£150K + shares to invest

jem16

mvteng wrote: »

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

Then you will now have to consider an extra £7500 approx of taxable income from savings interest on the £150k plus whatever the dividends from your shares portfolio would amount to.

mvteng

I understand that.

ISA allowances are also generally used up each year.

I notice you are in Glasgow & assume you are from a financial background.

Canyou recommend any Investment Specialist IFA in Edinburgh? (PM me if you refer)

jem16

mvteng wrote: »

I understand that.

ISA allowances are also generally used up each year.

That's a good start. Do you use up the whole £7k or just the £3k for cash?

I notice you are in Glasgow & assume you are from a financial background.

No, I'm a Primary teacher.

I found myself in a similar situation almost 5 years ago with a lump sum of £150k. For the first 3/4 years it sat mostly in a high interest account although some of it was used for Premium Bonds and NS&I index-linked certificates.

I then found this site and realised how stupid I was being! I was having to pay the tax man around £1800 extra on tax each year because of income from savings and dividends. :eek:

Around 15 months ago I sought the help of an IFA. My investments are now more tax efficient and making me more as well. This year HMRC owe me £59! :j

Canyou recommend any Investment Specialist IFA in Edinburgh? (PM me if you refer)

Sorry I don't know anyone in the Edinburgh area. Try www.unbiased.co.uk

mvteng

Thanks for the help everyone - especially jem16.

Rafter

You also don't say what your housing situation is.

There is not point sitting on a large investment portfolio if you also have a large mortgage.

Following the abolition of mortgage interest tax relief, as a higher paid tax payer, you are much better off paying off your mortgage and saving tax on your investments. Earning your mortgage rate after tax on investments (unless they are high risk) is almost impossible.

Otherwise the advice is sound. I'd be cautious about advisors. Because you already have a well diversified investment portfolio, the commission available to an advisor to set one up is a lot less.

An advisor may be able to help you (for a fee) with some pension advice though. It may be worth you making additional pension contributions each year using some of your investments to:

a) Reduce your taxable income and tax bill each year
b) Build up a good pension fund while you are still 20+ years from retirement. Your employer may well have a advisor who can help on the pension side too.

Good luck

R.

dunstonh

There is not point sitting on a large investment portfolio if you also have a large mortgage.

Following the abolition of mortgage interest tax relief, as a higher paid tax payer, you are much better off paying off your mortgage and saving tax on your investments. Earning your mortgage rate after tax on investments (unless they are high risk) is almost impossible.

I disagree. A medium/low risk portfolio (let alone medium or higher risks) has seen double digit returns each year and potential going forward over the long term should see that continue when averaged over the years.

Otherwise the advice is sound. I'd be cautious about advisors. Because you already have a well diversified investment portfolio, the commission available to an advisor to set one up is a lot less.

The commission payable to advisers can actually be quite low. For many NMA IFAs, the money is in the natural fund based commission and not the upfront and just by having the portfolio under management can be more important.

EdInvestor

Advisors will probably tell you to liquidate the shares and buy funds, because they are not qualified to advise on shares, and can make no money out of such investments ( similarly for investment trustrs which are also in the portfolio.)Many of them also want to stuff any large capital sum they come across (like yours) into aninvestment bond which levies high charges and hi8gh taxes.

Looking at the portfolio overall, because it has such a lot in cash, it is actually quite low risk, despite the fact that some of the funds are quite racy.Other than using some of the cash to pay down any mortgage (and reduce the HRT risk), IMHO you could leave it as it is and monitor it for a while.It seems to me the person who gave you this portfolio knew what s/he was doing, and you could productively spend a little time studying how the strategy works and what returns it makes.

Then you'll have a better idea as to whether you actually need an advisor, and if so, a better likelihood of understanding the merits (or otherwise) of what he proposes.

jem16

EdInvestor wrote: »

Many of them also want to stuff any large capital sum they come across (like yours) into aninvestment bond which levies high charges and hi8gh taxes.

I wondered how long it would take before your usual dig at investment bonds.

As you have been told time and time again, an investment bond can be cheaper(in the correct circumstances) than the same investment in unit trusts, etc. Still you persist in posting this rubbish.

Looking at the portfolio overall, because it has such a lot in cash, it is actually quite low risk, despite the fact that some of the funds are quite racy.Other than using some of the cash to pay down any mortgage (and reduce the HRT risk), IMHO you could leave it as it is and monitor it for a while.It seems to me the person who gave you this portfolio knew what s/he was doing, and you could productively spend a little time studying how the strategy works and what returns it makes.

What suits one person does not necessarily suit another person. The cash and shares for this OP will result in a lot more tax.

Then you'll have a better idea as to whether you actually need an advisor, and if so, a better likelihood of understanding the merits (or otherwise) of what he proposes.

I agree to a certain extent. Find out what it all means to you financially.

However be aware that delaying too much can cost much more. It has cost me around £5000 in extra tax and goodness knows what in lost growth on my lump sum.

EdInvestor

One thing to remember (apart from the fact that there is no tax to pay on dividends from shares or equity funds for basic rate taxpayers because it is covered by the tax credit) is that you have an annual capital gains tax allowance on realised profits of over 9k.

A big disadvantage of the bonds is that gains (whether realised or not) are taxed within the bond @20% and this tax isn't reclaimable. If held direct, gains are tax free until realised, and are then only taxable if over 9k p.a

Holding shares directly also usually incurs no charges once they have been bought.It's thus quite easy for the BRT to invest in equities entirely tax and charge free without using any wrappers.This doesn't however apply to cash, bonds/gilts or property funds.

skintscotsman

i#'ll look after the 150k for you