possible investments??

DannyC77

Hi, apologies if this is not the right place to post this, I am a 30 yr old teacher with annual income of 30k, I have an unencumbered property worth £300k with an annual rental income of £13k, i also have £6k in cash isas with Abbey. I am looking into how i should invest this, and am a bit of a novice at this sort of thing, would it be worth me seeing an IFA to discuss options??

wongseefu

Hi there,

With that amount of money your best bet is a IFA...... make sure you don't go to a bank for advice. I did that mistake and lost me alot of money, they don't work for your benefit its only for own pockets.


REgards, Wong

cheerfulcat

DannyC77 wrote: »

Hi, apologies if this is not the right place to post this, I am a 30 yr old teacher with annual income of 30k, I have an unencumbered property worth £300k with an annual rental income of £13k, i also have £6k in cash isas with Abbey. I am looking into how i should invest this, and am a bit of a novice at this sort of thing, would it be worth me seeing an IFA to discuss options??

What is it you are wanting to invest? The rental income? The cash in the ISA? Or perhaps you mean save rather than invest, and you are looking for a home for cash?

DannyC77

i am looking to invest in more buy to let property but also I was wondering if i was to sell my property, how about spreading investments into different areas such as shares. I was just thinking it might be a good idea to diversify my portfolio instead of having all my eggs in one basket??

dunstonh

Buy to lets can be quite an expensive option in retirement. You have tax to pay on income (as you wont have the mortgage any more), the income could wipe out your age allowance (increasing your tax liability above basic rate in effect) and when you sell, you are looking at a capital gains tax bill assuming you have made money and havent made a loss.

So, putting all your eggs in that one basket could be a bad option.

cheerfulcat

As it stands, you have £300,000 yielding a little over 4%. I'm assuming that this is gross, before tax and expenses. That is a very poor yield for property; it's considerably less than even the return on cash. You also have the hassle of maintaining the place.

You don't say whether you also own the house you live in. If you do, then selling the rental property may give rise to capital gains tax, which you will have to factor in to your calculations.

Property as an investment is very illiquid compared to shares/funds, most of which can be sold instantly at the press of a button. On the other hand, investing in the stock market requires a certain amount of research and dedication, at least at the start. You could leave it to an IFA or a financial planner but that entails extra costs, which will eat into any returns.

jamesd

One significant advantage of buy to let is that the full amount of the mortgage interest can be offset against income, substantially reducing the tax payable. At present you're not using one of the greatest advantages of a buy to let investment: inexpensive leverage.

So, taking out a mortgage on the current BTL, perhaps one with flexible drawdown so you don't have to use it all immediately, then investing that in a mixture of funds held in a stocks and shares ISA and other BTL properties is one option.

If you did simply want to keep the BTL for retirement, adding to the BTL mortgage each year to invest in stocks and shares ISA funds is one way to keep the ongoing income free of tax, or at least at reduced tax: effectively borrowing at no net cost to invest to produce a tax free income instead of a taxable one.

DannyC77

the 13k per year is net, and i also own my home with my partner. I think I am leaning towards remortgaging the property and drawing down funds to invest in different areas including more btl property. I am looking to be in a situation where i can maybe have the property as a bump up for my pension in years to come, but would also like to have an income to supplement my current salary. has anyone read the Which guide to investments which Martin recommends?? I have also looked at unbiased.co.uk, for IFA's. I am unsure about what qualifications someone in my position should be looking for when looking for an IFA if I should go and see one at all. thanks for all your advice it is much appreciated, Danny

dunstonh

I have also looked at unbiased.co.uk, for IFA's. I am unsure about what qualifications someone in my position should be looking for when looking for an IFA if I should go and see one at all.

Dont use the qualification filter as it is highly flawed. If you pick a qualification, it will eliminate all the advisers with equivalent or higher qualifications if they dont have that particular one.

Like many qualifications, the names change over the years. In teaching terms, it would be like filtering someone by selecting someone with GCSEs but eliminating all those with O levels (and A levels or degrees).

An IFA is no use to you for a buy to let (although a mortgage adviser may be). Only if you want to invest money in conventional methods is an IFA going to be of use to you.