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    • Davethepioneer
    • By Davethepioneer 15th Sep 17, 11:08 AM
    • 19Posts
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    • #1
    • 15th Sep 17, 11:08 AM
    Help 15th Sep 17 at 11:08 AM
    Good Morning.

    This is my first time posting and I'm not sure if I have this in the right category so I shall apologise in advance if not.

    So I'm 41 years old, married and have two young children and I own a very small business that I run from home, it's been running 12 month and is not running st a profit yet but will be. My wife works full time and our house is currently valued at £240,000 - £250,000

    Anyway I'm about to receive some money in the region of £600,000 and £700,000 which basically has to last me the rest of my life. So my mortgage is with the Halifax and because of the Bank of England base rate I'm hardly paying any interest. I can pay off as much of the mortgage as I want without any fees so if I wish to pay £10,000 of I can and there are no fees or penalties etc.

    Anyway as it stands I owe at the last mortgage statement £118,000 and I have a loan which I got for my extension and that is £21,000 I have £2000 on my credit card and that's pretty much it apart from my car which I pay £350 per month for and then after 3 years I can pay the remaining balance or use the vehicle to trade in or hand it back and walk away.

    So in my head when I receive this money the best thing to do would be to pay the mortgage and loan and credit card off then I'm own nothing to nobody.

    If I worked of getting the minimum which would be £600,000 then that leaves me with £459,000 we would want to put £10,000 away to finish our house off (fitted bedrooms, four of them) and £10,000 away for a family holiday to Florida when my two young boys are older, currently 8 and 5.

    As you can see it still leave a good chunk of money, we think we would need to open several bank accounts so that we are covered up to the £85,000 but we are not sure what to do with it once we have distributed it into the bank accounts. I say I'm doing this because I bank with HSBC and I asked them if I could open several accounts to put the money into and they said yes but as an individual I'm only covered up to £85,000 or £170,000 joint account.

    We have briefly spoken to an adviser who was talking about isa and children's pensions but in all fairness it went over my head. I know I can put £20,000 in an USA per tax year but it still leaves a lot of money lying around.

    I suppose my question is this, I need the money to work for me, I'm not expecting or wanting a great return of it but enough so that my pot doesn't dwindle to nothing so I'm after any ideas that some of you may have. We have briefly spoken about buying a property and renting it out and managing it ourselves, we've head about the Santander 123 account I think it was called and that's pretty much it. We don't really want very high risk and I suppose we are looking at long term investment as we will put aside from the £600,000 a certain amount as a rainy day fund. We could at worst case scenario live off my wife's wages as we would only have utility bills to pay and my car. We go away for 3 weeks once a year, we like to eat out but I'm only talking Nando's and TGI's nothing to extravagant. We are a young family and we obviously want to do the best for our boys and ourselves.

    Any advice or ideas would be greatly appreciated
Page 2
    • kidmugsy
    • By kidmugsy 16th Sep 17, 12:24 PM
    • 9,603 Posts
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    However, you are dead right that you will not have a claim against any of the money in your wife's name, and I can understand you being cautious in that regard.
    Originally posted by fiisch
    Exactly wrong, at least in England. A divorce court will split up all assets between husband and wife in whatever way it thinks fit. With two young children, normally the wife keeps the children and will get the bulk of the assets. So the OP might as well get the tax advantage of contributing to his wife's pension because if he keeps the money in his own name it'll still be handed over to the wife.

    They are more rational in Scotland, but even there the existence of the two young children would weigh heavy.
    • Jenniefour
    • By Jenniefour 16th Sep 17, 12:27 PM
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    Now I'm not saying it's going to happen but both my wife and me have been in failed realationships before. I'm not saying it's going to happen with my wife and myself but you just never know so why would I put money into her pension when if something did happen which touch wood it doesn't that would be money lost.
    Dave, can I put a slightly different perspective on this. In the (hopefully unlikely) event that your marriage were to end then all the more reason to make this money work hard for you. Just in case.

    I also have her brother who is hinting at me to give him money so he is mortgage free. I've taken risks with my life to get this money and I just don't want to be stupid with it
    Resist all attempts by anyone to part you from some of this money, or borrow it, including your brother-in-law. Stick to your very sensible aim of making the money work to secure a good future for you and your immediate family - wife and children. You might want to consider having a conversation with your wife about who gets to know about this money, you can do without having to deal with this kind of nonsense. As you have said, you need time to think about what to do with the money.
    • kidmugsy
    • By kidmugsy 16th Sep 17, 12:28 PM
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    I also have her brother who is hinting at me to give him money so he is mortgage free. I've taken risks with my life to get this money and I just don't want to be stupid with it
    Originally posted by Davethepioneer
    Suggest to the brother that he take a running jump. I'm afraid that once people know you have a large capital sum chancers will try it on with you. That's why everyone who can should keep it a secret.
    • Davethepioneer
    • By Davethepioneer 17th Sep 17, 3:12 PM
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    To be clear if we were to split I'd be the one having the boys as I'm the one who's home but I doubt it would come to any of that lol as for the brother in law I have no intention and either does the wife of lending the money to him. What are people's thoughts on buying a property. For example I could buy and old terrist house for around £85,000 -£100,000 or modern 1&2 bedroom apartments same area for £100,000 to £130,000
    • bowlhead99
    • By bowlhead99 17th Sep 17, 3:52 PM
    • 6,690 Posts
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    What are people's thoughts on buying a property.
    Originally posted by Davethepioneer
    Presumably you have no experience being a landlord? In order to make money in the landlord game you need to treat it as a second business alongside your other one, with a proper business plan etc.

    To be competitive with other "rival" landlords in terms of getting a decent return for your risks and being able to charge a competitive rent, you would need to have multiple properties so your eggs aren't in one basket, and use mortgage finance to help you buy them. As well as maintenance and renovation costs (can be a lot when a tenant trashes the place) you would have agency costs and property management costs if you're not going to do everything totally yourself. And it's pretty inefficient tax-wise (compared to you and wife and kids using the full extent of ISA and pension allowances every year.

    Whereas, if your current place is not as big as it might need to be for your family as the kids get older, investing in your own house is quite tax efficient as you don't have any rental income to be taxed or any 'capital gains' tax to pay if you sell in future.

    You mentioned early on that you were thinking that if something happens to the relationship, any money you put into your wife's pension would be "lost". But presumably when you split, the default position is she gets half your stuff and you get half hers. Pensions would be included in that analysis.

    For example I could buy and old terrist house for around £85,000 -£100,000
    As someone ex-army, you should know more than most that it might be unwise to buy an old terrorist property.

    Last edited by bowlhead99; Yesterday at 5:54 AM.
    • xylophone
    • By xylophone 17th Sep 17, 4:03 PM
    • 22,864 Posts
    • 13,224 Thanks
    You do not mention the source of the money but it does not appear to be an inheritance.

    Have you fully allowed for any tax that may be due?

    You can hold the whole amount safely in NS&I Income bonds while you consider your options.

    I think it would be well worth considering paying off your mortgage and loans so as to be debt free.

    You say that you own a business - it would be a good idea to explore the possibility of starting a pension. may be worth a read.

    Had you considered a JISA for each of the children?

    Consider opening stocks and shares ISAs for you and your wife.

    And in your position, I would avoid making any gifts/loans to the BIL.
    • LHW99
    • By LHW99 17th Sep 17, 4:54 PM
    • 853 Posts
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    Make sure any advisor your see is truly independent, don't ever go to a company that cold calls you.
    The main thing with your advisor is to be sure they can properly explain their approach to you in a way you can understand, and that they can discuss it without making you feel inferior. Some can, some can't!
    • Davethepioneer
    • By Davethepioneer 17th Sep 17, 6:45 PM
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    The money is an insurance payout from the US department of labour. I want to diversifie with the money so it would be in ISA and JISA, LISA, stocks and shares, SIPP, property and of course paying my mortgage off. The house is 4 bedroom detached and is big enough for my wife two sons and myself, we've already extended the property so it's more than adequate. From what everyone has mentioned it would seem that I will be in a good position. I don't need a lot of money to actually live on, my wife gets a decent wage and she normally covers the holiday payment so if putting this money into several things brings a little back then that would be perfect. Everything I'm looking at is long term
    • Davethepioneer
    • By Davethepioneer 17th Sep 17, 6:48 PM
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    Terraced not Terrist ��
    • kidmugsy
    • By kidmugsy 17th Sep 17, 7:28 PM
    • 9,603 Posts
    • 6,359 Thanks
    I want to diversifie with the money so it would be in ... property ...
    Originally posted by Davethepioneer
    It might be well worth your while to find an accountant with the expertise to advise you about the advantages of buying and running your BTLs within a limited company, and the balance of advantage in mortgaging rather than buying entirely with cash.
    • Davethepioneer
    • By Davethepioneer 17th Sep 17, 10:02 PM
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    I shall have a word with my accountant and see what he says
    • Davethepioneer
    • By Davethepioneer 18th Sep 17, 2:14 PM
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    Money pot £600,000

    Pay mortgage £118,000
    Pay loan £21,000
    Credit Card £2000

    That leaves me debt free apart from the £350 I pay each month for my car, I'm due to trade it in for another one or hand back or pay the final balance of £11,000 but I'm thinking of trading in for a 2018 plate when the time comes and paying monthly again as the car OTR is £36,000 but that's a different story.

    So with the above paid off that leaves me with £459,000 which I should put into NS&I

    So advice on here says I can put £20,000 in an ISA for me and the same in an ISA for my wife this tax year and every other tax year if I wanted.

    I can also put £4,128 in a JISA for both my boys aged 8 & 5 is this per tax year also?

    Can I also open a LISA in conjunction with the above or are they the same? According to google I can put £4,000 per tax year into this.

    Pension wise you advise to put some into my wife's pension, now would that be her company pension to which her employer matches what she puts in but I doubt they would match a huge amount or do you mean setting up a private pension for her and one for me? Do I pay a tax on that?

    You say I can put money every year in ISA so do you mean leaving the money in NS&I and then every year taking the amount needed and putting it in or taking it from somewhere else.

    I'm so sorry for all the questions
    • atush
    • By atush 18th Sep 17, 2:59 PM
    • 16,239 Posts
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    Ok this is going to sound bad but I don't mean it to. Yes my priority is my family and making sure we are all going to be financially secure. Now I'm not saying it's going to happen but both my wife and me have been in failed realationships before. I'm not saying it's going to happen with my wife and myself but you just never know so why would I put money into her pension when if something did happen which touch wood it doesn't that would be money lost. I also have her brother who is hinting at me to give him money so he is mortgage free. I've taken risks with my life to get this money and I just don't want to be stupid with it
    Originally posted by Davethepioneer
    If you and your wife split she gets half anyway. So why not save tax instead of worring about splitting up?
    • atush
    • By atush 18th Sep 17, 3:16 PM
    • 16,239 Posts
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    Pay off your loans and CCs.

    open a PP/Sipp for you and your wife- if she has a pension already top it up to the max. Her entire salary or 40K whichever is larger. For 40K you put in 32K and it gets Tax relief on top.

    If you have a limited company, pay through that for your pension. If not, ask your acct about the advantages of becoming one.

    BTL is a business. Just one property is not a good business. BTL is now heavily taxed, so unless you have skills in the business I dont rec it.

    S&S isas for both of you, and Lisas if you want, and Jisas for the kids. Vanguard was mentioned, but you could at your age consider the 60/40 instead of the 40/60. Or preservation of capital ITs as described above.

    6-12 months outgoings in cash, saved at the highest interest rate you can find (Santander etc).

    So you already invedt in property (your own). So you'll have cash pension, S&S isas.

    Do you need a new flash car every few years? Could you consider keeping it when the lease is up? Or handing it back and buying late model used (ie 2017/2016) for cash?

    Your kids are already old enough for florida- book a holiday for next year. No point in waiting if you have the money.

    Consider spliting the rest of yoru money into tranches for cash, investing and pension for the upcoming years.
    • Davethepioneer
    • By Davethepioneer 18th Sep 17, 3:42 PM
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    I'm not worried about splitting up, it was just a general question. The car isn't flash to be honest. The boys, well the young one we feel isn't old enough yet due to his height he would be restricted on most things and Florida isn't going anywhere. I'm not a Ltd company but will see what my accountant says. ISA I understand, what I wanted to know is where do I keep the £20,000 that I want to put in next tax year, is it in the NS&I or invested somewhere for the year then taken out
    • Eco Miser
    • By Eco Miser 18th Sep 17, 4:23 PM
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    Eco Miser
    LISAs are for people under 40 at time of first payment, so not for you, but maybe for your wife (I can't see her age mentioned). The £4000 that goes in a LISA is deducted from what you can put in an S&S (or cash or IF) ISA, so only £16000 left for that (but LISAs can hold S&S so there's no disadvantage there, and a massive advantage if held until 60 (and a small disadvantage if cashed in earlier).
    All forms of ISA are repeatable each year.

    The £20000 you're going to put in an ISA in April 2018, probably leave in NS&I. The sums you're going to put in ISAs in subsequent years, invest in the same underlying funds in an unwrapped account now.

    The purpose of the suggestions of NS&I is to immediately put your large lump sum somewhere where it it safe from bank collapse and will earn some interest, until such time as you have decided exactly what to do with it. You can withdraw bits as you find a better place to put some, whether that is a slightly higher interest savings account (but no more than the FSCS compensation limit per person per institution except NS&I which has its own guarantee), or investment funds, or paying off debt, or buying a car, or opening high interest current accounts with a few thousand.
    Eco Miser
    Saving money for well over half a century
  • jamesd
    Some options to consider in the peer to peer lending area.

    With protection fund:

    1. Unbolted. Secured on pawned goods, with gold-backed loans paying 8% a year, and other pawned items like high value watches, silver and such paying 10.5%. Gold backed by insurance against a drop in the gold price and the other ones by a provision fund. Also some without either protection. You could probably invest at a rate of about £500-800 a week to a maximum of about £13,000-£21,000 because the normal loan term is six months until repayment, leaving 26 weeks worth the effective maximum. You'd probably get about 10% overall based on the mixture of loans between the types. Pretty much automatic lending, just set up a limit for autoinvest and feed more money in as it gets lent out.

    2. Lending Works. About 5% with protection fund.

    3. RateSetter. About 3.5% for the rolling market (rapid access) product, with protection fund.

    Without protection fund, secured lending instead:

    4. BondMason. About 7% after charges. They manage investments at lots of peer to peer platforms for you, a convenient way of diversifying among lots of places. No overall protection fund but some ways they invest may have one.

    5. Ablrate. 10-15% for loans secured on property of various sorts, from houses through business buildings, land and machinery. Assume perhaps 2% loss after sale of security for net return before tax of about 10-11%. Has an ISA. No protection fund, secured lending instead. Stick to £250-500 per loan until you know enough to do more by your own decision.

    6. MoneyThing. 10-12% for loans secured on buildings and land, rarely other things. Assume about 2% loss to bad debt after security, so about 10% net before tax. ISA planned, not available yet. No protection fund, secured lending instead. Stick to £250-500 per loan until you know enough to do more by your own decision.

    7. Collateral. 10-15% for loans mostly secured on land and buildings, though lots are property development loans that are fairly high risk compared to other P2P. Sometimes loans secured on pawned items at lower rates, very high demand for them. Maybe 9% returns after bad debt before tax. No protection fund, secured lending instead. Stick to £250-500 per loan until you know enough to do more by your own decision.

    The common factors are that none has FSCS protection and all pay more than any mortgage you have is likely to be costing you. You might consider a split of this sort between them:

    1. £20k, 10% expected return
    2. £20k, 5% expected return
    3. £50k, 3.5% expected return
    4. £50k, 7% expected return
    5. £20k, 10% expected return
    6. £20k, 10% expected return
    7. £20k, 9% expected return

    On that £200,000 you'd expect an average overall return of about 7.025% before tax, £14,050 a year. For £100,000 keep 1 the same, halve the rest except take 5k more from 4 and 5 to give to 1 and keep that at £20k.

    The splits are based on relative risk levels and platform history as well as effort level. Easy diversification is why Bond Mason gets £50k, long history and the protection fund why RateSetter does. With that spread of seven P2P platforms you aren't going to have too much exposure to any one platform.
    Last edited by jamesd; 18-09-2017 at 6:29 PM.
    • greenglide
    • By greenglide 18th Sep 17, 5:37 PM
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    where do I keep the £20,000 that I want to put in next tax year
    You could invest it in the same funds as the ISA in a unwrapped account and the put it into the ISA next April using a "bed and ISA" operation which most platforms will do at a lower charge than a normal sell and buy.

    You are unlikely to incur capital gains or dividend tax during that period unless you already have unwrapped investments.

    Many other people might differ in your definition of a £36,000 car as "not flash" but horses for courses!
    Last edited by greenglide; 18-09-2017 at 5:39 PM. Reason: Typo
    • Davethepioneer
    • By Davethepioneer 18th Sep 17, 5:37 PM
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    Hi thanks for that I've just been looking at LISA which would not be suitable as she has just turned 40. I'm getting there slowly with the information that is being given, I do apologise for all the questions, when someone puts an answer in easy to understand lingofor someone who doesn't follow these interesting things about money it takes a while to sink in.

    I now know I can put £20,000 in an isa and so can my wife each tax year. I can also put in an amount to JISA for each of my boys. I need to look into SIPP for myself and my wife and it would be fair to say that paying the mortgage, loan and CC off would be a good idea. I know I can split between cash isa or SS isa but I can't do no more than £20,000 between them. This still leaves a huge chunk of money so stocks and shares look the way to go but how much? Is it something you can DIY or do I have to pay the guy who came to see me.
    • Davethepioneer
    • By Davethepioneer 18th Sep 17, 5:38 PM
    • 19 Posts
    • 0 Thanks
    Sorry you posted stuff as I was writing, will read now ��
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