What else should I be doing? My finances......

[temp name]

Posted this for obvious reasons under pseudonym forum name and would welcome some feedback.

I know I'm doing ok but would welcome any thoughts/insights to what else I should be thinking about/considering for the future.

My current position:

43yr M - married, 4 children (ages 7,5,3,1)

Basic salary - £75k pa (co car), some potential for bonus, very stable and growing global company and sector
Wife - £18k pa (NHS), part time (£15k car, paid for in cash)

House - approx value £500k, mortgage £200k

My pension (combined work and private) - approx value today £210k (paying in approx £950per month including employers contributions)
Wife (NHS) - approx £30k

ISA (vanguard 80 lifestyle) - approx £55k value, contributing £500 pm

Approx £15k in cash savings (emergency fund)

4 buy2lets - total value approx £600k, mortgages £380k, (fixed, good rates in personal name). I clear approx. £800 per month (after tax, maintenance /ins/mortgages etc). Not as good as it was now with S24 kicking in

For children, each has child ISA, paying in £50 per month (each into 100 Vanguard)

No other debts except mortgages already mentioned.

We still have a bit of cash left each month here and there (out less for dinner and lunches these days, kids and covid!). I'm thinking I should increase ISA/Pension contributions split evenly?

Any other thoughts/considerations? A small dabble into crypto?

[NickCQ]

For me personally there's quite a lot of leverage (6.2x your joint income), too much property (79% of gross assets / 64% of net) and not enough use of tax wrappers. I'd be looking to make use of the full £40k pa ISA allowance across you and your wife, if you have to sell a BTL and drip-feed the proceeds over a few years that would make sense.

The BTLs are yielding 4.5% on the equity slice on a cash basis which isn't great unless you believe in lots of capital growth. Thing is, you're exposed to that on your primary property anyway so if it happens you'll do alright.

Edited by NickCQ on Friday 10th December 17:48

[chinnyman]

Is that £800 for each property or in total for all of them?

[Dixy]

Take the kids skiing or Disney or... and bank the memories. This is a more rational version of coke and hookers.
It is so easy to be sensible and put away for the future at the expense of today.

[JezHill]

NickCQ said:

For me personally there's quite a lot of leverage (6.2x your joint income), too much property (79% of gross assets / 64% of net) and not enough use of tax wrappers]

This^

And the earlier comment about living a bit!

I found my BTLs take up a lot of time, and with 4 young children this time is precious. Even with a letting agent I’m not letting them add their percentage to any repairs/renewals quotes so I’m always getting involved.

I only have 3 BTLs so this year I sold the one that caused the most hassle and had the most equity. I would plan to sell some or all of your 4. Use the proceeds of the sale to pay off your 200k mortgage / maximise your ISA. You’ll make the same £800 per month and have more time to spend with your young children.

Yes, you could lose out on capital growth but equally CGT rates could rise / interest rates rise when your fixed rates end etc in line with any capital growth - who knows!

Edited by JezHill on Saturday 11th December 08:44

[Mr Whippy]

Dixy said:

Take the kids skiing or Disney or... and bank the memories. This is a more rational version of coke and hookers.
It is so easy to be sensible and put away for the future at the expense of today.

I like this post.

Saving up in excess means leaving it to your kids.

So better to decide if you want an excess when you die, and if you do, start passing over more now so you meet that goal before you die, and tax efficiently.

That way you meet your passing on goals and can likely spend ~40% more now (IHTsaving) enjoying life!


Ie, kids isas. I’d be splitting the £800pcm 4 ways into their ISAs.

Are the 4x BTls for your kids?

[Monkeylegend]

I would speak to a properly qualified, recommended, financial or pensions advisor.

Each persons circumstances and risk profile are different. The advice you will get off forums like this will be based on that persons experience and longer term requirements, not yours, and I am sure very few will be authorised to offer such advice by the FCA.

[NickCQ]

Monkeylegend said:

I would speak to a properly qualified, recommended, financial or pensions advisor.

I wouldn’t. The average person in the UK is facing a pretty simple optimisation problem, and will get a much better outcome from educating themselves than paying a few £k for off-the-shelf FCA approved advice. Reasonable people can disagree over whether a car forum is the right place to get that education… but if you don’t like it you can always get your money back ;-).

Advisers face so much redress / misselling risk these days that they are really limited in their ability to deviate from what the regulator regards as a ‘suitable’ investment strategy. Not to mention the conflicts inherent in their revenue model.

[Burwood]

NickCQ said:

Monkeylegend said:

I would speak to a properly qualified, recommended, financial or pensions advisor.

I wouldn’t. The average person in the UK is facing a pretty simple optimisation problem, and will get a much better outcome from educating themselves than paying a few £k for off-the-shelf FCA approved advice. Reasonable people can disagree over whether a car forum is the right place to get that education… but if you don’t like it you can always get your money back ;-).

Advisers face so much redress / misselling risk these days that they are really limited in their ability to deviate from what the regulator regards as a ‘suitable’ investment strategy. Not to mention the conflicts inherent in their revenue model.

This-all day long. An IFA will sell you life insurance, income protection, put you onto a lawyer mate to redo your will, sign you up for probate and tax those investments as hard as they can. You are clearly doing the right thing for you at the moment and it's hard to fault the mix. As Nick suggests, start learning a bit, ask around with a healthy degree of scepticism

Edited by Burwood on Saturday 11th December 12:06

[loafer123]

Dixy said:

Take the kids skiing or Disney or... and bank the memories. This is a more rational version of coke and hookers.
It is so easy to be sensible and put away for the future at the expense of today.

So true.

I took a sabbatical 6 years ago and we all went around the world as a family.

Best money I ever spent.

[Monkeylegend]

Burwood said:

NickCQ said:

Monkeylegend said:

I would speak to a properly qualified, recommended, financial or pensions advisor.

I wouldn’t. The average person in the UK is facing a pretty simple optimisation problem, and will get a much better outcome from educating themselves than paying a few £k for off-the-shelf FCA approved advice. Reasonable people can disagree over whether a car forum is the right place to get that education… but if you don’t like it you can always get your money back ;-).

Advisers face so much redress / misselling risk these days that they are really limited in their ability to deviate from what the regulator regards as a ‘suitable’ investment strategy. Not to mention the conflicts inherent in their revenue model.

This-all day long. An IFA will sell you life insurance, income protection, put you onto a lawyer mate to redo your will, sign you up for probate and tax those investments as hard as they can. You are clearly doing the right thing for you at the moment and it's hard to fault the mix. As Nick suggests, start learning a bit, ask around with a healthy degree of scepticism

Edited by Burwood on Saturday 11th December 12:06

You need to find the right one, there are advisors around who don't do this, as I know to my benefit.

Edited by Monkeylegend on Saturday 11th December 13:29

[TwigtheWonderkid]

Monkeylegend said:

You need to find the right one, there are advisors around who don't do this, as I now to my benefit.

Absolutely. Try and find one who is recommended by someone you know. Mine is great, and has made me thousands more than I've ever paid him. And he gets paid quite well.

[Burwood]

Monkeylegend said:

Burwood said:

NickCQ said:

Monkeylegend said:

I would speak to a properly qualified, recommended, financial or pensions advisor.

I wouldn’t. The average person in the UK is facing a pretty simple optimisation problem, and will get a much better outcome from educating themselves than paying a few £k for off-the-shelf FCA approved advice. Reasonable people can disagree over whether a car forum is the right place to get that education… but if you don’t like it you can always get your money back ;-).

Advisers face so much redress / misselling risk these days that they are really limited in their ability to deviate from what the regulator regards as a ‘suitable’ investment strategy. Not to mention the conflicts inherent in their revenue model.

This-all day long. An IFA will sell you life insurance, income protection, put you onto a lawyer mate to redo your will, sign you up for probate and tax those investments as hard as they can. You are clearly doing the right thing for you at the moment and it's hard to fault the mix. As Nick suggests, start learning a bit, ask around with a healthy degree of scepticism

Edited by Burwood on Saturday 11th December 12:06

You need to find the right one, there are advisors around who don't do this, as I know to my benefit.

Edited by Monkeylegend on Saturday 11th December 13:29

I'd agree with that too

[gazapc]

Surely you need to decide what a goal is then work backwards?

For example, is a goal to take early retirement? In that scenario you might want to have more ISA savings as they are accessible earlier than a pension.

[Burwood]

gazapc said:

Surely you need to decide what a goal is then work backwards?

For example, is a goal to take early retirement? In that scenario you might want to have more ISA savings as they are accessible earlier than a pension.

It's great to have goals and we all do but life throws curve balls at you and things change. The OP has a big young family. My father retired at 45 and us kids couldn't handle having the old man at home all the time sticking his nose into everything. He played golf-he was rubbish, bought a boat, got sea sick. He went back to work a couple of years later

I think most people want financial security. No debt and enough money to never worry about it. I think the OP is well on that path regardless of any micro decisions.

[Percy Cushion]

Lots of good advice on here already but I'd suggest paying of the mortgage on the family home.

If the BTL's are to be for your kids later, think about how they will be transferred, taking IHT into consideration.

I'm in a similar position with one 7 year old son and 3 BTL's. I plan to transfer these to him when he's 18 but I'm not sure on the tax implications.

[NickCQ]

Percy Cushion said:

I plan to transfer these to him when he's 18 but I'm not sure on the tax implications.

CGT for you based on market value at time of transfer and stamp duty if he wants to buy another property to live in.

I would expect most 18-21 year olds would be better served with cash towards a first property deposit (assuming uni costs already paid) compared to an income-generating asset.

[Burwood]

NickCQ said:

Percy Cushion said:

I plan to transfer these to him when he's 18 but I'm not sure on the tax implications.

CGT for you based on market value at time of transfer and stamp duty if he wants to buy another property to live in.

I would expect most 18-21 year olds would be better served with cash towards a first property deposit (assuming uni costs already paid) compared to an income-generating asset.

Not necessarily. If you use a trust and pay close attention to Section 260 of the TCGA legislation you can mitigate the taxes. Seek professional advice as if you do nothing and simply gift it you will be whacked

[Mr Whippy]

Just skimmed that s260, is that moving CGT onto the receiver, which is due when it moves from trust to ownership at your death, and so can be bundled with IHT allowance?

That’s what it read like but it’s a bit word soupy.


I’ve no idea on the OPs position, but giving to kids is a tough one.
Will they pee it all up the wall?
Or if you gift later, more appreciated and valued, but also giving £££ more to HMRC?
The dangers of marriage failures, remarriages, deaths, and your estate by-passing your kids altogether.

It definitely needs lots of consideration around kids though, if there is intention to leave decent chunks to them.

40pc on an estate worth a few million quid starts to add up!


Then again you may plan to leave kids nowt, provide for a great education and first house deposit, then blow the rest on yourself...

You do at least need to set out some rough intentions to plan accordingly and get suitable ideas/advice.

[NickCQ]

Burwood said:

Not necessarily. If you use a trust and pay close attention to Section 260 of the TCGA legislation you can mitigate the taxes. Seek professional advice as if you do nothing and simply gift it you will be whacked

IIRC these days that only defers the tax until the kids / trust dispose it. There used to be a workaround where the kids could move into it then sell with principal residence exemption but it’s been closed.