Money and morgages and stuff
Discussion
Right - semi serious topic here.
Being that there are some seriously smart financial types out there, I thought I'd try and pick some brains if at all possible. Free advice and all that.
Forgive me if I'm intentionally vague.
I am in the fortunate position of having a not insignificant sum of money to invest. Now - I'm looking around at various options, and I'm trying to determine which is most tax efficient.
Some details:
The sum is of the order of 5 figures.
I am a top rate tax payer.
I have a morgage (interest only) that is larger than the sum to invest.
I already have a pension and other investments (endowerment to pay off the morgage, various other small scale bits and bobs).
My options as I see them:
1) Sink the sum into the morgage and wipe some of it out.
2) Stick it in a long term savings account (get about 5% before tax)
3) Offset it against the morgage (effectively tax free interest and I still have access should I need it)
4) Take some of it and use it while spending some of my salary on additional pension contributions (tax free).
5) Buy a porsche
6) Build the fastest GT-Four in the country.
7) Invest it elsewhere (stock market I guess)
I think 5 and 6 are out. ;)
I'm not sure I have the nouse or balls for 7.
I'm leaning towards 2) until it's time to remorgage, and then offsetting the sum against the morgage. This means I still have access should I require money fast, but I'm not paying large amounts of tax on the interest earnt in a savings account (as there isn't any interest being earnt, just less being paid on a monthly basis).
Have I missed any options? Any advice is more than welcome. Feel free to Email rather than post, as it is a sensitive subject.
Being that there are some seriously smart financial types out there, I thought I'd try and pick some brains if at all possible. Free advice and all that.
Forgive me if I'm intentionally vague.
I am in the fortunate position of having a not insignificant sum of money to invest. Now - I'm looking around at various options, and I'm trying to determine which is most tax efficient.
Some details:
The sum is of the order of 5 figures.
I am a top rate tax payer.
I have a morgage (interest only) that is larger than the sum to invest.
I already have a pension and other investments (endowerment to pay off the morgage, various other small scale bits and bobs).
My options as I see them:
1) Sink the sum into the morgage and wipe some of it out.
2) Stick it in a long term savings account (get about 5% before tax)
3) Offset it against the morgage (effectively tax free interest and I still have access should I need it)
4) Take some of it and use it while spending some of my salary on additional pension contributions (tax free).
5) Buy a porsche
6) Build the fastest GT-Four in the country.
7) Invest it elsewhere (stock market I guess)
I think 5 and 6 are out. ;)
I'm not sure I have the nouse or balls for 7.
I'm leaning towards 2) until it's time to remorgage, and then offsetting the sum against the morgage. This means I still have access should I require money fast, but I'm not paying large amounts of tax on the interest earnt in a savings account (as there isn't any interest being earnt, just less being paid on a monthly basis).
Have I missed any options? Any advice is more than welcome. Feel free to Email rather than post, as it is a sensitive subject.
All comes down to what you want. If you want the small grin associated with a bit more financial security then the offset-still-easily-accessible route is probably best.
If you want a silly grin so large you have to wear a headscarf to keep the top of your head on, buy a stupidly fast car and go hoon!
If you want a silly grin so large you have to wear a headscarf to keep the top of your head on, buy a stupidly fast car and go hoon!
Or perhaps I could draw your attention to this thread...
www.pistonheads.com/gassing/topic.asp?f=13&h=&t=191698
www.pistonheads.com/gassing/topic.asp?f=13&h=&t=191698
Thanks for the suggestions.
Second house on buy to let is on the agenda - but I don't actually need any money to do that (95% buy to let morgage).
I'd not heard of a SIPP until mentioned, so particular thanks for bringing it to my attention. Will do some reading tomorrow.
Sad, but might well be the best growth commodity I can think of. Where can one store several thousand gallons of high octane fuel safely?
Of course, I'd be tempted to sample my stock, and that way bankruptsy lies.
Second house on buy to let is on the agenda - but I don't actually need any money to do that (95% buy to let morgage).
I'd not heard of a SIPP until mentioned, so particular thanks for bringing it to my attention. Will do some reading tomorrow.
Kinky said:
Yeah - Petrol. Double your money in a few weeks
Sad, but might well be the best growth commodity I can think of. Where can one store several thousand gallons of high octane fuel safely?
Of course, I'd be tempted to sample my stock, and that way bankruptsy lies.
My advice would be to do a mix of 1,& 3 with perhaps a bit of 2.
IIRC you will have to get around 11% interest gross to beat paying off a mortgage as you are a higher rate tax payer. On the other hand it's handy to have the cash if you need it. If you had a flexible offset mortgage then you can draw money off the mortgage account should you ever need it.
(I'm a great fan of offset mortgages, if you hadn't already guessed; it has meant we are debt-free 8 years earlier than we originally planned - yippee!!)
>> Edited by muley on Thursday 11th August 08:51
IIRC you will have to get around 11% interest gross to beat paying off a mortgage as you are a higher rate tax payer. On the other hand it's handy to have the cash if you need it. If you had a flexible offset mortgage then you can draw money off the mortgage account should you ever need it.
(I'm a great fan of offset mortgages, if you hadn't already guessed; it has meant we are debt-free 8 years earlier than we originally planned - yippee!!)
>> Edited by muley on Thursday 11th August 08:51
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