What sort of professional do I need to search for? Lump sum.

[911pleb]

What google search terms do i need to find the right advice??

I think I need an account to spend an hour with me, but I feel like I need a bit of financial planning help too, rather than just tax advice - perhaps there are people that do both?

I'm pretty sure it's not a financial adviser I want as Ive already spoken to one and he basically ignored my entire list of questions and tried to take 3% of my money to manage a fund on my behalf, with ongoing fees on top....

I have recently acquired a low 6 figure sum and I just want some clear advice on the best way to handle it from both a sensible, long term point of view and a tax efficiency standpoint. I also wish to use a little for a bit of high risk frivolity.

My main concern is understanding, recording and paying my tax properly and in the most efficient manner. Being PAYE since forever, Ive never dealt with any extra income or tax returns etc and im finding it all very confusing. I don't want HMRC to string me up by my toes and hit me with a stick.

I have maxed out my ISA, which is generating circa 8% (or was until recently) but I still have a fair wedge left over which, as I understand it will be subject to tax on any interest it generates. Its the ins and outs of this that I really need help with.

Another aspect I'm struggling with is how much I 'need' to use as my 'safe' growth generator and how much I can sensibly use for frivolous high risk stuff, like individual stocks or the like. Basically, some sort of long term planning advice for when I retire. I know if act sensibly now (aged 30) I'm going to be set for life as long as I'm not stupid.

I have already got an idea of where and how I wish to invest my funds, though I'm open to ideas. (I'm aware of the IM thread).

So, who do I need to talk to? The main thing is I don't want whoever it is acting in their own interest, as I'll get skewed advice and be no closer to understanding what I need than I am now. Ive had that already and I wasn't impressed.

Thank you in advance,

pleb (accurate username)

[Mr Pointy]

If you're aware of the IM thread then arrange to speak to Nik. If he's not helpful you haven't lost anything - apart from a hour of your time.

[covmutley]

Take your time. The cash is going nowhere, and your not missing out on anything so even if you get stung for a tiny bit of tax if its stick in a current account it's not an amount that should make you rush into something you later regret

Im not speaking from experience (unfortunately!) But Before speaking to anyone, I think you need to think what you are looking for the money to do for you. What do you want from life etc? House? Family? Retire early?

Watch some of the dave Ramsey videos on YouTube. Yes he talks about god a bit too much for some (although it's the light touch good stuff) and I think he can be too extreme about delaying enjoying your money, but I dont think you can argue too much with him that if you followed his advice, you would end up in a good place financially.

Rich dad poor dad worth a read too.

Edited by covmutley on Saturday 11th April 12:59

[Phooey]

The last thing you want or need is an IFA attaching themselves like a leech and feeding off your money.

I’d also recommend speaking to Nik at Intelligent Money. It’s a free no-strings-attached service that Julian has offered anyone on PH. Nik has as much if not more knowledge and experience of these things than 99.9% of IFAs. He will also talk in a language you understand.

[Derek Chevalier]

Phooey said:

Nik has as much if not more knowledge and experience of these things than 99.9% of IFAs.

Please don't post nonsense. There's just no need for it.

[Derek Chevalier]

911pleb said:

So, who do I need to talk to? The main thing is I don't want whoever it is acting in their own interest, as I'll get skewed advice and be no closer to understanding what I need than I am now. Ive had that already and I wasn't impressed.

I would suggest spending time reading some books and educating yourself. Some links here but loads of others

https://www.pistonheads.com/gassing/topic.asp?h=0&...

[Tiggers]

I'll echo what Phooey says - speak to Nik or Julian at Intelligent Money. Friendly and knowledgeable and no pressure from them either!

[CaptainSlow]

OP..are you a 40% tax payer? Do you own your own home?

[Brads67]

Speak to Nik, he really knows his stuff and will tell you straight if using someone other then IM is best for you.

IFA's will view you as a wallet to be dipped.

[anonymous-user]

I'm no friend of the IFA community but I believe they can be useful if the right one is used in the right way at the right time. OPs situation looks to me as though it might tick that box - on the basis of one-off advice for a one-off fee.

Any ongoing IFA relationship should IMO be considered as a separate subject.

Derek Chevalier always seems to make a certain amount of sense on here.

[bitchstewie]

Derek Chevalier said:

I would suggest spending time reading some books and educating yourself. Some links here but loads of others

https://www.pistonheads.com/gassing/topic.asp?h=0&...

My guess Derek is that side of it could be done reasonably simply i.e. move the money across into a suitable fund.

Tax and the best ways to structure the money are where people get confused or think it's harder than it need be.

I was in a similar position to 911pleb and all I've done is use my ISA allowance each year as I don't want to "lock" the money away in a SIPP.

I'm sure there may be more efficient ways of doing things but so far I've not encountered any obvious downside.

[911pleb]

CaptainSlow said:

OP..are you a 40% tax payer? Do you own your own home?

Im a lowly 20% tax payer.
I have a mortgage.
Does this alter the approach somewhat?

Thanks to everyone else who has replied; seems to be a theme...

[anonymous-user]

911pleb said:

I have a mortgage.

If I've understood correctly,

• You have substantial cash in hand, and
• You are borrowing money in the form of a mortgage.

Why are borrowing money that you've already got?

amongst the implications,

• You may well be paying income tax on your deposit income, and then
• You're paying interest on that mortgage out of taxed income.

This is inefficient.
However, if you believe you can make money from the "gearing effect" of borrowing for X but achieve net returns of X+ at an appropriate level of risk (?) there might be a case for doing it.

[anonymous-user]

911pleb said:

a bit of high risk frivolity.

Back in the day I think it was Joe Walsh who said he made a million dollars but had nothing left. Half of it he'd spent on coke and hookers; the other half he'd wasted.

More seriously, as a 20% taxpayer I personally don't think you'd be getting enough tax relief to make "high risk" investment worthwhile.

[911pleb]

rockin said:

However, if you believe you can make money from the "gearing effect" of borrowing for X but achieve net returns of X+ at an appropriate level of risk (?) there might be a case for doing it.

My mortgage rate is currently 1.57% - generally speaking I understand an average yearly return from a market tracking fund is around 7%, so It makes sense, in my view, to put my money to work. Of course I'm green to all of this, but makes sense to me.

[911pleb]

rockin said:

More seriously, as a 20% taxpayer I personally don't think you'd be getting enough tax relief to make "high risk" investment worthwhile.

I'm missing your point here. Clearly my lack of taxation knowledge is coming to the fore. Can you explain what my being in the 20% bracket has to do with the amount of tax relief I'll get, please? Is it more beneficial to be in the 40% or 0% in this case?

Thanks.

[Oldscottishgit]

911pleb said:

My mortgage rate is currently 1.57% - generally speaking I understand an average yearly return from a market tracking fund is around 7%, so It makes sense, in my view, to put my money to work. Of course I'm green to all of this, but makes sense to me.

Yes and no, averages don't tell you very much - a typical global equity fund would have been down around 30% in March. so comparing a fixed mortgage rate and a volatile equity return doesn't tell you the full story.

[loskie]

my dad died three years ago and 2 weeks before that my maiden aunt. Unfortunate as the circumstances were, I was fortunate to inherit what to me was a lot of money.

Now I'm single with no dependants and in my 40s.
First thing I did was pay off my mortgage, pay 50k in to premium bonds (Ive had about a 1.75% return) and pay a lump into a SIPP (with the benefit of tax relief). I also put the monthly no longer needed mortgage payment into that SIPP too.
I went on a tour of Sri Lanka , extravagant for me.

It's not difficult OP to work it out for yourself, why trust an unknown with handling YOUR money?
There are online platforms and forums that allow YOU to make an informed decision without trusting your money to an unknown person.

[Derek Chevalier]

Oldscottishgit said:

911pleb said:

My mortgage rate is currently 1.57% - generally speaking I understand an average yearly return from a market tracking fund is around 7%, so It makes sense, in my view, to put my money to work. Of course I'm green to all of this, but makes sense to me.

Yes and no, averages don't tell you very much - a typical global equity fund would have been down around 30% in March. so comparing a fixed mortgage rate and a volatile equity return doesn't tell you the full story.

Around 12% for a global (tracker) equity fund in March

[Oldscottishgit]

Derek Chevalier said:

Around 12% for a global (tracker) equity fund in March

You are correct, however between Jan and March, we had:
FTSE = -28%
SP500 = -20%
Eurostoxx50 - 28%
Topix = -22%

Which puts the '7%' average into context!