Were to invest £50k ? Pension or ?????

jem16

redstev wrote: »

Sorry but whats a S & S ?????

Stocks and Shares ISA.

You ahve an allowance of £10,680 this tax year which can be used all for S&S ISA or up to £5340 in a cash ISA with the rest for S&S.

Basically instead of using funds for pensions you can use funds for a S&S ISA. It's just a tax wrapper the same as a pension but whereas a pension has tax relief going in, with tax free growth but is taxed coming out, a S&S ISA has no tax relief going in but tax free growth and no tax to pay when you take it.

redstev

Oh I like the sound of that. I use my full allowance each year in my cash ISA so will look into a S&S isa to then.

How risky are S&S ISAs ?

Can you recomend one ? As i would proberly be inclined to just go with Nationwide as my cash isa is with them. Or is that the right thing to do ?

Annisele

A stocks and shares ISA is just a tax wrapper. How risky they are depends on what investments you choose to put in them.

The same is true of a pension - it's just a different type tax wrapper. Different tax wrappers give you different benefits and different restrictions. For example, there are limits on the amount of money you can put in to a S&S ISA and a pension, and there are limits on how and when you can take money out of a pension.

We can't recommend a S&S ISA to you; we're not allowed to give advice on this board. I'd suggest though that Nationwide may not be the best choice; bank products tend to be on the expensive side.

jem16

redstev wrote: »

Oh I like the sound of that. I use my full allowance each year in my cash ISA so will look into a S&S isa to then.

How risky are S&S ISAs ?

They do carry a risk. How much depends on the funds chosen and the funds to choose depends on your attitude to risk and length ot time to invest.

Can you recomend one ?

Unfortunately not as simple as that. There are thousands of funds that you can choose from and what is right for you is not necessarily right for someone else.

As i would proberly be inclined to just go with Nationwide as my cash isa is with them. Or is that the right thing to do ?

That would be the worst thing to do. Don't buy any sort of investment from a bank as they are usually more expensive and poorer quality.

If you can DIY with lots of research then use a funds supermarket like Hargreaves Lansdown for S&S ISAs - there are others but basically use a discount broker.

If you don't know what you are doing you may need to see an IFA for help with either a pension or a S&S ISA.

jamesd

Why sell out of the BTL properties now? Selling prices are down in many areas while rents have been increasing in many places. maybe you have room to increase rents and make them pay in the short term as well as longer term?

What's the mortgage situation with the BTL mortgages and your own? Are you exploiting the ability to save money by using your own residential mortgage instead of some of the BTL borrowing?

redstev

I only have about 15k left on my own mortage. And the mortages on my BTL are all capital repayments and I break even each month on these. I am just finding it harder to cover the cost of repairs and maintanace.

I've had the properties for about 6 years now and they have not gone up in value and the rents are hardly increasing.

jamesd

How does the rate you can get on your own place compare to the BTL mortgage rates? Maybe a chance to save some money there by increasing the residential borrowing to make the BTL borrowing cheaper? Still deductible from rent for tax purposes.

redstev

BTL rate is 2.5% above base variable and I,m fixed in till 2014 at 5% on my personal mortgage.

Cheers

jamesd

Ah well, looks like no opportunities there.

I agree with the stocks and shares ISA recommendation. You could have a rad of some of the other discussions about fund choices to get some ideas, though use a bit of caution because most people who post details here accept quite a lot of up and down movement in value.

gadgetmind

jamesd wrote: »

most people who post details here accept quite a lot of up and down movement in value.

(JamesD, I know *you* know this, but ...)

You have to. Equities (shares in companies) are volatile but long term (multi-decade) have better return than cash or bonds. However, you need some of the latter so that you can rebalance during the dips (use cash and bonds to buy bombed-out equities) and enjoy the upswing. As equities and interest rates rise, you roll back into bonds etc.

I'm seven years off (fingers crossed!) retirement and am currently heavily exposed to equities as most of the fixed interest is history.

Might equities drop? Yes. Would it bother me? Yes, we're all human and losing money. Will it swing back? Yes, probably, and if it doesn't, retiring early is the least of my worries.

Summary: You need to take some risk to receive reward. Anyone who's gone the BTL route should know all about risk versus reward!