1 million to invest

Arthurian

In addition to the warnings given in the last post ...... are you sure your wife needs something to do (like run a property management business) ?

You are planning to take the lion's share of running your home, housework and 4 children while you are semi-retired?

gadgetmind

I sold my first company at age 30, and it was a total buzz - enjoy the feeling! (OK, it was my second company, but the first didn't soar quite as high!)

I've finally got a grip on my retirement plans, and TBH the main issue was more regards "chanelling" the various income streams rather than what generates them. A balanced portfolio of shares and bonds can deliver a sustainable 4%-5%pa, so use a figure somewhere in the middle of that, so £1m can bring in £50kpa. (Dunno your age or how long until other pensions kick in, and this is important!)

The tax man would love to take some/all of that, so don't let him! Look at what your other retirement income will bring in, and then decide whether you want investments to generate income (lots of tax), dividends (far more tax efficient), or capitals gains (quite complex) and you need to know how all of these interact. You will also need to split this between self and spouse.

I don't know exactly what my own total retirement pot will be, but I do know roughly how it will be split between myself and wife, what will be in pensions, what in ISAs, and what in unwrapped investments, and I know which will be generating which type of income.

What assets will I hold in pension/ISA/unwrapped when retired? That's entirely TBD!

jamesd

Junior ISAs for the kids can be a good idea. Do be sure to use investments within a stocks and shares ISA for them because those are long term holdings unless any are within five years of 18.

The Invesco Perpetual Monthly Income Plus fund invests about 85% in corporate bonds - bonds issued by companies - and about 15% in shares. It's not using savings accounts. That's both why it pays more and why the capital value varies up and down over time. You should really discuss this sort of investment with an IFA and BTL property with at a minimum an accountant with lots of experience of BTL property.

For the BTLs do be sure not to concentrate them all in just one small area - at a minimum it's good to have them in a few towns in a local area and it's really bad to have them all in one street, not that most lenders would let you do that anyway.

plinth

hello all again there is loads of good advice here, I have used this site for loads over the last 2-3 years-I am 38 so have a bit to go until I retire-my wife has been looking after the kids and wants to return to work part time I am the same I want to work 3 days a week-I am setting up a separate training/consultancy company and want to focus on this- I think a balanced portfolio is the key I want to buy some properties as long term investments for the kids but get a steady income from the rest of the investment so shares, bonds and bank accounts. My wife and I will continue to work but again these will be new ventures so guess it’s a balance between investment and income generation. My aim is to pay off my mortgage which is 100k so that means effectively we only have to pay bills, I was thinking of a new house but want to get everything set up and check how much I can generate through investment and how the new companies are going-I really do appreciate the time and advice thank you

jamesd

If you do go for a new property to live in, do consider using investments that will produce an income that pays the mortgage and more instead of buying with cash. That should leave you with a profit compared to buying outright.

Derivative

jamesd wrote: »

If you do go for a new property to live in, do consider using investments that will produce an income that pays the mortgage and more instead of buying with cash. That should leave you with a profit compared to buying outright.

I would agree with this.

PasturesNew

plinth wrote: »

I have recently sold my company for 5 million pounds I was a third owner so am due 1.5 million pounds

I have no advice.

I'd just like to say: Hello

gadgetmind

jamesd wrote: »

JInvesco Perpetual Monthly Income Plus

I'm sure that's a perfectly good fund, but anything that generates income would need to be held in pension or ISA and the OP will have to drip-feed into these vehicles. (Well, he might be able to slam some into pension(s) but I guess he's looking at that.)

We have increasing amounts of unwrapped investments ourselves, and I'm ensuring we make full use of both our capital gains allowances and the fact that basic rate tax payers don't pay any additional tax on dividends.

Anything that generates income (bonds, REITs, etc.) is in SIPPs or ISAs. Everything we hold unwrapped is chosen to either generate dividends (equities in blue-chips and/or infrastructure, income ITs) or capital gains (growth equities/ITs and low-dividend ITs such as RIT, Personal Assets, and (if you can stomach the premium) Capital Gearing Trust) - wander along to Motley Fool for more advice on Investment Trusts.

We then sell enough per annum to use our capital gains allowances, move as much as we can into ISAs, and re-invest the rest. Meanwhile, we also have dividend income, which is currently being re-invested, but we will enjoy as a tax-free income stream in retirement.

I keep looking at BTL, and have read several books on the subject, but it all looks too much like hard work given the likely return, and I hate the idea of holding such large and illiquid assets that will cause future capital gains headaches.

If it were possible to hold BTLs in a SIPP, things would be very different, but HMG reneged on that one.

plinth

I was looking at btl's in relation to 2 things one setting up a company that will purchase the properties this will allow my wife to take dividend payments of 36k a year tax free- I also want to buy 4 (one for each child) eventually transferring them as owners but in the mean time extracting value in my area I could get 4 at 150k roughly a piece with a 15-25% deposit (including legal’s) so over the time they can pay down the mortgage and generate some income-I aim to work out how much to invest to yield the appropriate return (I have spoken to rental agents to get advice on the most rentable houses. I like the fact it can make a 6-9% return but that at the same time pay down debt of the mortgage



I am in the process of setting up 6 isas and I am meeting some financial (independent) to look at sipps.


It’s a minefield but a happy minefield

MarcoM

jamesd wrote: »

If you do go for a new property to live in, do consider using investments that will produce an income that pays the mortgage and more instead of buying with cash. That should leave you with a profit compared to buying outright.

This is an interesting point.
I don't understand much of this stuff so please bear with me.

Am I right in saying that this is a good thing to do now because of the low interest rates or is this tactic good regardless of the interest rates?

Also am i right in saying that the OP would be better with an interest only mortgage on his own house rather than a repayment one? I was always told to have repayment on your own home and interest on BTL but maybe this has changed.