100k Burning a hole
Discussion
What a lovely problem to have...
Just checked on savings and have around 100k kicking about. So I over paid my mortgage by 10% and will do another 10% in a month when it rolls over into the next year.
It's fixed at 1.6% for another 12 months and Natwest wants to charge 2.8% on overpayments above 10%.
This time next year I could clear the mortgage. Or invest in something now... Or move to a bigger house. (Probably in a few years).
Now... what to do with a lump sum now.
Pensions - Not giving huge returns and can't get my hands on them until 55. I want to retire by 40 latest.
Investments - Again, not huge returns unless you go for the risky options.
Property - Get screwed on stamp and income tax. Though I could do this in my wife's name. (Who is not working)
So.... im a white British male who works hard, saves hard and lives well within his means. Earn too much to claim child benefit and was over the moon when the council said I could have a bigger dust bin...
What can I do with my savings?
Just checked on savings and have around 100k kicking about. So I over paid my mortgage by 10% and will do another 10% in a month when it rolls over into the next year.
It's fixed at 1.6% for another 12 months and Natwest wants to charge 2.8% on overpayments above 10%.
This time next year I could clear the mortgage. Or invest in something now... Or move to a bigger house. (Probably in a few years).
Now... what to do with a lump sum now.
Pensions - Not giving huge returns and can't get my hands on them until 55. I want to retire by 40 latest.
Investments - Again, not huge returns unless you go for the risky options.
Property - Get screwed on stamp and income tax. Though I could do this in my wife's name. (Who is not working)
So.... im a white British male who works hard, saves hard and lives well within his means. Earn too much to claim child benefit and was over the moon when the council said I could have a bigger dust bin...
What can I do with my savings?
Nice problem to have. First thing I would do is max out your ISA allowance if you don't want to get into pensions , although pensions do offer generous tax incentives, the most generous of which will soon be faded out. You can control what it gets invested in (cash, stock, bonds or funds) and you have access to it unlike a pension. With what's left over, I'd be tempted to pay down more of the mortgage, regardless of how low rates are.
Edited by P.Griffin on Thursday 31st August 13:51
Edited by P.Griffin on Thursday 31st August 13:54
Edited by P.Griffin on Thursday 31st August 13:57
It sounds as though you would benefit from a fully funded ISA for you and your wife, no Income Tax or Capital Gains tax implications on growth. Pensions wise it sounds like you are not keen, for understandable reasons; that said you will still need an income after 55, so anything you invest still has merit in the future.
This is my professional world, so feel free to pm me if you want some no cost advice.
Charlie
This is my professional world, so feel free to pm me if you want some no cost advice.
Charlie
If you plan on using the money in twelve months to pay off the mortgage (which is very sensibe although 1.6% is v cheap) there isnt really much you can do. £50k in premium bonds, 15k into an ISA (with the intention of leaving it there - a large ISA can provide a very useful tax free income later on), the rest in the best 1 year bond you can find - Atom bank or similar. As others have stated, as a higher rate tax payer who hasnt (presumably) hit the taper thresholds you would do well to put the money into your pension - the 40% tax relief makes it attractive and I am sure higher rate tax relief wont be around for long. Others on here can advise better where but you want a nice low maintenance low fee option - after taking some advice i ended up with Royal London on that basis.
Prizam said:
What a lovely problem to have...
Just checked on savings and have around 100k kicking about. So I over paid my mortgage by 10% and will do another 10% in a month when it rolls over into the next year.
It's fixed at 1.6% for another 12 months and Natwest wants to charge 2.8% on overpayments above 10%.
This time next year I could clear the mortgage. Or invest in something now... Or move to a bigger house. (Probably in a few years).
Now... what to do with a lump sum now.
[b]Pensions - Not giving huge returns and can't get my hands on them until 55. I want to retire by 40 latest.
Investments - Again, not huge returns unless you go for the risky options.
Property - Get screwed on stamp and income tax. Though I could do this in my wife's name. (Who is not working)
[/b]
So.... im a white British male who works hard, saves hard and lives well within his means. Earn too much to claim child benefit and was over the moon when the council said I could have a bigger dust bin...
What can I do with my savings?
I think you're getting a bit confused here.Just checked on savings and have around 100k kicking about. So I over paid my mortgage by 10% and will do another 10% in a month when it rolls over into the next year.
It's fixed at 1.6% for another 12 months and Natwest wants to charge 2.8% on overpayments above 10%.
This time next year I could clear the mortgage. Or invest in something now... Or move to a bigger house. (Probably in a few years).
Now... what to do with a lump sum now.
[b]Pensions - Not giving huge returns and can't get my hands on them until 55. I want to retire by 40 latest.
Investments - Again, not huge returns unless you go for the risky options.
Property - Get screwed on stamp and income tax. Though I could do this in my wife's name. (Who is not working)
[/b]
So.... im a white British male who works hard, saves hard and lives well within his means. Earn too much to claim child benefit and was over the moon when the council said I could have a bigger dust bin...
What can I do with my savings?
An ISA and a pension are purely investment wrappers, not investments. If you don't want to invest your money, then you can stick it under your bed or spend it.
If you do want to invest it, then what you invest in will be dictated by your time horion and your attitude to risk.
If you are not 40 yet, I don't think you'd be entitled to any Pension drawdown until you are 58 earliest, given the government latest raid. Although Ginge / sidicks may correct this.
Bit of a pain, because I was planning to do a tax free deduction @ 55 when my daughter was at Uni to buy her a house / flat to live in.... if its 58 for the tax free draw down she'll be finished.
Anyone, point is check WHEN you can draw down the pension carefully, normal pension saving may not be best route if you want access earlier. Also be aware of lifetime max - nice if your company has paid in for you - but be wary of over payments (although being able to stop paying in if its looking like a decent pot)
Plenty of other avenues for investments - depends on risk attitude. BTC/ETH have done well for many, but probably not advisable for your whole 401k like the US is going nuts for at the moment. I've actually done quite well on art recently, but I was buying US works pre Brexit so seen a decent FX gain.
Bit of a pain, because I was planning to do a tax free deduction @ 55 when my daughter was at Uni to buy her a house / flat to live in.... if its 58 for the tax free draw down she'll be finished.
Anyone, point is check WHEN you can draw down the pension carefully, normal pension saving may not be best route if you want access earlier. Also be aware of lifetime max - nice if your company has paid in for you - but be wary of over payments (although being able to stop paying in if its looking like a decent pot)
Plenty of other avenues for investments - depends on risk attitude. BTC/ETH have done well for many, but probably not advisable for your whole 401k like the US is going nuts for at the moment. I've actually done quite well on art recently, but I was buying US works pre Brexit so seen a decent FX gain.
Stick it in things you enjoy. I like Porsche's & skiing, so I bought an old 911 as a toy & a ski apartment in French Alps (current exchange rate will rules that one out for you) I hope neither will depreciate, in fact due to exchange rate I am quid's in on the apartment but it is an example of saving & enjoying your savings at same time.
Thanks for options so far.
Pension - I already pay in at 8% with a 5% contribution. Should be a good pot but can't get to it until 55.
Mortgage - the 1.6% rate will end in August 2018. I can choose to pay it all off then or keep the Mortgage if I have used the cash elsewhere. Paying it off now would cost more than waiting.
Investment - It depends on risk. Getting 5k a year from 100k risky investment won't cut it for me. 25k might be worth the risk. but then I guess you have to pay 40% tax on it anyway.
I guess I could top up some ISA's. I have been lazy and not done it yet. The return is between nothing and naff all.
I suppose I could buy the new TVR.... Hang on... not a bad idea actually.
Pension - I already pay in at 8% with a 5% contribution. Should be a good pot but can't get to it until 55.
Mortgage - the 1.6% rate will end in August 2018. I can choose to pay it all off then or keep the Mortgage if I have used the cash elsewhere. Paying it off now would cost more than waiting.
Investment - It depends on risk. Getting 5k a year from 100k risky investment won't cut it for me. 25k might be worth the risk. but then I guess you have to pay 40% tax on it anyway.
I guess I could top up some ISA's. I have been lazy and not done it yet. The return is between nothing and naff all.
I suppose I could buy the new TVR.... Hang on... not a bad idea actually.
Prizam said:
I guess I could top up some ISA's. I have been lazy and not done it yet. The return is between nothing and naff all.
That would be a cash ISA...yes they are paying FA. The ISA is simple a tax free investment vehicle in which you can hold different kinds of investments (funds, shares, bonds etc), not only cash. Any interest, dividends or capital appreciation is tax exempt. The same goes for pensions but you have the additional uplift of the tax relief. PM Charlie for some free advice ...would be my advicePrizam said:
Thanks for options so far.
Pension - I already pay in at 8% with a 5% contribution. Should be a good pot but can't get to it until 55.
Mortgage - the 1.6% rate will end in August 2018. I can choose to pay it all off then or keep the Mortgage if I have used the cash elsewhere. Paying it off now would cost more than waiting.
Investment - It depends on risk. Getting 5k a year from 100k risky investment won't cut it for me. 25k might be worth the risk. but then I guess you have to pay 40% tax on it anyway.
I guess I could top up some ISA's. I have been lazy and not done it yet. The return is between nothing and naff all.
I suppose I could buy the new TVR.... Hang on... not a bad idea actually.
As explained above, you are confusing an investment wrapper with an investment. Pension - I already pay in at 8% with a 5% contribution. Should be a good pot but can't get to it until 55.
Mortgage - the 1.6% rate will end in August 2018. I can choose to pay it all off then or keep the Mortgage if I have used the cash elsewhere. Paying it off now would cost more than waiting.
Investment - It depends on risk. Getting 5k a year from 100k risky investment won't cut it for me. 25k might be worth the risk. but then I guess you have to pay 40% tax on it anyway.
I guess I could top up some ISA's. I have been lazy and not done it yet. The return is between nothing and naff all.
I suppose I could buy the new TVR.... Hang on... not a bad idea actually.
An ISA will provide the returns for whatever underlying asset class you choose. This could be cash, bonds, property, equities etc.
Prizam said:
Investment - It depends on risk. Getting 5k a year from 100k risky investment won't cut it for me. 25k might be worth the risk. but then I guess you have to pay 40% tax on it anyway.
With all due respect, you sound pretty clueless and should really be getting some professional advice.For example your £5k example, are you talking yield, investment growth or a mixture of both?
Some investments are a lot riskier than others, you can't really put them all in the same basket. Plus with £100k you would really be looking at creating a portfolio with a range of investments to balance risk.
As I said before, you should get some advice.
menguin said:
This is sage advice. Not often you get that on here.Prizam said:
Thanks for options so far.
Pension - I already pay in at 8% with a 5% contribution. Should be a good pot but can't get to it until 55.
Mortgage - the 1.6% rate will end in August 2018. I can choose to pay it all off then or keep the Mortgage if I have used the cash elsewhere. Paying it off now would cost more than waiting.
Investment - It depends on risk. Getting 5k a year from 100k risky investment won't cut it for me. 25k might be worth the risk. but then I guess you have to pay 40% tax on it anyway.
I guess I could top up some ISA's. I have been lazy and not done it yet. The return is between nothing and naff all.
I suppose I could buy the new TVR.... Hang on... not a bad idea actually.
A little more info would help us give a more suitable reply.Pension - I already pay in at 8% with a 5% contribution. Should be a good pot but can't get to it until 55.
Mortgage - the 1.6% rate will end in August 2018. I can choose to pay it all off then or keep the Mortgage if I have used the cash elsewhere. Paying it off now would cost more than waiting.
Investment - It depends on risk. Getting 5k a year from 100k risky investment won't cut it for me. 25k might be worth the risk. but then I guess you have to pay 40% tax on it anyway.
I guess I could top up some ISA's. I have been lazy and not done it yet. The return is between nothing and naff all.
I suppose I could buy the new TVR.... Hang on... not a bad idea actually.
Is your ISA an investment one (stocks and shares /funds/trusts ) ?
Do you have any BTL's?
BoRED S2upid said:
Can't believe the obvious hasn't been mentioned yet.
Indeed, hasn't everybody on PH got some fantastically successful but rather hazily defined 'business' into which they can stick any amount of money at any time and get a sure-fire double-digit return? That's what I gather from every lease v. buy thread.Personally I'd stick the max into an equity tracker fund within an ISA this year and next, top up my pension contributions to the annual allowance, keep £10k in a bog-standard instant access account, and pay the mortgage off with the rest.
Roger Irrelevant said:
Indeed, hasn't everybody on PH got some fantastically successful but rather hazily defined 'business' into which they can stick any amount of money at any time and get a sure-fire double-digit return? That's what I gather from every lease v. buy thread.
Interestingly, those types don't seem to turn up on the 'Finance' section of the forum - I wonder why...Gassing Station | Finance | Top of Page | What's New | My Stuff