Starting an investment journey
Discussion
I've received a small pot of cash (c£4-5k) that I wasn't expecting and I'd like to do something meaningful with it instead of the usual frittering away that tends to happen. It came from HMRC as a tax overpayment based on higher rate relief from pension contributions (I don't do, nor want to do a SA). I know the amount isn't very Powerfully Built PH Director, but it's a bit of a windfall and something to start with.
Now my first thought was throw it back into my pension as a lump sum. But I quite like the idea of using it to start some form of investing, something I'm not up to speed with at all.
If I do choose to use it that way, I'd want to put it somewhere (longer term) and pretty much leave well alone with the exception of a small monthly top up. Suggestions welcome as to the best platform and type of "account" to be using for this.
I see many abbreviations - ETF, CFD that mean zip to me at this stage so whilst I appreciate things go down as well as up, I want to minimise the risk of blowing the whole thing and want to put it somewhere like S&P500 or similar
Or is the first option of adding back to my existing pension the right choice here? Would that then entitle me to further relief at higher rate that I'd need to claim back for this financial year (Assuming I add it before the end of this tax year).
Let's have your thoughts!
Now my first thought was throw it back into my pension as a lump sum. But I quite like the idea of using it to start some form of investing, something I'm not up to speed with at all.
If I do choose to use it that way, I'd want to put it somewhere (longer term) and pretty much leave well alone with the exception of a small monthly top up. Suggestions welcome as to the best platform and type of "account" to be using for this.
I see many abbreviations - ETF, CFD that mean zip to me at this stage so whilst I appreciate things go down as well as up, I want to minimise the risk of blowing the whole thing and want to put it somewhere like S&P500 or similar
Or is the first option of adding back to my existing pension the right choice here? Would that then entitle me to further relief at higher rate that I'd need to claim back for this financial year (Assuming I add it before the end of this tax year).
Let's have your thoughts!
Dimebars said:
Or is the first option of adding back to my existing pension the right choice here? Would that then entitle me to further relief at higher rate that I'd need to claim back for this financial year (Assuming I add it before the end of this tax year).
Pension vs investing outside a pension depends on if you want access to it before you reach pension age.Keep in mind in both cases it will be invested, just in a pension tax wrapper or an ISA wrapper (If you want to avoid self assessment, do not invest it outside a tax wrapper of some sort).
If you'd get higher rate relief or not would depend on how much higher rate tax you have paid in the year in question. You don't get more higher rate relief than the amount of higher rate tax you have paid.
The asset you invest in is a separate choice from the kind of "thing" that holds the investment.
This recent post asks a very similar question - you could do worse than skim the answers there: https://www.pistonheads.com/gassing/topic.asp?h=0&...
Dimebars said:
I want to minimise the risk of blowing the whole thing and want to put it somewhere like S&P500 or similar
Or is the first option of adding back to my existing pension the right choice here?
I think the decision is whether you want to do the most sensible/tax-efficient thing - which is probably to put it in your pension, especially if you're a higher-rate taxpayer - or, seeing as it was an unexpected windfall, you could play with it and if you lose half you're still better off than you were...Or is the first option of adding back to my existing pension the right choice here?
If the latter, at least do it in an S&S ISA so there are no tax concerns.
Giantt said:
Had a similar situation, redundancy 2019,put the lot into AIM listed invest/ gamble had great fun,pick a market,a sector ie mining,pharma, entertainment,research n roll the dice
Seems a very high-risk strategy, given how the AIM is known as the Wild West.How did this work out?
Countdown said:
Open a Stocks & Shares ISA, stick it into a low cost Tracker like vanguard VWRL
xeny said:
Pension vs investing outside a pension depends on if you want access to it before you reach pension age.
Keep in mind in both cases it will be invested, just in a pension tax wrapper or an ISA wrapper (If you want to avoid self assessment, do not invest it outside a tax wrapper of some sort).
If you'd get higher rate relief or not would depend on how much higher rate tax you have paid in the year in question. You don't get more higher rate relief than the amount of higher rate tax you have paid.
The asset you invest in is a separate choice from the kind of "thing" that holds the investment.
This recent post asks a very similar question - you could do worse than skim the answers there: https://www.pistonheads.com/gassing/topic.asp?h=0&...
Keep in mind in both cases it will be invested, just in a pension tax wrapper or an ISA wrapper (If you want to avoid self assessment, do not invest it outside a tax wrapper of some sort).
If you'd get higher rate relief or not would depend on how much higher rate tax you have paid in the year in question. You don't get more higher rate relief than the amount of higher rate tax you have paid.
The asset you invest in is a separate choice from the kind of "thing" that holds the investment.
This recent post asks a very similar question - you could do worse than skim the answers there: https://www.pistonheads.com/gassing/topic.asp?h=0&...
Simpo Two said:
I think the decision is whether you want to do the most sensible/tax-efficient thing - which is probably to put it in your pension, especially if you're a higher-rate taxpayer - or, seeing as it was an unexpected windfall, you could play with it and if you lose half you're still better off than you were...
If the latter, at least do it in an S&S ISA so there are no tax concerns.
Thanks allIf the latter, at least do it in an S&S ISA so there are no tax concerns.
Looks like a S&S ISA is the way to go.
Recommendations for low cost/fee providers? Do I then pick what the money gets invested in after opening?
Simpo Two said:
I think the decision is whether you want to do the most sensible/tax-efficient thing - which is probably to put it in your pension, especially if you're a higher-rate taxpayer - or, seeing as it was an unexpected windfall, you could play with it and if you lose half you're still better off than you were...
If the latter, at least do it in an S&S ISA so there are no tax concerns.
Apart from IHT.If the latter, at least do it in an S&S ISA so there are no tax concerns.
Dimebars said:
Do I then pick what the money gets invested in after opening?
Yes; it's an account that you transfer money (up to £20K pa) into, then invest it in what you want (eg funds, ETFs, shares) - essentially the same mix of stuff that a SIPP would have, only the wrapper is different.Dimebars said:
Thanks all
Looks like a S&S ISA is the way to go.
Recommendations for low cost/fee providers? Do I then pick what the money gets invested in after opening?
I went for Vanguard as it had low costs for smaller investors. It's got a fairly simple online interface that allows you to pick what market your money is invested in. I started with the Vanguard 100 ISA, which is a Stocks and Shares ISa investing a wide spread of markets. Subsequently i've put money in and bought into the S&P500. It's all clear where your money is and how much it has risen or lost in value.Looks like a S&S ISA is the way to go.
Recommendations for low cost/fee providers? Do I then pick what the money gets invested in after opening?
boyse7en said:
I went for Vanguard as it had low costs for smaller investors. It's got a fairly simple online interface that allows you to pick what market your money is invested in. I started with the Vanguard 100 ISA, which is a Stocks and Shares ISa investing a wide spread of markets. Subsequently i've put money in and bought into the S&P500. It's all clear where your money is and how much it has risen or lost in value.
Thanks - I'll check that outI see a lot of Hargreaves Lansdowne mentioned as well as Vanguard. Plus the likes of Trading 212?
Dimebars said:
av185 said:
Apart from IHT.
I'm not likely to amass that much that IHT becomes an issue. It would be nice thoughav185 said:
Fair point but if it is a long term investment which will likely grow in value it is best pointed out. Many think Isas are completely tax free but they aren't so this could well influence whether you cash them in before your pension depending on whether you want to pay income tax or IHT.
Appreciate the heads up. I suppose something like that is a decision for 15-20 years time as I get nearer to retirementDimebars said:
Thanks - I'll check that out
I see a lot of Hargreaves Lansdowne mentioned as well as Vanguard. Plus the likes of Trading 212?
HL do not charge for fund trades if you want to chop and change/trade generally most are available and their website is excellent with a brilliant back up team to help if needed. Their platform fee at .45% is a bit toppy yes but if you are investing in low cost global trackers generally under 0.1% a 0.5% total annual fee is doable which overall is good value for their overall package imo.I see a lot of Hargreaves Lansdowne mentioned as well as Vanguard. Plus the likes of Trading 212?
okgo said:
Vanguard also fairly idiot proof. And cheaper still if you end up with a meaningful amount I believe.
It is idiot proof, I find the website easy to navigate and it’s easy to invest with them. I’ve got about £10k in a S&S ISA in various funds, it’s gone up by about 10% over the past year.Gassing Station | Finance | Top of Page | What's New | My Stuff