70k to invest, buy to let?
Discussion
Testaburger said:
FS doesn’t have the balance of LS100, but I chose it as in my view, the stock selection appeals to me. I’d prefer it to be less overweight in tech, but otherwise it’s a well-selected portfolio of everyday consumables - stuff which sells regardless of the economic cycle.
That said, if large-cap stocks fall out of favour, LS100 will take a hammering, too.
It's my take on it from my limited knowledge.That said, if large-cap stocks fall out of favour, LS100 will take a hammering, too.
I always like Terry Smith's videos as he puts things in terms I can understand i.e. you may choose not to put BP fuel in your car but you'll probably keep buying Colgate.
Testaburger said:
BarryGibb said:
I can understand LS100 being set and forget but interested to hear you think the same of Fundsmith. What happens if/when large cap growth shares fall out of favour?
FS doesn’t have the balance of LS100, but I chose it as in my view, the stock selection appeals to me. I’d prefer it to be less overweight in tech, but otherwise it’s a well-selected portfolio of everyday consumables - stuff which sells regardless of the economic cycle.That said, if large-cap stocks fall out of favour, LS100 will take a hammering, too.
BarryGibb said:
The consumables may well continue to sell, but the market may not value them as highly, you just need to look at what happened to large cap growth shares in the dot com bubble. Not sure large cap growth falling out of favour would necessarily impact LS100 on the same scale.
Terry Smith likened Fundsmith's investment "style" to the Tour de France in one of the AGM videos (the latest one I think).It won't win every stage but should win the race.
It always seems to come down to believe/trust in someone's style of investing over the long term or just buy the index?
Pesty - a few important points to perhaps get you started.
1. How long are you wanting to invest the money? Generally shares should be 5 years, in case there is a crash. I'd say that is particularly the case now when we are likely much closer to the end of an economic cycle based on the normal ones, the state of the economy etc. However that leads onto point 2.
2. If investing don't try and trade (buying and selling quickly). If you keep buying and selling individual companies it will cost a lot in fees, and you will almost certainly not make more than the market would have anyway. So use funds to spread the risk, and leave the money there. One of the most recommended things is a low cost global index tracker. This is a fund that is made up of lots of companies which should represent the growth of an index. The tracker part refers to following the index, there is no humans trying to improve things. This has the benefit of lower cost, and not losing money compared to the index (underperforming it), but has the disadvantage of not being able to do better than it, and no one to take it into cash apart from yourself. However if you are holding long term the latter point should be reduced in terms of risk.
3. The ISA is as explained a wrapper. So it is not the fund etc, but just a way to shelter you from paying as much tax as you would otherwise.
4. It's also good to start a pension ASAP, as you the more you save earlier then due to compound interest you need to save a lot less later. So try and fill your pension quota for the year.
1. How long are you wanting to invest the money? Generally shares should be 5 years, in case there is a crash. I'd say that is particularly the case now when we are likely much closer to the end of an economic cycle based on the normal ones, the state of the economy etc. However that leads onto point 2.
2. If investing don't try and trade (buying and selling quickly). If you keep buying and selling individual companies it will cost a lot in fees, and you will almost certainly not make more than the market would have anyway. So use funds to spread the risk, and leave the money there. One of the most recommended things is a low cost global index tracker. This is a fund that is made up of lots of companies which should represent the growth of an index. The tracker part refers to following the index, there is no humans trying to improve things. This has the benefit of lower cost, and not losing money compared to the index (underperforming it), but has the disadvantage of not being able to do better than it, and no one to take it into cash apart from yourself. However if you are holding long term the latter point should be reduced in terms of risk.
3. The ISA is as explained a wrapper. So it is not the fund etc, but just a way to shelter you from paying as much tax as you would otherwise.
4. It's also good to start a pension ASAP, as you the more you save earlier then due to compound interest you need to save a lot less later. So try and fill your pension quota for the year.
hstewie said:NRS said:
Pesty - a few important points to perhaps get you started.
1. How long are you wanting to invest the money? Generally shares should be 5 years, in case there is a crash. I'd say that is particularly the case now when we are likely much closer to the end of an economic cycle based on the normal ones, the state of the economy etc. However that leads onto point 2.
2. If investing don't try and trade (buying and selling quickly). If you keep buying and selling individual companies it will cost a lot in fees, and you will almost certainly not make more than the market would have anyway. So use funds to spread the risk, and leave the money there. One of the most recommended things is a low cost global index tracker. This is a fund that is made up of lots of companies which should represent the growth of an index. The tracker part refers to following the index, there is no humans trying to improve things. This has the benefit of lower cost, and not losing money compared to the index (underperforming it), but has the disadvantage of not being able to do better than it, and no one to take it into cash apart from yourself. However if you are holding long term the latter point should be reduced in terms of risk.
3. The ISA is as explained a wrapper. So it is not the fund etc, but just a way to shelter you from paying as much tax as you would otherwise.
4. It's also good to start a pension ASAP, as you the more you save earlier then due to compound interest you need to save a lot less later. So try and fill your pension quota for the year.
I think that’s all spot on. 1. How long are you wanting to invest the money? Generally shares should be 5 years, in case there is a crash. I'd say that is particularly the case now when we are likely much closer to the end of an economic cycle based on the normal ones, the state of the economy etc. However that leads onto point 2.
2. If investing don't try and trade (buying and selling quickly). If you keep buying and selling individual companies it will cost a lot in fees, and you will almost certainly not make more than the market would have anyway. So use funds to spread the risk, and leave the money there. One of the most recommended things is a low cost global index tracker. This is a fund that is made up of lots of companies which should represent the growth of an index. The tracker part refers to following the index, there is no humans trying to improve things. This has the benefit of lower cost, and not losing money compared to the index (underperforming it), but has the disadvantage of not being able to do better than it, and no one to take it into cash apart from yourself. However if you are holding long term the latter point should be reduced in terms of risk.
3. The ISA is as explained a wrapper. So it is not the fund etc, but just a way to shelter you from paying as much tax as you would otherwise.
4. It's also good to start a pension ASAP, as you the more you save earlier then due to compound interest you need to save a lot less later. So try and fill your pension quota for the year.
With regards to the ISA element, I wonder what the tax savings actually would be given an annual CGT allowance of £11-22k depending on circumstances? I’ve often thought that an awful lot of investors are paying up to 1% a year in Wrapper fees that give them a benefit they already have?
Deesee said:
You could look at it this way
It’s the top of the uk property market to date.
It’s the top of the western world equity’s market to date.
You’ve got cash....
I’d be tempted to wait..
I believe you’re still able to hold cash within a SIPP so you could still place it and claw income tax back on the equivalent earnings then drip fees the funds into the market at a modest monthly rate. If you’re 45ish and looking for a ten year home and can survive not being able to access the money then this would be quite a tempting approach. It’s the top of the uk property market to date.
It’s the top of the western world equity’s market to date.
You’ve got cash....
I’d be tempted to wait..
DonkeyApple said:
NRS said:
Pesty - a few important points to perhaps get you started.
1. How long are you wanting to invest the money? Generally shares should be 5 years, in case there is a crash. I'd say that is particularly the case now when we are likely much closer to the end of an economic cycle based on the normal ones, the state of the economy etc. However that leads onto point 2.
2. If investing don't try and trade (buying and selling quickly). If you keep buying and selling individual companies it will cost a lot in fees, and you will almost certainly not make more than the market would have anyway. So use funds to spread the risk, and leave the money there. One of the most recommended things is a low cost global index tracker. This is a fund that is made up of lots of companies which should represent the growth of an index. The tracker part refers to following the index, there is no humans trying to improve things. This has the benefit of lower cost, and not losing money compared to the index (underperforming it), but has the disadvantage of not being able to do better than it, and no one to take it into cash apart from yourself. However if you are holding long term the latter point should be reduced in terms of risk.
3. The ISA is as explained a wrapper. So it is not the fund etc, but just a way to shelter you from paying as much tax as you would otherwise.
4. It's also good to start a pension ASAP, as you the more you save earlier then due to compound interest you need to save a lot less later. So try and fill your pension quota for the year.
I think that’s all spot on. 1. How long are you wanting to invest the money? Generally shares should be 5 years, in case there is a crash. I'd say that is particularly the case now when we are likely much closer to the end of an economic cycle based on the normal ones, the state of the economy etc. However that leads onto point 2.
2. If investing don't try and trade (buying and selling quickly). If you keep buying and selling individual companies it will cost a lot in fees, and you will almost certainly not make more than the market would have anyway. So use funds to spread the risk, and leave the money there. One of the most recommended things is a low cost global index tracker. This is a fund that is made up of lots of companies which should represent the growth of an index. The tracker part refers to following the index, there is no humans trying to improve things. This has the benefit of lower cost, and not losing money compared to the index (underperforming it), but has the disadvantage of not being able to do better than it, and no one to take it into cash apart from yourself. However if you are holding long term the latter point should be reduced in terms of risk.
3. The ISA is as explained a wrapper. So it is not the fund etc, but just a way to shelter you from paying as much tax as you would otherwise.
4. It's also good to start a pension ASAP, as you the more you save earlier then due to compound interest you need to save a lot less later. So try and fill your pension quota for the year.
With regards to the ISA element, I wonder what the tax savings actually would be given an annual CGT allowance of £11-22k depending on circumstances? I’ve often thought that an awful lot of investors are paying up to 1% a year in Wrapper fees that give them a benefit they already have?
DonkeyApple said:
Deesee said:
You could look at it this way
It’s the top of the uk property market to date.
It’s the top of the western world equity’s market to date.
You’ve got cash....
I’d be tempted to wait..
I believe you’re still able to hold cash within a SIPP so you could still place it and claw income tax back on the equivalent earnings then drip fees the funds into the market at a modest monthly rate. If you’re 45ish and looking for a ten year home and can survive not being able to access the money then this would be quite a tempting approach. It’s the top of the uk property market to date.
It’s the top of the western world equity’s market to date.
You’ve got cash....
I’d be tempted to wait..
Deesee said:
Tax on dividends? Now only 2k tax free pa
I think the FTSE currently yields a shade under 4% which would suggest a portfolio would need to be over £50k to generate £2k of income. I just wonder how many people have quite small portfolios that don’t justify needing an ISA?
I’d be inclined to build a personal portfolio to around £50k per spouse and then switch to paying further savings into a SIPP along with ‘bed and SiPPing’ the capital gains each year on the personal portfolio?
I’m not an IFA or tax specialist nd there may be a flaw in that but it seems a logical to really take advantage of our CGT allowances and Pension reliefs if an average income earner.
DonkeyApple said:
Deesee said:
Tax on dividends? Now only 2k tax free pa
I think the FTSE currently yields a shade under 4% which would suggest a portfolio would need to be over £50k to generate £2k of income. I just wonder how many people have quite small portfolios that don’t justify needing an ISA?
I’d be inclined to build a personal portfolio to around £50k per spouse and then switch to paying further savings into a SIPP along with ‘bed and SiPPing’ the capital gains each year on the personal portfolio?
I’m not an IFA or tax specialist nd there may be a flaw in that but it seems a logical to really take advantage of our CGT allowances and Pension reliefs if an average income earner.
My isa is a ?% of funds held to a maximum of circa 40£ pa (however there are charges for trading etc) and allows me to hold most investment veichles as such.
My SIPP sadly costs me a lot more than that..
The power of accumulation funds and dividends will grow a pot of cash, costs trading and holding will erode it.
I personally think that saving 20k into an isa pa is out of reach and actually unthinkable for 90/99% of the population.
I also think that capital gains allowances will fall to the wayside and be brought in line with income tax, in the same way that pension draw downs have.
However the power of unlimited growth with no cgt tax, and non taxible dividends means it’s the right savings/investment vehicle for the majority of users as it can be instantly accessible.
The government don’t give the most of us much, take what you can.
DonkeyApple said:
I think that’s all spot on.
With regards to the ISA element, I wonder what the tax savings actually would be given an annual CGT allowance of £11-22k depending on circumstances? I’ve often thought that an awful lot of investors are paying up to 1% a year in Wrapper fees that give them a benefit they already have?
Ah, that makes sense. I'm outside the UK so it doesn't matter for me, but I had previously looked it up for my sister and saw it would not help her. Just everyone seems to mention it on here so thought I was perhaps missing something. I'm about to fall under the wealth tax here (extra tax on wealth each year after I have already paid around 46% tax rate on salary) so trying to find any way to reduce tax for myself as of now! With regards to the ISA element, I wonder what the tax savings actually would be given an annual CGT allowance of £11-22k depending on circumstances? I’ve often thought that an awful lot of investors are paying up to 1% a year in Wrapper fees that give them a benefit they already have?
Deesee said:
DonkeyApple said:
Deesee said:
You could look at it this way
It’s the top of the uk property market to date.
It’s the top of the western world equity’s market to date.
You’ve got cash....
I’d be tempted to wait..
I believe you’re still able to hold cash within a SIPP so you could still place it and claw income tax back on the equivalent earnings then drip fees the funds into the market at a modest monthly rate. If you’re 45ish and looking for a ten year home and can survive not being able to access the money then this would be quite a tempting approach. It’s the top of the uk property market to date.
It’s the top of the western world equity’s market to date.
You’ve got cash....
I’d be tempted to wait..
DonkeyApple said:
I’d be inclined to build a personal portfolio to around £50k per spouse and then switch to paying further savings into a SIPP along with ‘bed and SiPPing’ the capital gains each year on the personal portfolio?
I'd generally agree that that sort of approach/asset allocation balance is a good fit for people not aggressively chasing FI/RE. One nuance is that if you've got access to an employer scheme that allows salary sacrifice, then the potential savings in NI of AVCs v a SIPP can be very attractive.bmwmike said:
DonkeyApple said:
I think the FTSE currently yields a shade under 4% which would suggest a portfolio would need to be over £50k to generate £2k of income.
Hi - do you mean there is FTSE tracker fund that pays 4% in dividends ? Saleen836 said:
joyless lobotomised parrot said:
Here's the type of thing you need.
http://www.futurepropertyauctions.co.uk/property_d...
Bought separately no tax on the way in, very little annual tax to pay if strategised well, and ditto on disposal too.
Easy to get managed too for 10% of the rent.
Be very surprising if you didn't nett 10% of the price as your annual pocket money.
How is there no tax on the way in by buying seperately?http://www.futurepropertyauctions.co.uk/property_d...
Bought separately no tax on the way in, very little annual tax to pay if strategised well, and ditto on disposal too.
Easy to get managed too for 10% of the rent.
Be very surprising if you didn't nett 10% of the price as your annual pocket money.
Edited by joyless lobotomised parrot on Saturday 16th June 15:31
....in recent years the town has been dubbed the 'most dismal in Scotland'.[39]
Sounds impressive as you'd expect there to be fierce competition for this accolade.
Pesty said:
After selling a few assets I’ve ended up with around 70k.
I know nothing of finance or investments or shares.
I’m not a risk taker just doesn’t sit well with me.
So that leaves me buying somewhere and renting it. It’s all I can think of . . .
I know nothing of finance or investments or shares.
I’m not a risk taker just doesn’t sit well with me.
So that leaves me buying somewhere and renting it. It’s all I can think of . . .
Property values have doubled recently, and as you say you are not a risk taker, so it just seems perfect. ~
What could possibly go wrong?
Property is a market, so not very different from other business ventures. The exception in domestic property is our sole main residence, which is usually purchased with a mortgage (therefore the gearing magnifies profits ), and importantly any profit is tax-free.
All that I can suggest, is to learn as much as you can about the property rental market, and in particular the risks that you will be taking. If the unexpected happens, at least you will have been prepared.
Jon39 said:
Pesty said:
.....So that leaves me buying somewhere and renting it .
Property values have doubled recently, and as you say you are not a risk taker, so it just seems perfect. ~ What could possibly go wrong?
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