How to make the most of a 50k gift

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  • kidmugsy
    kidmugsy Posts: 12,709
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    Do you pay higher rate income tax?
    Free the dunston one next time too.
  • misja
    misja Posts: 8 Forumite
    No, I'm on basic rate
  • Audaxer
    Audaxer Posts: 3,506
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    misja wrote: »
    I surmised myself that a flat might bring the biggest returns, being that is essentially mostly paid for by someone else, a mortgage covered by rent. We were thinking modestly, just as a way of locking away capital until the kids are at university.

    Investing in stocks and shares do interest me but honestly I'm not sure I have the time for it.

    Globally diverse tracker funds sound interesting, what are they?
    A buy to let flat is likely to take up more of your time and be more risky than investing in stocks and shares. Globally diverse low cost multi asset funds are a good place to start. One example you could have a look at are Vanguard LifeStrategy funds which are very popular on this forum, and come with different percentages of equities and bonds to suit your risk level. You can also learn a lot about starting investing on sites like Monevator.
  • Robin9
    Robin9 Posts: 12,055
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    Does your wife have a pension ?
    Never pay on an estimated bill
  • misja
    misja Posts: 8 Forumite
    No, Robin9 not yet.

    Audaxer, that's an interesting pov. Have you had experience with such things?

    If I was to place a 25% deposit into a flat and sell it 20 years later with rent having covered the mortgage, its value would have hopefully grown with inflation, meaning I've made an asset from just a deposit.

    This is my current train of thought, although I will definitely check out the Vanguard option too.
  • Audaxer
    Audaxer Posts: 3,506
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    misja wrote: »
    Audaxer, that's an interesting pov. Have you had experience with such things?
    Yes, I've learned a lot through this forum, Monevator and other such sites in the last year. I'm retired but have just started investing seriously in the past year as I was getting poor returns from Cash ISAs.

    There will be equity crashes when the equity part of your investments could fall by up to 50%, but if you have 60% equities and 40% bonds that is a 30% drop overall. The loss only crystallises if you panic and sell when you see the value of your investments falling. If you stay the course, the investments should recover and in the long term your investments will give you better returns than holding it as cash savings, which will depreciate in value due to inflation.

    You may do better investing in a buy to let, but you may not, and you could have problems with tenants, repairs, falling house prices etc.
  • TBC15
    TBC15 Posts: 1,446
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    misja wrote: »
    No, Robin9 not yet.

    Audaxer, that's an interesting pov. Have you had experience with such things?

    If I was to place a 25% deposit into a flat and sell it 20 years later with rent having covered the mortgage, its value would have hopefully grown with inflation, meaning I've made an asset from just a deposit.

    This is my current train of thought, although I will definitely check out the Vanguard option too.

    You will get hammered for capital gains tax.
  • misja
    misja Posts: 8 Forumite
    Well if the rule is to spread the risk, then perhaps a combination of both is best.

    Any links of good posts for vanguard beginners?

    Thanks!
  • Thrugelmir
    Thrugelmir Posts: 89,546
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    misja wrote: »
    If I was to place a 25% deposit into a flat and sell it 20 years later with rent having covered the mortgage, its value would have hopefully grown with inflation, meaning I've made an asset from just a deposit.

    Sounds easy in principle. Trouble is the reality isn't for many people. Nor does the value of property have any correlation to inflation. Remember you'll be running a business. Tenants come in all kinds.
  • badger09
    badger09 Posts: 11,128
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    misja wrote: »
    Well if the rule is to spread the risk, then perhaps a combination of both is best.

    Any links of good posts for vanguard beginners?

    Thanks!

    There are lots of threads on here discussing Vanguard funds, passive v active investing etc. Just have a read around.

    This is not a bad place to start for an explanation of the basics of investing for a novice.

    http://monevator.com/category/investing/passive-investing-investing/
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