Money question
Discussion
Hi,
Hoping for some advice, appreciate any views or ideas
I sold some shares a few months ago which has left me with £35k I need to decide what to do with.
I own a house already that has 2 mortgages on it,
First mortgage is approx £85k at 2.99% fix until November 2017 and I'm ready overpaying the maximum monthly amount of 20%, lump sums have a charge.
Second mortgage is approx £33k at 2.49% variable, I'm not overpaying this currently but overpayments are unlimited
I need to decide what to do with this money, buying an m6 or refurb in the house are options but priority is either a good return on investment. Paying off mortgage #2 is an option but at (currently) 2.49% seems cheap money, whilst convinced there must be a better option I'm unsure what.
Other option is a BTL but with such a small deposit would possibly over stretch me and would be concerned about future interest rate rises, not to mention I'm less than convinced the housing bubble is sustainable in its current form.
Do you have any ideas or thoughts please?
Many thanks
Sean
Hoping for some advice, appreciate any views or ideas
I sold some shares a few months ago which has left me with £35k I need to decide what to do with.
I own a house already that has 2 mortgages on it,
First mortgage is approx £85k at 2.99% fix until November 2017 and I'm ready overpaying the maximum monthly amount of 20%, lump sums have a charge.
Second mortgage is approx £33k at 2.49% variable, I'm not overpaying this currently but overpayments are unlimited
I need to decide what to do with this money, buying an m6 or refurb in the house are options but priority is either a good return on investment. Paying off mortgage #2 is an option but at (currently) 2.49% seems cheap money, whilst convinced there must be a better option I'm unsure what.
Other option is a BTL but with such a small deposit would possibly over stretch me and would be concerned about future interest rate rises, not to mention I'm less than convinced the housing bubble is sustainable in its current form.
Do you have any ideas or thoughts please?
Many thanks
Sean
You do realise you are going to get answers from people on what THEY would do with it
Some of them have never had 35K while for others it's a small percentage of their NAV.
So...do your own NAV, see how your asserts look against your liabilities.
Sometimes useful to do a NAV without your residence as unless you want to live in a tent, it is not an asset you can liquidate
Now you can see what 35K means to you.
Why did you sell the shares? Did they meet the target you set? or you just got nervy
Shares are a bet on business.
Sterling is a bet on the Government.
Shares are easiest way to stay ahead of inflation. (esp with current inflation)
M6 is a nice car but not worth taking yourself to zero liquid asstes. (you also didn't say what it would replace)
Alternatively, that could be a lot of Buck fizzes into a lot of dumb blondes.
Some of them have never had 35K while for others it's a small percentage of their NAV.
So...do your own NAV, see how your asserts look against your liabilities.
Sometimes useful to do a NAV without your residence as unless you want to live in a tent, it is not an asset you can liquidate
Now you can see what 35K means to you.
Why did you sell the shares? Did they meet the target you set? or you just got nervy
Shares are a bet on business.
Sterling is a bet on the Government.
Shares are easiest way to stay ahead of inflation. (esp with current inflation)
M6 is a nice car but not worth taking yourself to zero liquid asstes. (you also didn't say what it would replace)
Alternatively, that could be a lot of Buck fizzes into a lot of dumb blondes.
jeff m2 said:
You do realise you are going to get answers from people on what THEY would do with it
Some of them have never had 35K while for others it's a small percentage of their NAV.
So...do your own NAV, see how your asserts look against your liabilities.
Sometimes useful to do a NAV without your residence as unless you want to live in a tent, it is not an asset you can liquidate
Now you can see what 35K means to you.
Why did you sell the shares? Did they meet the target you set? or you just got nervy
Shares are a bet on business.
Sterling is a bet on the Government.
Shares are easiest way to stay ahead of inflation. (esp with current inflation)
M6 is a nice car but not worth taking yourself to zero liquid asstes. (you also didn't say what it would replace)
Alternatively, that could be a lot of Buck fizzes into a lot of dumb blondes.
Thanks for the reply JeffSome of them have never had 35K while for others it's a small percentage of their NAV.
So...do your own NAV, see how your asserts look against your liabilities.
Sometimes useful to do a NAV without your residence as unless you want to live in a tent, it is not an asset you can liquidate
Now you can see what 35K means to you.
Why did you sell the shares? Did they meet the target you set? or you just got nervy
Shares are a bet on business.
Sterling is a bet on the Government.
Shares are easiest way to stay ahead of inflation. (esp with current inflation)
M6 is a nice car but not worth taking yourself to zero liquid asstes. (you also didn't say what it would replace)
Alternatively, that could be a lot of Buck fizzes into a lot of dumb blondes.
"NAV" isn't something I've heard of before, understand the concept from a brief google (too late in the day to have a proper look)
Apologies for my ignorance but by comparing my assets vs liabilities, what would I gain in this situation? (Sorry if totally missing the point here)
Sold the shares for both the reasons you mentioned, I've had a rocky ride with them and finally got something back out but not sure I'm ready to take such a punt again, at least with the amount of research to do it yourself (funds maybe an option?)
Currently have an e92 330i, agree an m6 isn't the wisest choice
Buck's Fizz isn't the worst idea though!!
Re what to do with it, maybe I didn't phrase my original post well so apologies - what I'm after is advice on where to invest it vs pros/cons of paying a chunk on the mortgage
As I see it for zero risk I'm probably marginally better off paying the mortgage than a cash isa- am I missing alternatives, any recommendations on where else to look?
Thanks!
Compiling your NAV once a year will show the direction you are moving. Getting richer, getting poorer.
It's quite simple, get a lump of paper, draw a vertical line down the centre.
On one side list your assets (Major Assets) be realistic about the value of each, include bank deposits etc
On the other side list debts, like mortgage, C.C.balances.
Add the two columns. note the result.
If you are young it is highly probable it's a big scary negative.
Do it again in 6 months or a year, see if the number has improved.
So, one would expect the mortgage to have reduced a little, maybe house has increased a little, current car probably deceased a bit, get the picture.
If you are comfortable with the results you get, then go for the M6, this is Pistonheads after all.
I agree shares are not for everyone, funds are better for those who cannot give individual stocks the attention they require.
Many like FTSE 100 index funds, you do need the divs reinvested to make decent progress, also because of the cyclic components it is actually quite suitable for drip feeding.
Personally I prefer the FTSE 250 because it has better growth due to having some mid caps.
25% in a European fund would not be a bad move because of the current Pound Euro rate and Draghis QE.
For the opposite reasons investing in a US Fund would not be advisable. Exchange rate not in your favour and US multinational lower projected earnings due to Dollar stregth. Manufacturing also under pressure from lower priced imports. The S & P will continue to plod along, but growth will be slower and might not cover the currency shift if the Dollar drifts back down. Too risky for a Sterling investor.
Your age, and where you want to be financially in 5 10, 20 years is something only you can work out.
Having said that, I have blown decent amounts of money a couple of times not being sensible, so maybe wait for the next poster
(I do take a very calculated position now)
Hope I've given you something to think about.
It's quite simple, get a lump of paper, draw a vertical line down the centre.
On one side list your assets (Major Assets) be realistic about the value of each, include bank deposits etc
On the other side list debts, like mortgage, C.C.balances.
Add the two columns. note the result.
If you are young it is highly probable it's a big scary negative.
Do it again in 6 months or a year, see if the number has improved.
So, one would expect the mortgage to have reduced a little, maybe house has increased a little, current car probably deceased a bit, get the picture.
If you are comfortable with the results you get, then go for the M6, this is Pistonheads after all.
I agree shares are not for everyone, funds are better for those who cannot give individual stocks the attention they require.
Many like FTSE 100 index funds, you do need the divs reinvested to make decent progress, also because of the cyclic components it is actually quite suitable for drip feeding.
Personally I prefer the FTSE 250 because it has better growth due to having some mid caps.
25% in a European fund would not be a bad move because of the current Pound Euro rate and Draghis QE.
For the opposite reasons investing in a US Fund would not be advisable. Exchange rate not in your favour and US multinational lower projected earnings due to Dollar stregth. Manufacturing also under pressure from lower priced imports. The S & P will continue to plod along, but growth will be slower and might not cover the currency shift if the Dollar drifts back down. Too risky for a Sterling investor.
Your age, and where you want to be financially in 5 10, 20 years is something only you can work out.
Having said that, I have blown decent amounts of money a couple of times not being sensible, so maybe wait for the next poster
(I do take a very calculated position now)
Hope I've given you something to think about.
Thanks both for the further replies, very much appreciated.
Thanks for the further detail on the NAV, I'm fairly certain I have a good picture in my head but I'm sure it's worth while putting to paper as you mention - I'll have a crack at this tonight!
Edit... have had a quick play with this and roughly £200K in the black, I'm not tempted by the M6 with this, though!
I'm just about to hit 28... not sure what happened between 18-28 but there you go!
Mortgage 1 should be paid off in May 2023 with the current overpayments and assuming 2.99% is held for the duration, in reality I'd like to get it paid off sooner with a lump sum at the end of the fix term (not for the full amount but to whittle it down some more)
Mortgage 2 has some 25 years left to run but as it's cheaper the focus is on the higher one, for now - but it's also not a huge amount of cash.
I'd like to aim to be mortgage free in ~5 years (or have the equivalent capital else where) which is probably a little ambitious but doable with some effort and little luck.
I don't know a huge amount about funds, I have the ~£35K in a Barclay's Stockbroker ISA at the moment which I believe I can use... any recommendations on reading up on funds?
Does anyone have a view on BTL's as well to see the other side of the coin?
Thanks
Sean
Thanks for the further detail on the NAV, I'm fairly certain I have a good picture in my head but I'm sure it's worth while putting to paper as you mention - I'll have a crack at this tonight!
Edit... have had a quick play with this and roughly £200K in the black, I'm not tempted by the M6 with this, though!
I'm just about to hit 28... not sure what happened between 18-28 but there you go!
Mortgage 1 should be paid off in May 2023 with the current overpayments and assuming 2.99% is held for the duration, in reality I'd like to get it paid off sooner with a lump sum at the end of the fix term (not for the full amount but to whittle it down some more)
Mortgage 2 has some 25 years left to run but as it's cheaper the focus is on the higher one, for now - but it's also not a huge amount of cash.
I'd like to aim to be mortgage free in ~5 years (or have the equivalent capital else where) which is probably a little ambitious but doable with some effort and little luck.
I don't know a huge amount about funds, I have the ~£35K in a Barclay's Stockbroker ISA at the moment which I believe I can use... any recommendations on reading up on funds?
Does anyone have a view on BTL's as well to see the other side of the coin?
Thanks
Sean
Edited by Gr44 on Wednesday 8th April 14:39
200K in the black at 28 puts you in a great position.
I would not be in any great rush to pay off the mortgage, probably worth getting some paid help, just make sure it is someone you choose and not someone that chooses you. (a few smart ones on PH)
You have obviously made as lot of good decisions in the past to get to where you stand now, I'm guessing your asset side needs some diversification as it's probably all House.
I do my NAV sans house, to give a better or different picture. (I would include mort if I had one though)
Fund investing is about low upfront charges, low expenses and getting through the first two years without thinking you have made a mistake
And of course most important, future contributions. 10% pa growth will not make you rich, 10% growth and a 10% contribution will.
I would not be in any great rush to pay off the mortgage, probably worth getting some paid help, just make sure it is someone you choose and not someone that chooses you. (a few smart ones on PH)
You have obviously made as lot of good decisions in the past to get to where you stand now, I'm guessing your asset side needs some diversification as it's probably all House.
I do my NAV sans house, to give a better or different picture. (I would include mort if I had one though)
Fund investing is about low upfront charges, low expenses and getting through the first two years without thinking you have made a mistake
And of course most important, future contributions. 10% pa growth will not make you rich, 10% growth and a 10% contribution will.
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