small amount of cash...

[lord trumpton]

Please can anyone advise on the best option of utilising a small lump of spare cash £14k

Just to maybe invest it and generate a reasonable return. Although we don't need access to it, we don't really want to lose it either

Many thanks

[Trailhead]

New tax year starts next month so there will be new ISA's coming out. Probably only 1 or 2% though. Tax free and guaranteed though....

[Claudia Skies]

lord trumpton said:

Just to maybe invest it and generate a reasonable return. Although we don't need access to it, we don't really want to lose it either

You need to decide a likely timescale.

• On any timescale shorter than several years (five?) it's hard to have reasonable "security" unless you are willing to "lose real value slowly". In other words by depositing the money with a bank either inside or outside an ISA. You will be lucky if you manage to break even by keeping up with inflation.

• On a longer timescale investment in a mainstream equity fund (stocks & shares) within an ISA deserves serious consideration. The hope is for decent returns combined with favourable tax treatment. If you go this route you might choose to suppress timing risk by investing £5k now, £5k in 6 months time and £4k this time next year.

[trowelhead]

lord trumpton said:

Please can anyone advise on the best option of utilising a small lump of spare cash £14k

I would do one of the following:

1 - invest it all into maxing next years ISA allowance. Go for a stocks and shares ISA and invest into a low cost tracker fund. Personally i like Vanguards products and you would't go far wrong with most of their funds. Should be looking at 5-8% pa depending on the product / risk profile.

2 - invest it as a deposit on a very cheap property up north. Manchester / Leeds / Liverpool all have good fundamentals and strong rental demand. You can get a terrace or flat for 50/60k and your 14k would be the 25% deposit, plus perhaps a lick of paint and new carpets at a push. More work but your return on cash should be 15% plus.

[HotJambalaya]

trowelhead said:

I would do one of the following:

1 - invest it all into maxing next years ISA allowance. Go for a stocks and shares ISA and invest into a low cost tracker fund. Personally i like Vanguards products and you would't go far wrong with most of their funds. Should be looking at 5-8% pa depending on the product / risk profile.

I just set up my first stocks and shares ISA, how do you buy into a tracker fund from them? I've only ever bought stocks from before

[Rangeroverover]

I would look at buying a small property to let, I have just bought a one bed flat for £103,000 with a £12,000 deposit.

Rental income is £575 per month so £6,900 per annum

Costs

Tenant find fee £290 (50% of 1st months rent)
Insurance £250 p.a
Mortgage (repayment) £400 per month

So you have £440 per month going out and £575 coming in so an 11%ish return plus whatever capital appreciation comes up in the future.

Let it unfurnished, people who own furniture tend to stay longer, also no need to replace white goods etc

You will have an annual gas check to pay for if heating etc is gas

Hope that helps

[Trailhead]

We do this however repairs from bad tenants or tenants not paying etc wipes out any cash flow profit. It's capital appreciation only. At least that's how I see it.

[trowelhead]

HotJambalaya said:

I just set up my first stocks and shares ISA, how do you buy into a tracker fund from them? I've only ever bought stocks from before

What platform are you using to invest? In mine there is a "funds" section where you can search for you choice of funds from most providers

[trowelhead]

Trailhead said:

We do this however repairs from bad tenants or tenants not paying etc wipes out any cash flow profit. It's capital appreciation only. At least that's how I see it.

Rental guarantee insurance? Landlords contents insurance?

[Trailhead]

trowelhead said:

Rental guarantee insurance? Landlords contents insurance?

We don't have that insurance. I don't think it would cover damage to the property anyway, ie one tentant let an upstairs shower leak onto the floor for a year and the whole ceiling and floor needed replacing. Another tenant did a midnight flit owing £500. Another tenant moved out and took a load of furniture with them. There are good tenants too, but to say it guarantees 11% profit isn't our experience.

[Trailhead]

trowelhead said:

Rental guarantee insurance? Landlords contents insurance?

We don't have that insurance. I don't think it would cover damage to the property anyway, ie one tentant let an upstairs shower leak onto the floor for a year and the whole ceiling and floor needed replacing. Another tenant did a midnight flit owing £500. Another tenant moved out and took a load of furniture with them. There are good tenants too, but to say it guarantees 11% profit isn't our experience.

[R8Steve]

Neil Woodfords new accumulation fund would be worth a shout imo. There is always risk attached to funds but if you look at his past/current performance that would be where I would, and do, put my money.