2022 advice needed - home, BTL and £140k cash

[Nuance]

Hi,

I'm posting this under an alias but would appreciate some advice please.

Current situation:

40 year old, married and 1 child (9 month old)
Own residence worth £500k with remaining mortgage of £315k
Own BTL worth £160k with interest only mortgage of £60k. Consistently net £450 per month after expenses
Earn approx £50k per annum and wife earns £28k. Both pay into work public sector pensions schemes.
Recently bought a german supersaloon for £28k cash as family wagon (Pistonheads after all)

Savings:

£30k in LISA (£15k each between me and my wife) - will continue to top up £4k in each per annum
£140k in cash from sale of last property sitting in high street bank doing nothing.
Other investments of £15k including Crypto and Gold

Options considering:

Option 1 - Use £140k to reduce my residental mortgage as currently 4yr left of fixed deal at 2.03%
Option 2 - Use £140k to by 3 further BTL and expect to net at least £400/450 per month each
Option 3 - Use £140k and consider investing long term in a fund (Vanguard?) or split between fund and NSI.

I would not like to risk the money at all and really want to earn revenue to support my income so that I can enjoy with the family. Currently leaning towards BTL's once properties prices settle a little more and come back down to reality in 2022.

Any advice would be appreciated - TIA!

[RichTT]

Nuance said:

Hi,

I'm posting this under an alias but would appreciate some advice please.

Current situation:

40 year old, married and 1 child (9 month old)
Own residence worth £500k with remaining mortgage of £315k
Own BTL worth £160k with interest only mortgage of £60k. Consistently net £450 per month after expenses
Earn approx £50k per annum and wife earns £28k. Both pay into work public sector pensions schemes.
Recently bought a german supersaloon for £28k cash as family wagon (Pistonheads after all)

Savings:

£30k in LISA (£15k each between me and my wife) - will continue to top up £4k in each per annum
£140k in cash from sale of last property sitting in high street bank doing nothing.
Other investments of £15k including Crypto and Gold

Options considering:

Option 1 - Use £140k to reduce my residental mortgage as currently 4yr left of fixed deal at 2.03%
Option 2 - Use £140k to by 3 further BTL and expect to net at least £400/450 per month each
Option 3 - Use £140k and consider investing long term in a fund (Vanguard?) or split between fund and NSI.

I would not like to risk the money at all and really want to earn revenue to support my income so that I can enjoy with the family. Currently leaning towards BTL's once properties prices settle a little more and come back down to reality in 2022.

Any advice would be appreciated - TIA!

If your risk profile already includes Crypto then why not put at least a good portion of that 140k into a place like Nexo.io and be earning at least 4% on GBPx or 8% on DAI or another safe stablecoin? That's almost a grand a month in interest compounded daily.

Having had BTL's as a private owner I would never recommend it to anyone. Far more hassle than the return is worth.

2% mortgage rate is almost free money so I wouldn't be paying that off either.

[Darlo74]

FWIW based on your investment split currently I'd be looking at stocks rather than more property.

I know you've said you want to increase current revenue, but I'd certainly look at investing more in your pensions if you aren't already. The tax advantages are significant.

I'd then look at maximising your ISAs allocation - £20k a year, so you can put another £16k per year into a S&S ISA each. Invest £16k this tax year for you and your wife and then the full £20k each in April for next tax year will be £76k in total.

You could also start a Junior ISA for your child and invest £9k this year and £9k next.

However, all of the above should really be about investing for accumulation and not an increase in income now. Property is therefore probably the best if you really do want to increase your income - but I'm not sure your expectations are realistic of increasing your income by £1,200 per month on 3 BTLs with £140k capital. My expectations would be for a post-costs income of around £4-500 per month on that basis - but really depends on a lot of variables and I'm not a BTL investor!

[guyvert1]

Based on your comment of not wanting to risk any of it I'd stay well clear of places like nexo.io.

BTL's, as mentioned, not really worth it now unless you have an angle or 'enjoy' it.

I'd say chat to IM about the options , maybe stick £50k into premium bonds whilst you're thinking about it...

Edited by guyvert1 on Friday 17th December 13:54

[RichTT]

guyvert1 said:

Based on your comment of not wanting to risk any of it I'd stay well clear of places like nexo.io.

Why would you say that?

They have $13 billion dollars AUM and 2.5 million customers.... hardly a backwater shady finance company.

It's not a risk, keeping it in your bank is more of a risk.

[guyvert1]

RichTT said:

Why would you say that?

They have $13 billion dollars AUM and 2.5 million customers.... hardly a backwater shady finance company.

It's not a risk, keeping it in your bank is more of a risk.

Not being regulated in the UK would be one of the main reasons, let alone the T&C's about being able to close/freeze/lock your account at their will.

[NickCQ]

RichTT said:

2% mortgage rate is almost free money so I wouldn't be paying that off either.

The big difference being that you pay tax on the 4% investment yield but can't deduct the 2% interest cost against taxes. The net spread you are getting for the crypto risk is probably <1% depending on OP's marginal tax rate. Doesn't feel worthwhile for me given the opacity, collateral volatility & lack of FSCS protection in the crypto investment.

[RichTT]

NickCQ said:

The big difference being that you pay tax on the 4% investment yield but can't deduct the 2% interest cost against taxes. The net spread you are getting for the crypto risk is probably <1% depending on OP's marginal tax rate. Doesn't feel worthwhile for me given the opacity, collateral volatility & lack of FSCS protection in the crypto investment.

You can't offset the mortgage interest against taxes either apart from the piddly tax credit amount.

Personally I'd rather have money with a company I know has insurance, is over 100% collateral funded and independently audited. More liquidity in DeFi than in my own corrupt bank.

[pilotoscot]

Max out pension payments and isas while you still can. Government is going to need a whole lot of cash soon and I can guess where it’s coming from.

[Zoon]

Nuance said:

Currently leaning towards BTL's once properties prices settle a little more and come back down to reality in 2022.

Have you not thought about predicting the lottery numbers?
BTL's are a waste of time outside of a LTD co. for most people now.
Stick £70k in S&P 500 Vanguard or similar and £70k in premium bonds.
Or pay your mortgage down and keep the term the same so you have extra spare cash from that.

[NickCQ]

RichTT said:

You can't offset the mortgage interest against taxes either apart from the piddly tax credit amount.

That's exactly the point I am making. If you pay off a non-deductible 2% mortgage, your return is 2%. If you make a taxable investment at 4%, your return is about 3.2% depending on your marginal investment tax rate. The tax disparity massively erodes the spread, which makes me think you aren't being compensated for the difference in risk.

[RichTT]

NickCQ said:

That's exactly the point I am making. If you pay off a non-deductible 2% mortgage, your return is 2%. If you make a taxable investment at 4%, your return is about 3.2% depending on your marginal investment tax rate. The tax disparity massively erodes the spread, which makes me think you aren't being compensated for the difference in risk.

I stand corrected, misread your original post. Big difference to it just sitting in a bank account however.

[NickCQ]

RichTT said:

I stand corrected, misread your original post. Big difference to it just sitting in a bank account however.

I don't think I would advise anyone to borrow £200k against their house at 2% and deposit it in the bank at 0%!

[Welshbeef]

RichTT said:

I stand corrected, misread your original post. Big difference to it just sitting in a bank account however.

Drop £100k into premium bonds - risk free.


Buy a F 458

[Burwood]

Welshbeef said:

RichTT said:

I stand corrected, misread your original post. Big difference to it just sitting in a bank account however.

Drop £100k into premium bonds - risk free.


Buy a F 458

There's a reason it's risk free. Negative real returns. Unless you use it to park money you need in the medium term it's a shockingly bad investment

Dump the Gold-it's a waste of time.

[Jiebo]

Burwood said:

There's a reason it's risk free. Negative real returns. Unless you use it to park money you need in the medium term it's a shockingly bad investment

Dump the Gold-it's a waste of time.

Depends on your outlook. I certainty wouldn’t want to be pilling £140k into equity at the moment with the prices being so detached from reality. Mind you, I’ve got a track record of calling it wrong most of the time, so nobody should listen to me.

[BoRED S2upid]

If it was me I’d probably opt for a bit of all 3. Another BTL in your wife’s name coz tax. S&S isa and drip feed the income from the BTL into it each month and knock the rest off the residential mortgage or park it with NSI (premium bonds) until your current fixed deal comes to an end then knock say £50k off it when you fix again.

[Hoofy]

I'm boring so would put most of it into the mortgage. If not, then a couple of 996 Turbos for each of you, enjoy driving them for a couple of years and hopefully make a bit of profit when you sell.

[Burwood]

Jiebo said:

Burwood said:

There's a reason it's risk free. Negative real returns. Unless you use it to park money you need in the medium term it's a shockingly bad investment

Dump the Gold-it's a waste of time.

Depends on your outlook. I certainty wouldn’t want to be pilling £140k into equity at the moment with the prices being so detached from reality. Mind you, I’ve got a track record of calling it wrong most of the time, so nobody should listen to me.

In fairness I never said to thrown 140k into stocks. I would certainly be dripping some in. Im a big proponent of sticking to what you understand and that appears to be BTLs.

[Groat]

in 2022, which of the following do you think is a certainty?

1) Crypto is going to the moon in a diamond wheeled lambo

2) Equities are going to continue to experience good growth

3) people who cant afford to buy properties to live in are going to need to rent them

4) precious metals are going to decently rise in value

Edited by Groat on Friday 17th December 17:05