£150K + shares to invest

mvteng

Good afternoon everyone,

I have recently come into approx £150K cash & £100K of various shares.

I've looked back through the forums & have read various previous similar questions.

My gut feeling is that my situation is such that I probably need to go to an IFA to have a good overall look at my finances, but any other advise or investment suggestions would be greatly appreciated :

Likely timescale? Long term (10-15 years)

What would money be needed for and how likely is it going to be needed (and how much of it)? Unlikely to be needed

risk profile? prefer to split so that maybe 100K is safe (High interest savings account), 25 K low - mid risk, 25K mid risk.

where and how do you want it invested? Open to suggestion

how old are you? 36

what is your tax position? Standard rate taxpayer - very borderline high rate

jem16

I'm sure one of the experts will come along and help out but some observations from me.

£100k cash - Cash is not as safe as it may appear to be. Inflation is running at 4.8% so you would need to have at least this in interest to keep ahead. Otherwise the spending power of your £100k will diminish. 4.8% net would need 6% gross for a basic rate taxpayer and 8% if higher rate. Not many savings accounts will do that.

Tax position - if borderline higher rate taxpayer, interest at 5% £250k will be £12,500. Sounds like you will be a higher rate taxpayer. So you now have to think of all your savings and dividend payments being taxed at 40% for savings and 32.5% for dividends. It would therefore be important to have a suitable investment that will minimise the tax.

I think a meeting with an investment specialist IFA would be a good idea.

EdInvestor

Could you give more details about the shares in the existing portfolio?

An asset split of 150k in cash and 100k in shares (depending on what shares they are) is already low-medium risk.

There may be no need to change what you have already got.

mvteng

Thanks fro the responses so far.

The Share Portfolio contains 17 holdings.

Generally household names - Alliannce & Leicester, Barclays, Bradford & Bingley, Centrica, HBOS, M&S, Northern Rock, Tesco, Vodafone.

With a few more unusual :
AXA Framlington Emerging Markets,
EFM Small Companies Trust
F & C Global Smaller Companies
Gartmore Pacific Opportunities Fund Retail Class ACc
JPMF Asian Investment Trust
JPMH Japanese Investment Trust
Merrill Lynch Emerging Markets Fund
Schroder UK Growth Fund

Do any of the above flash up warning lights?

Thanks

Andrew

amcluesent

Keep the shares as is.

First off, use the cash to reduce debt. If you haven't any then I'd use 25K of the cash for exposure just to India, 25K into bullion, 25K into oils, 25K into alternative energy fund, 50K into 5 year index linked bonds, 25K into premium bonds, 25k cash in a internet account for spending on enjoying life (Toga party! Every month!)

Find a way of minimising tax (SIPP?) and update your will to minimise IHT (sorry to be a downer...)

EdInvestor

The share portfolio looks fine.You'll get good dividends from these ( no tax problems for someone on basic rate) and 17 diversified blue chip companies is quite OK on the risk front. You can let the dividends mount up and then reinvest them once a year in more shares (if this is not already happening). You'll pay hardly any charges with this portfolio,a big advantage.

But the funds look to be mainly higher risk - emerging markets and smaller companies - so it looks to me that you should consider some change there.

Property funds and equity income funds would be two areas to look at.

jem16

EdInvestor wrote: »

The share portfolio looks fine.You'll get good dividends from these ( no tax problems for someone on basic rate)

Except for the fact that the OP is a borderline higher rate tax payer and these dividends may push him over. Plus of course the interest on the cash.

OP - how borderline is borderline?

StevieJ

For what it is worth my first step would be 30K into NS&I tax free saving certificates.

EdInvestor

jem16 wrote: »

Except for the fact that the OP is a borderline higher rate tax payer and these dividends may push him over. Plus of course the interest on the cash.

If so he would still be better off with dividends, paying 25% tax on them compared with 40% on cash, property and bond income.

Of course he could max out his ISA @7k a year and perhaps he has a spouse allowance as well?If there are two allowances it wouldn't take thsat long to get the money protected for the long term.

jem16

EdInvestor wrote: »

If so he would still be better off with dividends, paying 25% tax on them compared with 40% on cash, property and bond income.
.

Why pay the extra tax at all if it can be avoided?

Of course he could max out his ISA @7k a year and perhaps he has a spouse allowance as well?If there are two allowances it wouldn't take thsat long to get the money protected for the long term.

Cash £150k and Shares £100k - total £250k.

With 2 allowances 18 years to get it all sheltered.
With 1 allowance 38 years.

If only the cash of £150k

2 allowances - 11 years
1 allowance - 22 years

Not long at all

I'm sure there are other more tax-efficient methods that can be used which could still allow the ISA allowances to be filled each year but meanwhile sheltering the amount from the tax man.

mvteng

jem16 wrote: »

Except for the fact that the OP is a borderline higher rate tax payer and these dividends may push him over. Plus of course the interest on the cash.

OP - how borderline is borderline?

absolutely on the borderline. Instead of recent pay rises, I've salary sacrificed to take pension payments & Childcare vouchers in order to stay under the limit