Generating Income From 200k?

[ObSene]

Due to some hard work, discipline and dare I say luck, we have reached our savings target of 200k.
The end game for this money is for it to be split between the kids (currently 5 & 6 years old) to give them a good start in life. Until then we want use the money to supplement our income, so we can start really enjoying life.

So here’s my current plan…
150k to offsetting the mortgage
20k in Santander 123 account
15k in my Stocks and Shares ISA

That leaves 15k plus our monthly income which is pretty much earning bugger all.

Any suggestions on better ways of generating income from the 200k? Or what to do with the remaining 15k and our income?

Investments I’m not keen on:
Property – I don’t want to have the cash locked away
Peer to Peer lending and the likes - I have money invested in a new start-up, so feel this is covered already

Other than that I’m open to suggestion.

[ObSene]

I'm not averse to risk. My trading ISA performs well enough with a mix ETF's (All World FTSE, S&P 500, FTSE 100 and UK government bonds).

I could get the wife to open trading ISA and put another 15k in to that, but to be honest that's the most amount of risk I'd like to take in the short term.

[ObSene]

Some good points...

With regards to putting more in to the offset, come January we'll only be protected up to 150K, so don't fancy put more in there.

I'm thinking my best bet would be to take advantage of trading ISA's and invest the remaining 50k in them and put our income into the Santander 123 accounts.

nyt said:

I'm not really sure how much you can take from £200k and still leave it as a worthwhile sum for your kids.

If you take inflation as 3% then you'd need over £310k to have the same spending power in 15 years (http://www.buyupside.com/calculators/inflationjan08.htm)

I think that what you're doing at the moment with the offset is a great idea. Probably the best safe-return that you can get. If you carry on paying the mortgage at the same level then your mortgage will be paid off much more quickly. And it's tax free.

On a minor note, is the santander 3% worth it. After fees and tax I suspect that you'd be better putting that into the offset too.


To actually answer your question: I've done well out of Fundsmith & Woodford funds over the past few years. They can both be ISA'd.
But remember that past performance is no guarantee etc.

Remember that you and your partner have £30k ISA allowance this year and £30k in April. I'd use that if you see investments that appeal.

Also, your children are entitled to tax free ISAs which pay better rates than adult ones usually: http://www.moneysavingexpert.com/savings/junior-is...
Certainly the 3.25% ISAs on that link beat Santander

[ObSene]

Thanks for the advice guys!

The below statement pretty much was the deciding factor; we're locked in at 2.89% for the next 4 years, so the offset return was not great. So we're going pay a lump sum, offset some and put the rest in to a trading ISA.

ringram said:

Depends what you interest rate on the mortgage is.
You might be better off with a capital repayment and then offset the rest.

[ObSene]

Bite the bullet and just paid 125k off the mortgage, 75k in the offset so we still have accessible cash and dip feeding my ISA with my income.