450k to invest -advice please

sambageeni

Hi I'm new to this forum so bear with me!

Last year my mum sadly passed away. Long story short once her house is sold I will approximately have 450k to invest. I am married with three very young children. We are mortgage free but my husbands income is pretty low so he is hoping to become a full time student to become a teacher. Therefore we need the money to work for us. The original plan was to buy two 4 bed houses for 200k to rent out to use as our income. However, someone has suggested investment banking. I'm a bit of a scaredy cat so would still want to put 200k into a property and perhaps invest the rest. Has anyone had dealing with HSBC investments or similar? Or perhaps anyone has other useful ideas?

Many thanks!

innovate

Sorry to hear about your loss, it's never nice to lose someone.

If you search the forum, you will find plenty of good discussion on the pros and cons of BTL, and on the absolute cons of putting all your eggs into one basket (such as BTL, lol).

However, you should seek the advice of a proper IFA with a sum of this size, rather than relying on the opinions of a bunch of complete strangers on the Internet.

You haven't said whether you are working but if the income from investing the £450K would be the only income for a family of 5, things might get very tight. You will also have to consider income in your older days, i.e. planning for retirement so you shouldn't spend it all right now. Find a decent IFA to help you with a balanced portfolio. Forget about BTL but if you want to invest in property, discuss a property fund within your overall portfolio with your IFA.

marathonic

Agree with innovate.

There's a lot that can go wrong with BTL - one horror story I heard was when tenants in a work colleagues BTL had left to go to Florida on a 3-week holiday a few years ago during the REALLY cold winter.

The work colleague was aware they were away but, for some reason, didn't check on the house. On their return, a burst pipe had brought the kitchen roof down.

Imagine the consequences of this, or something similar, happening if you were to go for the BTL option for your entire income.

jimjames

Completely agree that buying 2 houses would not be a good way to invest the money. Apart from the hassle of being a landlord if you have spent all your money on the properties you will be restricted what you have for maintenance of those plus your own property. It isn't easy to sell part of a house to fund repairs but it is easy to sell part of a fund holding or sell some shares to raise capital.

An IFA would be worth looking into if you are not confident or have enough information to make your own decision which it appears is the case. There are lots of variables and a good IFA will be able to plan out how to achieve the aims you are looking for.

Mickygg

marathonic wrote: »

Agree with innovate.

There's a lot that can go wrong with BTL - one horror story I heard was when tenants in a work colleagues BTL had left to go to Florida on a 3-week holiday a few years ago during the REALLY cold winter.

The work colleague was aware they were away but, for some reason, didn't check on the house. On their return, a burst pipe had brought the kitchen roof down.

Imagine the consequences of this, or something similar, happening if you were to go for the BTL option for your entire income.

Any disaster story can be said about any investment. Shares, funds, wine, bricks and mortar.
Insurance would sort this out and apart from loss of rental income, hardly a disaster like a shop going bust you've invested in.

marathonic

Mickygg wrote: »

Any disaster story can be said about any investment. Shares, funds, wine, bricks and mortar.
Insurance would sort this out and apart from loss of rental income, hardly a disaster like a shop going bust you've invested in.

Yeah, but it's much easier to diversify via investments in funds when compared to diversifying when investing in BTL.

vectistim

Unless you are somewhere strange the yield on 4 bed houses won't be very good. Having said that the highest percentage yield will generally be for HMOs (houses of multiple occupation) but you'd need to know what you're doing to deal with one of those. The next highest gross yield will usually be 1 bed flats, although you will have maintenance/ground rent costs. Personally I prefer 2(sometimes 3) bed terraced cottages for letting purposes.

Whilst you may be looking at using the capital to generate income, if possible this would seem an ideal opportunity to look into setting up savings/investment plans for the children.

xylophone

If I had three very young children and a spouse about to become a student and then probationary teacher I think that the last thing I would consider would be direct property investment with all the work and possible hassle entailed.

It is a large sum of money and if you are not confident about investing it, you could seek the advice of an IFA. http://www.unbiased.co.uk/

You and your husband might wish to consider using your ISA allowances and possibly your children's CTF/JISA allowances. https://www.gov.uk/child-trust-funds/overview

You could safely hold all the money with NS&I while you are considering your options? http://www.nsandi.com/

theianfox

Some M&G OEIC Finds (Open Ended Investment Companies) pay around 4% per year and can be withdrawn in 4 days. If you buy them through a broker the dealing cost can be 0.5%

You can spread the money around a few funds to diversify.

Newbie2saving

Sorry for your loss.

I would arrange appointments with 2 (or even 3) IFAs. Not your bank IFA. I lost my DH a few years ago and felt totally financially niave with the responsibility left to me to look after my little boy and I.

Ensure your children are looked after, wills sorted, life insurance, etc, etc. Obvious I know, but so many people don't have this in place (like us) and it really makes things a lot more difficult than they already are.

When you receive the funds ensure you don't leave it all in one bank, you only have £85,000 (sole or double this in a joint account) FSCS protection. Hence need to divide the funds in case one bank got into difficulty whilst you decide.

Don't rush into decisions. I initially was going to rent out a property, but when I sat down and worked out the cost to buy (solicitors, stamp duty etc) and the pay back, landlords insurance, tax, responsibility when something goes wrong, possibly agency fees, it just wasn't worth it (I know though others may disagree).

Fill up your ISA's (maybe your children's - although this does become theirs to manage at 16 and a 'real adults ISA' at 18).

I wish you all the best.

Linton

Your first decision I think is for you to make a plan showing why and when you want to spend the money and the cash required. Some may be a lump sum now, some in several years time, some may be a continuous income, and the rest could be for your retirement. The plan wont be cast in stone but will provide an initial framework for an appropriate set of investments and savings.

You will then be in a position to discuss what that set may be with an IFA.

The answer will probably not be a BTL, but even if it is that decision should be on the basis that it meets your considered requirements.