What To Do

tsmiggy

I am lucky enough to have been left some money,to the value of £175,000,but i am also self employed with very little work.I do own my semi detached house,and its paid for.I am aged 59 this year.I do not know where to go for impartial advice.Do i invest in a larger house,or do i buy a house to rent to provide some income.Obviously with interest rates dropping,the savings option is not to attractive,even though it is provding some income.Any thoughts would be very welcome.

cheers.

Gromitt

If you don't need the money, then I would create a diversified portfolio, if you've not one already.

I bought a property for 95K which is rented out at £400 per month, so £4800 per year, thus giving me 5% per year before taxes and maintenance. There's also the chance the property may increase in value.

Then you have your normal stocks and shares. As with property, the value may go up or down.

The important thing is you spread the risk and don't bet it all on black. Not sure what I'm going to do when my tenant decides to leave the property - do I try and get someone else, or sell it and get something bigger. Decisions, decisions...

opinions4u

IFA. Focus on retirement plans.

joerugby

You already have an investment in property. You may wish to consider spreading your risk by investing a proportion of your money in equities.

If you are not confident in this area you should see an IFA. See more than one before deciding which one to use.

marathonic

Due to buying and selling costs, I think that it'd be inadvisable to go into BTL unless you intend to hold for at least 10 years. This then begs the question - do you want to be dealing with awkward tenants at the age of 70+?

If you don't already have one, the top priority is to open an ISA before the April deadline and get it fully funded. You'll want to choose a Stocks and Shares ISA for this so that you can take full advantage of the higher allowance for this year.

You could choose to place £5,640 into a Cash ISA and the same amount into a Stocks and Shares ISA - using the Cash ISA as your emergency fund. If you already have a Cash ISA, you could just put the whole £11,280 into a S&S ISA.

If you can see the IFA and fund the ISA in the next two weeks, all the better. However, with time being so tight, I'd open the ISA first and then look for local recommendations for an IFA.

You'll then be able to add to the ISA next month using next years allowance. Basically, this is the quickest way to get as much money as you can outside the scope of the taxman.

marathonic

By the way, with a total £175,000 investment and the £11,280 put into the S&S ISA, you'd have a total of 6.45% of your investment sheltered from the taxman using this years allowance.

You can't really go wrong by selecting a medium risk fund, such as a low-charging UK tracker, to place this portion of your investment in until such times that you get around to seeing an IFA - who will research the best location to invest the remaining 93.55% of the funds.

benalder284

S&S ISA for 12-13 and 13-14 to form the basis of a diversified investment portfolio? (Dependant on your tolerance of risk and objectives)

Use some or all of it to supplement exisiting pensions (if any - if not then use more - depending on whether you are a higher or basic rate taxpayer)?

I agree with the comments about BTL - in general, I can't see capital values increasingly significantly in the next few years in real terms and there is the 'hassle' of being a landlord to consider.

In the short-term use your cash ISA allowance for 12-13 ans 13-14 and then find the best three paying easy access savings accounts and stick a third of the sum in each.

BLB53

If you are looking for a bit better return than the building society, I would (and do) seriously have a look at a few investment trusts.

Here's a link to an article on RIT about getting a reasonable income from ITs http://www.retirementinvestingtoday.com/2013/01/investing-for-income-via-investment.html

With a current yield of around 4%, the income would be around the £7,000 per year mark and is likely to rise each year to keep pace with inflation.

For me,I would think BTL would be too much like hard work.

grey_gym_sock

on the idea of buying a bigger house to live in, i wouldn't do that purely as an investment. unless you're thinking of taking in lodgers. because property is unlikely to be a good investment when you're not getting any rent from it.

do you have any pension provision except the state pension? if not, or not much, then some investment in a pension wrapper could make sense. you can contribute the higher of your self-employed profits or £3600 in each tax year.

other investments could be made in S&S ISAs, or (when you've put the maximum in them) unwrapped. since actually there isn't much difference between S&S ISA and unwrapped, except for higher-rate tax payers.

as for what to actually invest in within those wrappers (viz. pension, S&S ISA, and none), you either need to do a bit more reading, or to find an IFA. (though the answer is likely to involve shares and bonds.)

kidmugsy

tsmiggy wrote: »

Do i invest in a larger house

A larger house would really be an investment only if it let you take in lodgers or run a business from it.

Do you have any advantage at BTL - trade skills, legal knowledge, familiarity with the property market, ....? Or even just the other half of your semi- being available to buy?

The budget schemes for driving up house prices might give existing BTLers a nice capital gain, but they've already paid all the costs of purchasing.

tsmiggy

Thankyou for your advice,when I said larger house,it was to make life more comfortable.Certain things with my present house I am not happy with.(I was thinking a slightly larger one,maybe add £50,000 to my present one)

My ISA for this year is maxed out.To be honest I know little about S&S Isa but that would be a good idea.The downside at the moment is my lack of work,which does distort my decision making.

The idea of BTL was a way to bring in some regular income,but like one poster pointed out,would I need the hassle as I got older.

I will follow the links provided by yourselves,and once again thankyou to you all.