Progressive liquidation of the portfolio? Whether your gains come in the form of cash yield or appreciation you can still access it...

Humour a stupid man.

So you set up the Sipp (no doubt at some cost) and you fund it (no doubt at some charge) and then use the funds to buy the commercial property which is then owned by the Sipp.

Can you then get the rent it generates paid directly into your/your agent's current account without you having to be a certain age, or doing it via a circuitous route (no doubt involving further charge and fees), or any other awful pitfalls and obstacles or hassles like us stupid people use who don't take advantage of this pension method?

Y'know. Tenant sets up dd. Rent arrives same day every month.....

[GT03ROB]

drainbrain said:

cymtriks said:

Personally if I had that amount of money I'd put it straight into my unit trust portfolio which has made over 6% every year in return for virtually no effort or expense on my part.

Please don't take offence at the question, but do you take that 6% every year as income before tax or after tax ?

...and please don't take offence at this..... but on a 1 year view which it what the OP wanted, I would put that as a dreadful idea.... buying a few of drainbrains Glaswegian slums would be a far better........

[CarlosFandango11]

drainbrain said:

CarlosFandango11 said:

To pay less tax, at the expense of not being able to withdraw cash from the pension until he's 57.

Eh?

So how is a stupidly excessive lifestyle to be funded without any income to pay for its monthly instalments?

Eh?

Who says that the OP wants a stupidly excessive lifestyle and also that they don't have any other income to pay for it if they did?

[drainbrain]

Ok. Ok. So how is the private education for his kid going to be paid for?

The rent from the commercial property could provide some income to pay for it and could be used as old-age income later on. Not much use as education provision if he can't access that income till the kid's middle-aged, is it?

[Zingari]

Yipper said:

Private education is far superior to public education.

As a product of such an education system I'd tend to disagree. It comes down to two types at these places; parents who want the best education AND the kid buys into it so works hard, and then parents who have the money and throw their off-spring into the system for the status. During my A level years there was one kid who stayed on just to do Art, not because he could paint but it kept him out of the way for 2yrs before he could go into the family business. If his work ethic was anything to go by I suspect the business folded not long after he took over!

Look at the performance of local state schools, be realistic about the ability/potential/commitment of your kids and then decide.

[NickCQ]

drainbrain said:

NickCQ said:

Progressive liquidation of the portfolio? Whether your gains come in the form of cash yield or appreciation you can still access it...

Humour a stupid man.

So you set up the Sipp (no doubt at some cost) and you fund it (no doubt at some charge) and then use the funds to buy the commercial property which is then owned by the Sipp.

Can you then get the rent it generates paid directly into your/your agent's current account without you having to be a certain age, or doing it via a circuitous route (no doubt involving further charge and fees), or any other awful pitfalls and obstacles or hassles like us stupid people use who don't take advantage of this pension method?

Y'know. Tenant sets up dd. Rent arrives same day every month.....

I wasn't calling you stupid . I was commenting on the slightly odd point which I see getting made around here, which is that property is a 'superior' investment because it provides a recurring income, compared to stocks / shares / fixed income funds that primarily appreciate with less running cashflow. You can still access your investment returns either way.

I suppose it depends on how much you value your time, but I'd be prepared to go through quite a bit of extra hassle to increase my investment returns a couple of hundred bps by minimising my tax liability.

[FredClogs]

I'd buy £250k worth of UK based ftse shares, either a whole index tracker which will return over 3% in dividend and with a weak pound look set in for at least the next 12 months unlikely to lose on the capital. Or just buy some big ftse 100 utilities companies, national grid, United utilities etc, if you don't make 5% I'll eat my pants. You could buy gilt bonds which are certainly very unlikely to lose money and very likely to return over max cash savings rates.

[sidicks]

FredClogs said:

I'd buy £250k worth of UK based ftse shares, either a whole index tracker which will return over 3% in dividend and with a weak pound look set in for at least the next 12 months unlikely to lose on the capital. Or just buy some big ftse 100 utilities companies, national grid, United utilities etc, if you don't make 5% I'll eat my pants.

There is a material risk of this sort of portfolio losing money over a 1-year horizon, so it is certainly not the ideal strategy for the OP.

FredClogs said:

You could buy gilt bonds which are certainly very unlikely to lose money and very likely to return over max cash savings rates.

Totally wrong.

1-year gilts are yielding less than many savings accounts and longer dated bonds have a significant risk of losing money over the next year.

[cymtriks]

ellroy said:

So it's not income, but total return, and if you're not taking too much risk, and net of costs in the current climate, it's not a bad return at all. However, still not an approach to take with a one year time horizon.

Yes.

However I doubt that renting out a property is a one year activity either. Allowing for time to buy, do up, advertise, etc and then allowing for reversing the process to get the money liquid again you are not looking at 12 months rental income. Also there are the costs of setting up and then selling up to take into account.

I would guess that property rental, from cash to cash, over just one year is a pretty bad idea.