£80k to invest - but where?

Lauren1986 · 23 July 2017 at 8:44AM

Hi,

First time posting here... I've done a lot of reading of other threads and advice, but think I need some advice of my own now.

Over the last few years, my husband and I have had a couple of chunky inheritances. We haven't really done anything with it but since we had a baby 8 months ago, we realised we really need to get our lives in order. We have about £80k sitting in ISAs and old accounts doing nothing and I'm thinking S&S ISAs may be the way forward.

A bit of background and detail first:
- We have a flat with a mortgage - we have £162k still to go, and a fixed rate mortgage at 2.99% until December 2018. We've made the maximum 10% overpayment his year and have 10% earmarked to overpay at the beginning of next year too. The term of the mortgage is currently around 18 years (I reduced the term with the overpayment).
- We have £20k emergency fund in cash split across 3 current/regular saver accounts paying between 3-5%.
- We have set up a S&S JISA for our son and put in the maximum for the year. I went with VLS 100% equities since its going to be sitting there a long time, I understand that there's more scope to take the risk long term.
- We both have workplace pensions. I don't know the details of my husband's, but I pay in 5% which is matched by my employer.
- Other than mortgage and student loans (graduated 2008), we have no debt.
- I'm on maternity leave at the moment, but when I go back, we're both going to work part-time. I'll do 4 days a week, my husband will do 3, and the remaining childcare will be covered off by childcare vouchers. We'll be able to live comfortably and possibly save a couple of hundred each month so can live within our monthly salaries.

So that leaves everything else!
- £21k in my ISA which I haven't touched for at least 10 years apart from to shuffle it around between the best interest rate accounts
- £18.5k in my husbands ISA which I doubt he's ever touched
- £10k sitting in a Santander 123 account earning literally nothing
- £33k sitting in my husbands Halifax web saver account, again which I doubt is earning any interest and hasn't been touched for several years.

I want us to start investing this and getting our money to work a bit harder for us. I guess we probably want to start saving for retirement. Since we haven't touched the money for the last however many years, I can't see us needing it urgently (the only thing I could possibly see is needing it for would be if we move - however, we live in London and if we were to move, we would be going back up north where property is less expensive). It's really hard to know we're to start though! I don't have the time, knowledge or desire to do it myself, so was thinking of going for something along the lines of Vanguard 60/40 or 80/20 (maybe a mix) but I feel like I haven't investigated the other options well enough - but I don't know where to start!

The other option of course is paying off another chunk of our mortgage when our fix comes to an end next year. Still need to do something with the money in the meantime though.

Loads of information there - can anyone advise or maybe point me towards a good resource for a beginner investor?

letspretendforaminute · 23 July 2017 at 9:24AM

You could practically halve your outstanding mortgage and aim to be mortgage free in 10 years before you're 40 and then be in the envious position of being able to save and invest a larger proportion of your monthly salary.

To match the mortgage rate of 2.99% you'd need either 4% or 5% gross yield, year on year which is unrealistic in our low interest rate environment with every man and his dog chasing yield.

My own circumstances were £125k mortgage and mortgage free by aged 35 and coming up to 40 this year have now managed to save (SIPP) £90k and £15k cash although there is a question mark on this one as I have just had to request a withdrawal as they've moved away from their original principle of P2P and into risky wholesale lending. With regards to individual classes of shares I've also taken a £4,000 hit on Carillion shares in a tesco'esque accounting scandal. I believe there are more profit warnings to come so here I am actually envying your effective 2.99% savings rate, oh to have a mortgage again

letspretendforaminute · 23 July 2017 at 9:27AM

That's £15,000 in Ratesetter

jimjames · 23 July 2017 at 5:36PM

letspretendforaminute wrote: »

You could practically halve your outstanding mortgage and aim to be mortgage free in 10 years before you're 40 and then be in the envious position of being able to save and invest a larger proportion of your monthly salary.

To match the mortgage rate of 2.99% you'd need either 4% or 5% gross yield, year on year which is unrealistic in our low interest rate environment with every man and his dog chasing yield.

Of course it's achievable. Paying down cheap debt instead of investing the money is a way to have less down the line. Investing for retirement is definitely something to and also not to delay. Put it off until you've cleared the mortgage and you've lost the biggest element of compounding.

Lauren1986 wrote: »

- We have set up a S&S JISA for our son and put in the maximum for the year. I went with VLS 100% equities since its going to be sitting there a long time, I understand that there's more scope to take the risk long term.

It's interesting that you've setup a S&S ISA for your son but not for yourself. If you are investing over a similar timescale then surely that's worth doing too? You can transfer existing cash ISAs to S&S or put in the new money directly to a S&S ISA with £20k allowance each year.

As a resource then look at https://www.monevator.com

Thrugelmir · 23 July 2017 at 6:27PM

Lauren1986 wrote: »

The other option of course is paying off another chunk of our mortgage when our fix comes to an end next year. Still need to do something with the money in the meantime though.

Buy some premium bonds. S&S are for the long term. Short term speculation could easily result in a capital loss. While making 1% may not seem great. Better than losing 5%, 10% , 15%........ potentially.

justme111 · 23 July 2017 at 7:49PM

Good position to be in. I enjoy by proxy reading threads like this one

I think your intention of vanguard is the most realistic one. As you do not know about investing you may well do that. Then once /if you learn more about it you can transfer that money/split it. Whether to do it in an ISA or pension is secondary and depends. If any of you are higher rate tax payers than pension

Alice_Holt · 23 July 2017 at 8:23PM

I think you are quite right to make more of that money.
I'd hedge my bets - say
S&S ISA Consider global IT's alongside the LS fund- Bankers? - £20k (transfer from the poor rate Cash ISA holding)
http://www.moneyobserver.com/fund-fact-sheet/The-Bnkrs-IT/ITBNKR
Chunk to pay down the mortgage in 2018 - £40k (hold in premium bonds?)
SIPP Vanguard LS 80% - £5k each (more if currently a high tax payer)
With the balance to boost your emergency / medium term cash fund (I'm cautious!)

That's my opinion, but you will get many others.
There's not a correct solution.
Do what you are most comfortable with - you are already in a good situation.

Lauren1986 · 23 July 2017 at 9:07PM

Thanks for the replies. I think while we COULD put it all onto the mortgage, I don't feel entirely comfortable putting all our eggs in one basket... Perhaps £40-50k onto the mortgage which will make a hefty dent, and then £30-40k invested. I haven't really looked into SIPPs much, but will do a bit of investigating now. Neither of us are higher rate taxpayers (and even less so when we go down to part time!!)

I must admit, I'm quite enjoying this little project for keeping my brain sharp and learning through my mat leave!

bigadaj · 23 July 2017 at 10:56PM

letspretendforaminute wrote: »

That's £15,000 in Ratesetter

Simple question, why?

letspretendforaminute · 24 July 2017 at 10:21AM

The amount held with ratesetter isn't usually that high but I've taken my eye off the ball and allowed automatic monthly payments to build whereas before I'd sweep the account regularly for SIPP or tax purposes. I got preoccupied with other things and got lazy. Not a huge sum of money for me at this moment in time.

stehouk · 28 July 2017 at 4:57PM

ratesetter rates are rising as ppl sell i'm staying and reaping the rewards now as re-investment is now at 5.2 in 5yr market and rising.

£80k to invest - but where?

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