What to do with a spare £1000 per month ?

[windsorrob]

Here's the dilemma. I've generally got around £1000 ish spare every month after all expenses and living etc... and have been sticking it against my current mortgage. Not exicting I know, but effectively earning 5 ish % and no tax.

Now getting to a point that I want a project or something more exiting and potentially financially rewarding to do with it, before I blow it on another car or the like !!!

So - any views ? Any ideas what to do with a spare £1k per month to make some money ?

My thoughts are :

Get a buy to let - not going to matter that much if I can't rent it for the odd month but potential hassle. Upside is hopefully good return over the next few years.

Another theme on the above - buy some cheap studenty kind of flat or flats ?

Carry on paying my existing mort. About 2 years to go.

Buy property purely to renovate and sell - think there's too may people on this though ?

Move house and rent mine out - saves cap gains if I sell mine within 3 years, but, restricts what I can buy to £220k ish, which isn't that good.

Move house full stop to a more expensive prop.

Any other busines ideas ? I could put £20k-£30k cash as well. Have a fulltime job, so a business would need to work around this.

Overall aim is to generate cash / value over a five year period because the houses I like are £400k plus and I can only comfortably go to £275k ish....

Problem I'm trying to avoid is in 5 years time the £450k house will prob be £600k which again puts it out of reach. I need to do something to generate some value fairly quickly.

Any inspriration welcomed. !!!!!

[leosayer]

Get an ISA and invest in tracker funds.

[J_S_G]

leosayer said:

Get an ISA

leosayer said:

and invest in tracker funds.

Would pick some of the long term best performing funds... I would've said Fidelity Special Situations if you're happy to tie your money up for a few years (as it could fluctuate a bit), but now Anthony Bolton's leaving that fund, it's a little less certain.

Buy to let you'll probably need to use a chunk of cash up front to pay a decent (15%) deposit on it, and bear in mind that anything you earn from rental income beyond the interest repayments is taxable (i.e. if it's a repayment mortgage, it'll cost you unless you charge more), and you're technically open to tax on the sale of the property at the end of it, too. Possibly not the best time to do this, but if you've got £20-30k sitting around not making you much, you could probably do worse. Would use the £1k a month for investments, though, unless you can come up with a truly cunning business plan.

On average, getting approx. a 15% PA return on the market, and that includes the hell that was the first couple of years of the millennium. Those aren't particularly high risk funds, either.

[erijaso]

I need to find a better paid job, I'm usually £1k overdrawn every month!!!

[Stephanie Plum]

Play the share market - properly!! By that I mean do your research, monitor everything every single day and be prepared to buy and sell quickly - can turn into a full time occupation if you're not careful.

If you haven't got the time get an ISA.....

[Tyre Smoke]

Buy property or land.

You will never lose money in the medium to long term.

[J_S_G]

Tyre Smoke said:

Buy property or land.

You will never lose money in the medium to long term.

If you're leveraging the money to get a mortgage, etc. where income from it'll cancel out the interest so you're getting a return on borrowed money, great. If you're just "buying", then the stock market over a long enough period has always provided a higher return on investment...

[clubsport]

AS this is sort of a car forum,,,,why not "invest" in a new sportscar and have some fun!

[leosayer]

J_S_G said:

leosayer said:

Get an ISA

leosayer said:

and invest in tracker funds.

Would pick some of the long term best performing funds...

Fine if you're happy to spend time reading up on this and learning the business. I do, but most people won't and a tracker fund ensures that they don't need to bother.

It is surprising how few fund managers can consistently outperform the market.

[J_S_G]

leosayer said:

J_S_G said:

leosayer said:

Get an ISA

leosayer said:

and invest in tracker funds.

Would pick some of the long term best performing funds...

Fine if you're happy to spend time reading up on this and learning the business. I do, but most people won't and a tracker fund ensures that they don't need to bother.

It is surprising how few fund managers can consistently outperform the market.

An hour on Fidelity's website should be all it takes to find a historically strong fund that's well respected, and seriously outperforms the market. If you just dive in to even an index tracker, you could get stung badly with annual charges, initial charges, etc. Plus you've got to pick which index to track. The simple choice between the DJIA and NASDAQ over the last few years would see the difference between a healthy profit and financial suicide!

If you're investing £12k PA for, say, 5 years, spending a few hours finding a suitable fund should be worth it considering you're tying up £60k.

[windsorrob]

Thanks for the advice so far ! No crazy pyramid schemes or begging letters as yet. I'm almost dissapointed.

On the why not buy a sports car theme, I'm putting up with what I have in the short term to hopefully, get in a position to get what I want in the longer, ok, meduim term.
As the dream motor is a Zonda, could be a while ! But hey, it's an aspiration.

On the house front anybody know how this works :

I buy a another house and rent it out, continuing to live in mine.

I then sell mine, in say 2 years time and move into the other house. I live there for a year and then want to sell it.

How do I stand on Cap gains tax ? I've read that this reduces the CGT I would pay on the gain in the second house, but can't quite fathom the details. Going to get in t0ouch with an accountant next week to go through afew questions, but any info in the meantime appreciated.

[srebbe64]

What about 50% on an ISA and 50% buying 500 premium bonds per month. I bought 30,000 at the begining of this year and I'm "well up" on what I would have earned leaving money in the bank (I realise that's just luck, but it's a little more interesting!)

[J_S_G]

srebbe64 said:

What about 50% on an ISA and 50% buying 500 premium bonds per month. I bought 30,000 at the begining of this year and I'm "well up" on what I would have earned leaving money in the bank (I realise that's just luck, but it's a little more interesting!)

Depends whether you want "fun" with the money (with utter safety, and some return), or the best chances of maximising the ROI in the long term, but a little more stress/less enjoyment (if you're not a lover of the markets).

£999 invested and £1 on the lottery?

[sam_r]

srebbe64 said:

What about 50% on an ISA and 50% buying 500 premium bonds per month. I bought 30,000 at the begining of this year and I'm "well up" on what I would have earned leaving money in the bank (I realise that's just luck, but it's a little more interesting!)

Agreed, had a much better return on premium bonds than any other small risk investment.

[M400 NBL]

windsorrob said:

Thanks for the advice so far ! No crazy pyramid schemes or begging letters as yet. I'm almost dissapointed.

On the why not buy a sports car theme, I'm putting up with what I have in the short term to hopefully, get in a position to get what I want in the longer, ok, meduim term.
As the dream motor is a Zonda, could be a while ! But hey, it's an aspiration.

On the house front anybody know how this works :

I buy a another house and rent it out, continuing to live in mine.

I then sell mine, in say 2 years time and move into the other house. I live there for a year and then want to sell it.

How do I stand on Cap gains tax ? I've read that this reduces the CGT I would pay on the gain in the second house, but can't quite fathom the details. Going to get in t0ouch with an accountant next week to go through afew questions, but any info in the meantime appreciated.

I'm doing exactly that, moving into my btl next year having rented it out for 2 years. There is an allowance of £40k (PPR) if it becomes your principle residence - but you cannot be seen to be moving in just to make a big dent in cgt. This is seen as tax evasion. There is no rule that I know of but if you lived there for a year this should be sufficient to keep the taxman off your back.

You are entitled to an annula exemption, currently £8800 so in all you should be tax exempt. You can get excellent advise on www.taxationweb.co.uk/forum ut you will have to register. It's free and i've never had any hassle. You can receive replies direct to your e-mail address to.

One more thing. Having moved from your place to your btl, you can then rent that out for up to 3 years before being liable for cgt.

If you go down the btl road, do your homework. It's probably not worth it if you don't make a 6% yield or you don't make a significant capital gains. But it is possible so don't rule it out. Good luck..... by the way, did you ever live in Windsor

[windsorrob]

No - never lived in Windsor, just worked there a lot ! Could only afford a shoe box in that neck of the woods.

thanks for the tax tips....

[M400 NBL]

windsorrob said:

No - never lived in Windsor, just worked there a lot ! Could only afford a shoe box in that neck of the woods.

thanks for the tax tips....

You're welcome

[rich25]

Windsorrob, YHM

[jacko lah]

Incidently that £1000 is about what me and the wife are DOWN per month due to her giving up work due to CHronic Fatique Syndrome (ME)

Strangely we actually have more money left over at the end of the month. Mind you I now take a flask of coffee to work and sandwiches and she only buys things with Value in the reduced section at Tesco.

The £35K I have invested from an inheritance is spread across high and low risk but I like the £6K I have in a split traker with the Britania - 7% on £2 for one year and the Rest Tracking the FTSE 100 at 75% of the Rise (If that makes sence) I like it cause I get my £2k back as £2140 and get to reinvest it again. £5K went to paying off the Loft Conversion Morgage (I could pay off the whole mortgage but It's fixed for 8 years at 4.16%)

[Racingdude009]

Problem is ISA allowances are pretty small would suggest if I was in that position using up full ISA allowance then picking up some blue chip stocks things like Sainsbury's, Tesco's and banks