Where do we start?

Legacy_user

DH aged 49 is due to retire on 31st March with a generous payoff and immediate pension from his employer. DH is 40% tax payer and will still be 09/10 (as the payoff will be received in that tax year) though probably not after that. BTW I work too and pay tax at 20%.

We intend to pay off what is left on our credit cards, part repay our mortgage (currently 3.17% interest only), have a good holiday and invest the rest which will probably be about £85000.

With the recent reductions in the mortgage rate we have been fortunate to be able to overpay each month but that will have to stop when he retires until he gets a job. Part of the mortgage was equity release to buy a property in Germany.

We could pay off the whole mortgage but with the property in Germany I think we need to have some outgoings to set against the rental income to avoid having to pay tax on the property income.

With all this happening I can't quite work out what are our best options regards the £85000.

Obviously Cash ISA's are our first port of call but what should we consider after that?
Would we be better off paying off the mortgage and if so should we wait a year until DH is no longer a higher rate taxpayer?
If we should just invest then what would be the safest (if there is such a thing anymore) place to put the money?

Please correct me If I'm thinking about this the wrong way I really want to get this right and avoid wasting/losing the money he has worked hard for.

a7man

If you really want to get it right and because it is quite a large sum of money that obviously means a lot to you, I would see an IFA as the 'advice' on here isnt really good enough for your situation.

There will likely be a combination of equities, cash, commodities etc. to spread the risk, beat inflation and also produce some growth or income depending on what is required. But if you want to keep it simple then a high interest account with one of the banks would be your first port of call, however with the interest rates so low right now its not very attractive, especially with your husband paying 40% tax.

The first thing to do is use both your full ISA allowances of £7200 for the year, leaving roughly 70k. Paying off as much of the mortgage as possible is also a good idea.

arsenalboy

As previous poster states, your situation is not straight forward.

But my advice would be that if you can lock money away for more than a year then you can still fix at circa 4.5%. You will be earning more than you are paying on mortgage by a small margin even after taking tax on savings into account. Savings should be in your name as your tax rate is lower than your husbands.
It is also my opinion that the government will do something very soon for savers on the tax side to reduce effect of falling interest rates.

Having said all this you do need advice from somebody who has complete details of your finances.

System

Thanks a7man and arsenalboy.

DH and I do have an appointment in January to see a Financial advisor (arranged through his employer but independant) but bar the questions I've asked on my post here I have no idea what else to consider.
DH usually leaves all this to me and this site has been such a help to us financially since I joined.

opinions4u

This is a key stage in life and a large sum of money.

Find a reputable local IFA.

It will save you a lot more than any fees charged.

System

Can you give any idea of any other questions I should ask at our IFA appointment or is it more a matter of them asking questions and then offering advice?

opinions4u

Pam17 wrote: »

Can you give any idea of any other questions I should ask at our IFA appointment or is it more a matter of them asking questions and then offering advice?

Summed it up superbly.

I would usually suggest finding two IFAs, listening to what they say and doing business with the one that makes most sense to you.

Questions I would ask would be along the lines of "what are the alternatives and potential benefits that they offer?" and "how well has that done over the last few years?".

Before any of these questions ... "how much will you charge?" should be clear up front.

dwsjarcmcd

The key points are about you attitude to risk and what you want to achieve with your money (income/growth) and for how long. In general terms, the greater the potential benefit, the greater the risk. Having said that, you can only expect a decent return by taking some risk. If you don't want to take risks, you will be much more limited in what to do with the money.

Make sure you understand what the potential downside is as well as the potential benefits.

David

a7man

I think if you just explain the situation exactly as you have on here, as well as give him extra info about employment, current assets/ investments etc then he will provide you with a good strategy for the future. Make good use of the advice though as I dont think a regular savings account is where you want all the money and the investments he chooses should outweigh the costs in the long run.

I would say to get the costs as a percentage so it is easier to compare with other IFA's. You can get another opinion on this here in the future..

arcadia00

She asks "what would be the safest place to put the money?"
She says "I really want to get this right and avoid losing the money."

The above speaks of her attitude to betting her stash. She says "invest" but her words say otherwise.

dancingfairy

Hi. You need to think about what you want - do you want it to produce income? will you want any for anything specific in the future? etc.
Also you need to establish how much risk you are prepared to take as mentioned by previous OP.
Just make sure you understand what exactly they are telling you to invest in - if you don't understand what it is and how it will fit into your strategy then it's probably not a good idea. Don't forget you can always go and see a second adviser if you don't get on with the first one or you don't agree with their strategy. It's your money at the end of the day.
Also you need to find out the potential rewards/upside but also what the risks could be.
I am sure you will be well prepared so hope it all goes well for you.
df