Investing £300k for 3 years?

chipfire

I am leaving the country for a few years with my work (Texas):j

What would you do with £300k for 3 years?

I am wary of property as I really won't be able to manage letting it out and rightly or wrongly I don't trust agencies or tenants not to screw it up and fleece me. Maybe housing is at a peak, maybe I am paranoid and will be missing an opportunity but that is what I have decided.

That accepted what would you do with £300k which is currently in premium bonds, ISAs and icesaver?

By locking it in for 3 years somewhere would I benefit?

[Deleted User]

NS&I index linked 3 year certificates

http://www.nsandi.com/products/ilsc/index.jsp

equivalent to 9.25 for higher tax payers ie inflation proofed

I have them

whoops sorry, not thinking fast enough. That still leaves 285k

have a look at investec high 5 for some of it
http://www.investec.com/NR/exeres/41B2F36B-1D61-4922-8223-79A1AC57D69B,frameless.htm?NRMODE=Published

EdInvestor

Is this savings only, or are you willing to take some risks for higher returns (and to keep up with inflation?)

Do keep an eye on what's happening in the UK property market.I know people who've been seriously burnt doing what you are doing, permanently priced out of their chosen area in little more than 3 years. If you are willing to invest the money it shouldn't be a problem, but IMHO sticking it all in cash only would be risky.

If you are not happy to invest, then suggest you consider finding a small property to let out, say with half the cash. Letting income would likely be tax free (within your c5k UK personal allowance) so the target is pretty undemanding.Not having a mortgage takes off a lot of the pressure as it doesn't really matter that much if there are voids.

Finding a good agent is the key to success as an expat landlord and while not actually growing on trees, they do exist.Having somewhere to move into when you get back also helps with re-entry.

si1503

EdInvestor wrote:

If you are not happy to invest, then suggest you consider finding a small property to let out, say with half the cash. Letting income would likely be tax free (within your c5k UK personal allowance) so the target is pretty undemanding.Not having a mortgage takes off a lot of the pressure as it doesn't really matter that much if there are voids.

I like this idea. However how would they go about deciding the tennants and making sure they pay up each month? Surely it would still require constant attention?

Aside from that, to invest is best.

dunstonh

also, 3 years is very short to turn a profit. Property valuations are volatile, just as stockmarket is and just because we have seen good growth on both stockmarket and property, doesnt mean we would do in the future.

EdInvestor

However how would they go about deciding the tennants and making sure they pay up each month? Surely it would still require constant attention?

As I said a good letting agent will handle all this. It's well worth putting effort to finding a good experienced one.Often a smaller local agent who specialises in letting will be good. Ignore the branches of the big national agent chains.

Also, 3 years is very short to turn a profit.

This would not be the point.The reason I suggest this is to enable the OP to retain a stake in the property market so that he's not left behind if it rockets up in the period he's away. He should also be able to make a profit on the letting income roughly equivalent to gross bank interest, as even though he is a cash buyer, his income will be tax free due to his unused UK personal allowance.

The Op says

I am wary of property as I really won't be able to manage letting it out and rightly or wrongly I don't trust agencies or tenants not to screw it up and fleece me.

It's true these things do happen, but that's the case with all investments Stock and bond markets crash. So do property markets occasionally but in the Uk the bigger risk is that they go up very rapidly and price you out..

Personally I would see rapidly rising prices as more of a risk than bad agents and tenants (assuming I have made some reasonable effort to find a good agent). So I'd tend to keep a stake in the market - albeit a small one - just in case.

cheerfulcat

Edinvestor wrote:

his income will be tax free due to his unused UK personal allowance.

It may be tax free in the UK but as a resident alien he will be required to declare and pay tax on it in the US.

Chipfire, personally I would put the money in a decent deposit account and hope to save additional funds while working abroad. There are too many horror stories about renting out property, especially from afar. And it's really too short a timeframe for investing in equities.

EdInvestor

Ah yes, the US. Better take out a small mortgage then :rolleyes: Or perhaps he has a spouse?

I repeat, if you do put the money in cash, keep a close eye on your location property price wise while you are away and be prepared to move in a hurry if need be.

si1503

The problem with just sticking it into a bank account is that if property prices shoot up, then the spending power of that £300k in a few years time in terms of buying a property is going to be greatly reduced. Bonds would have been another "safer" alternative, but look less attractive at present due to the rise in interest rates. All this points to the best returns coming from equities, but over just 3 years the risks are higher due to it being a relatively short time period. Obviously past returns should not be used as a guide to future returns, but judging by previous years it would be extemely unfortunate not to profit above inflation from a good selection of equity investments over a 3 year period.

chipfire

Many thanks for the replies everyone. I think it confirms that it is not a simple one and some share my concerns. I will be paid by a UK organisation - in Sterling and will indeed remain a UK PAYE taxpayer.

I like the idea of a bond linked to the property market if such a thing exists.

cheerfulcat

Both Barclays and Newcastle BS offer trackers linked to the Halifax house price index but I think that both of them are five year products. If you really wanted to track the index you probably could do it with spreadbets or CFDs but you would need to have experience of these instruments as in the wrong hands they can be dangerous. Bear in mind too that house prices don't always go up; they can come down as easily.

EDIT: I see that trading in house prices has been suspended, at least by IG.