Semi-retired and £100k to invest..
Discussion
Hi there,
Im a 49yr old self employed mechanical engineer working freelance designing and building plantrooms/boiler houses etc for a few companies.I work autumn and winter and take spring and summer off to rest (knee/back issues) and enjoy holidays and hobbies.
I take home approx £15k for 6mths work (after tax @20%) which i can live on comfortably,my wife works part time which helps.
I have no mortgage (paid off 9 yrs ago) and no credit cards/loans etc and everything i own is paid for.I do have £100k sitting in two isa`s (mine and wifes) and wonder if i can make this work better for me? of course i could see a financial advisor but seeing as this section has some very knowledable guys i thought id ask here first......thanks for any advice
Im a 49yr old self employed mechanical engineer working freelance designing and building plantrooms/boiler houses etc for a few companies.I work autumn and winter and take spring and summer off to rest (knee/back issues) and enjoy holidays and hobbies.
I take home approx £15k for 6mths work (after tax @20%) which i can live on comfortably,my wife works part time which helps.
I have no mortgage (paid off 9 yrs ago) and no credit cards/loans etc and everything i own is paid for.I do have £100k sitting in two isa`s (mine and wifes) and wonder if i can make this work better for me? of course i could see a financial advisor but seeing as this section has some very knowledable guys i thought id ask here first......thanks for any advice
Ginge R said:
Is It income that you're going to be after - or cash for lump sum items? You could consider slowly transferring your assets into a pension (wrapper) to start making small but meaningful gains with tax relief.
Thanks for the reply,Ive got a private pension that ive been paying into since i was 17yrs old,i dont want to put more into it as i doubt i will make retirement age.This will sound morbid but all my immediate family have died of cancer to young to enjoy retirement hence why i try and enjoy life now.So id like a income from the money if possible,i know it wont be much but everthing helps and at the moment im getting very little return..
megaphone said:
What ISAs are you invested in? Cash or stocks and shares? If cash, then it's earning nothing, best transfer into a S&S ISAS. If S&S, invest in some decent income funds and take the income tax free. Should be able to achieve at least 8%.
Do you recommend any S&S ISA in particular? Looking for somewhere to store some money that is currently sat in a current account. Thanks.I-A said:
megaphone said:
What ISAs are you invested in? Cash or stocks and shares? If cash, then it's earning nothing, best transfer into a S&S ISAS. If S&S, invest in some decent income funds and take the income tax free. Should be able to achieve at least 8%.
Do you recommend any S&S ISA in particular? Looking for somewhere to store some money that is currently sat in a current account. Thanks.As for which funds to hold, you need to do some research, decide what risk you are willing to take. You are investing at a high point in the markets, so the gains from the past year or so may not carry on through 17/18. Who knows!
megaphone said:
What ISAs are you invested in? invest in some decent income funds and take the income tax free. Should be able to achieve at least 8%.
Perhaps you will tell us where 8% income is available?With stock markets at an all-time high and OP semi-retired it would be unfortunate to invest the lot in S&S and then find he loses half his money overnight, as happened in 2003 and 2008.
megaphone said:
What ISAs are you invested in? Cash or stocks and shares? If cash, then it's earning nothing, best transfer into a S&S ISAS. If S&S, invest in some decent income funds and take the income tax free. Should be able to achieve at least 8%.
Only if you want to take on significant risk to your capital!Edited by sidicks on Monday 13th March 10:49
megaphone said:
There are lots of ISA platform providers out there, 'fund supermarkets'. I like Hargreaves Lansdown, www.hl.co.uk as their website is very good, very easy to switch funds etc. They also have good research on suitable funds etc. I believe their charges are a little more than others.
As for which funds to hold, you need to do some research, decide what risk you are willing to take. You are investing at a high point in the markets, so the gains from the past year or so may not carry on through 17/18. Who knows!
Hargreaves are generally good if a touch expensive although if you are trading funds as opposed to stock there are no charges unlike many others.As for which funds to hold, you need to do some research, decide what risk you are willing to take. You are investing at a high point in the markets, so the gains from the past year or so may not carry on through 17/18. Who knows!
Could be a risky time to invest as others have said as markets only slightly off their highs. So best policy currently imo is drip feeding lump sums into top performing funds although you have to be prepared to closely monitor and if necessary sell quickly albeit on a forward pricing and this may not suit those more into buying and holding long term.
Better Japan Emerging markets and European funds worth a punt.
sidicks said:
megaphone said:
What ISAs are you invested in? Cash or stocks and shares? If cash, then it's earning nothing, best transfer into a S&S ISAS. If S&S, invest in some decent income funds and take the income tax free. Should be able to achieve at least 8%.
Only if you want to take on significant risk to your capital!Edited by sidicks on Monday 13th March 10:49
thebraketester said:
If I was 50 and had 100k in the bank, I would spend it and enjoy it......
Thanks for the comments so far but i had to reply to this one inparticular,so thebraketester what would you spend it on as im curious,would you have nice holidays,nice car etc or do you have something else in mind.While i do go away every year twice usually i tend to stay in the uk taking our dog with us and i do have another thread running asking should i spend wisely on a car that hopefully will make money.
and to the question do i have it in cash isa`s the answer is yes...
id also like to add the £100k isnt my only money but an amount that i can use to make myself some more (all being well) i do have a little more flash cash so the £100k could be locked away but it took a lot of hard work and a shreud house sale to come to this amount and i really want to keep it..
Thanks again chaps
Edited by noway on Monday 13th March 17:40
thebraketester said:
Yep... travel... go see the world. I am not suggesting blowing it all... I am just suggesting that you could enjoy being in (I presume) good health and having the money to go and explore. You are in a very fortunate position.
Thats what I would do anyway.
Im retiring in 6 yrs (aged 55) and yes ive got some travelling planned....Route 66 and the Garden Route in South Africa are both on my to do list Thats what I would do anyway.
S&S Isa at HL charges 0.45% pa on value and £13 a transaction.
Agree as UK and US main stock markets near record high its not best time. You could do an ISA transfer in S&S (think you may have to do an entire cash ISA at a time). Although you can put £20k pa in from 6 April into a new S&S Isa and if haven't done one this year another £15k before then.
You could drip feed into a selection of funds with monthly order set up (e.g £100/£200 a mth into 10 funds) and I don't think you get charged on fund investments (units trusts and OEICs). HL do have some combined funds where they invest in a basket of other income or growth funds.
Don't want to split holdings into more than 20 different shares/funds.
If buying shares in lumps anything below £5k the transaction and 0.5% stamp duty become a drag.
Last 2 years or so UK smaller companies and global funds with a US content have faired much better than UK income funds.
Could invest in a number of FTSE 100 dividend payers and get 4-5% income. There's normally an inbuilt charge in funds of 0.75% to 1.5% (high side) which means yield on income funds somewhat lower than 4-5%. Beware high yields as can mean the profits can no longer support than level of dividend and shares may fall (dividend cover 1.5 good under 1 means they are paying out more than they earnt).
When interest rates rise there's some views that the value of some of the main dividend paying shares and income funds may fall.
Although funds spread risk look at holdings (most show top 10 holdings detail in fund analysis on HL etc). Lots of UK equity income funds hold similar shares so holding a number of these may not spread risk.
Should get positives returns if hold for 5 years or more but investing at peaks more risky and if need cash for special purposes in short/medium term then may lose out. Although sitting on cash when interest is less than inflation means you're losing value over time.
Need to have time to look at values and movements at least monthly and review holdings every six months or so. But too many changes just costs too much in fees and best to take a long term view if you can. If happy to take income and long term view could get steady growing income and return over time although current values go up and down. If hate losses or potential losses other things may be more suited. May be best to invest gradually at first and learn/research as you go.
Agree as UK and US main stock markets near record high its not best time. You could do an ISA transfer in S&S (think you may have to do an entire cash ISA at a time). Although you can put £20k pa in from 6 April into a new S&S Isa and if haven't done one this year another £15k before then.
You could drip feed into a selection of funds with monthly order set up (e.g £100/£200 a mth into 10 funds) and I don't think you get charged on fund investments (units trusts and OEICs). HL do have some combined funds where they invest in a basket of other income or growth funds.
Don't want to split holdings into more than 20 different shares/funds.
If buying shares in lumps anything below £5k the transaction and 0.5% stamp duty become a drag.
Last 2 years or so UK smaller companies and global funds with a US content have faired much better than UK income funds.
Could invest in a number of FTSE 100 dividend payers and get 4-5% income. There's normally an inbuilt charge in funds of 0.75% to 1.5% (high side) which means yield on income funds somewhat lower than 4-5%. Beware high yields as can mean the profits can no longer support than level of dividend and shares may fall (dividend cover 1.5 good under 1 means they are paying out more than they earnt).
When interest rates rise there's some views that the value of some of the main dividend paying shares and income funds may fall.
Although funds spread risk look at holdings (most show top 10 holdings detail in fund analysis on HL etc). Lots of UK equity income funds hold similar shares so holding a number of these may not spread risk.
Should get positives returns if hold for 5 years or more but investing at peaks more risky and if need cash for special purposes in short/medium term then may lose out. Although sitting on cash when interest is less than inflation means you're losing value over time.
Need to have time to look at values and movements at least monthly and review holdings every six months or so. But too many changes just costs too much in fees and best to take a long term view if you can. If happy to take income and long term view could get steady growing income and return over time although current values go up and down. If hate losses or potential losses other things may be more suited. May be best to invest gradually at first and learn/research as you go.
I know other people are much more savvy however in my eyes, depending on what part of the country you buy in, I would buy a 100k buy to let. That would probably give you a rental income of approx 500gbp a month and you can enjouy that ASAP.
With any luck depending how long you keep it, it will go up by the usual 1-5% per year (minimum) too.
Just give it to someone else to look after and your sorted.
With any luck depending how long you keep it, it will go up by the usual 1-5% per year (minimum) too.
Just give it to someone else to look after and your sorted.
Meant to add on shares S&S ISAs etc there are tables comparing charges at differenrt levels in Questor/Telegraph and This Is Money (think has a connection to Daily Mail).
Family member has Telegraph so do read Questor alot - they and every investor will get some bad ones. But if have time to read/look at on line 2-3 times a week does build up knowledge.
Did investigate buy to let as have retired friend who invested that. And as I used to work in tax didn't like it from that point as hate having to pay tax if other routes were tax free. Main benefit is gains are from capital appreciation and periodic selling would allow £11k a year tax free capital gains per person. Transaction/solicitors fees make a split ownership 50/50 with partner and take £11k tax free each slightly better especially if you pay higher rates of tax.
Rental income would be bit by 10-12% plus VAT a month covering tenant find and management, possibly more if have rent indemnity and at that level if getting a flat you have a £600-£1000 management charge usually covering communal areas and building upkeep and buildings insurance. Do have to pay for repairs to appliances, new ones occasionally and new kitchen/bathroom every so often (easier to sell when that needs doing I'm told if have enough gain). Annual gas safety check (if gas) and probably need landlord's insurance (no idea how much these are). If have tax return and tax at 20% or 40% (your marginal rate) on profit (and mortage interest will soon be fully restricted to 20% deduction) your net return each year from income can be a lot lower than the rental yield. But long term capital growth may be attractive which is why most investors used capital across a number of mortgaged properties. You need to read up & check all the tax for yourself to make sure as its always changing.
Probably less volatile than shares though, especially as although share index has risen strongly you get much more of a roller coaster ride in individual shares and sectors.
Family member has Telegraph so do read Questor alot - they and every investor will get some bad ones. But if have time to read/look at on line 2-3 times a week does build up knowledge.
Did investigate buy to let as have retired friend who invested that. And as I used to work in tax didn't like it from that point as hate having to pay tax if other routes were tax free. Main benefit is gains are from capital appreciation and periodic selling would allow £11k a year tax free capital gains per person. Transaction/solicitors fees make a split ownership 50/50 with partner and take £11k tax free each slightly better especially if you pay higher rates of tax.
Rental income would be bit by 10-12% plus VAT a month covering tenant find and management, possibly more if have rent indemnity and at that level if getting a flat you have a £600-£1000 management charge usually covering communal areas and building upkeep and buildings insurance. Do have to pay for repairs to appliances, new ones occasionally and new kitchen/bathroom every so often (easier to sell when that needs doing I'm told if have enough gain). Annual gas safety check (if gas) and probably need landlord's insurance (no idea how much these are). If have tax return and tax at 20% or 40% (your marginal rate) on profit (and mortage interest will soon be fully restricted to 20% deduction) your net return each year from income can be a lot lower than the rental yield. But long term capital growth may be attractive which is why most investors used capital across a number of mortgaged properties. You need to read up & check all the tax for yourself to make sure as its always changing.
Probably less volatile than shares though, especially as although share index has risen strongly you get much more of a roller coaster ride in individual shares and sectors.
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