£80,000 to save/invest - HELP!

nadnad

We have just agreed the sale of our house and fingers crossed if it all goes through we will have £80,000 left.
What should we do with it?! I'm really not up on savings and investments. Any advice would be very welcome.

Moorepart

nadnad wrote: »

! I'm really not up on savings and investments. Any advice would be very welcome.

http://www.ladbrokes.com/lbr_portal?action=do_lang_splash&form_name=lang_splash&LANG=en&ST:beer: YLE=en&VIEW=uk&LAYOUT=default

debbie42

It depends on what access you need to the money, and how long you want to save/invest it for?

There have been a few threads of a similar ilk on this forum recently, with varying amounts, so might be worth a search.

p.s. Ladbrokes is NOT a good idea.

dunstonh

saving and investing are two different things. Which do you wish to do? How long? what is your tax position? what is your risk profile?

Ian_W

As debbie and dunstonh say a lot depends on your circs and when you need the money. As well as searching the forums for similar threads [at least one a day] start to educate yourself about savings accounts at the BANKING SAVINGS section of the site.

nadnad

ok I'll give you the full circumstances -
we're building a house and for that have a £114000 mortgage. We've agreed the sale on the house we're in and should come away with £160000. However we will use £80k of that to finish our new house completely - ie floors furniture etc. So we will have £80k left over. Would you throw it all at the mortgage and reduce that to £34k? Or some of it or none of it?
I was initially thinking of reducing the balance of the mortgage down to £85k because thats what we're paying now and we're comfortable with that. But I don't know what to do. I've read the savings articles and know all about isas and regular savings and all the rest. But I just wondered if anyone had any advice.
Also we are quite good at saving anyway - over the last 2 years we've saved £26k. And once the house was built we were intending to save lump sums and reduce the mortgage every 2 or 3 years anyway.
If we did save the money we wouldnt need access to it readily as we have other savings accounts for "rainy days" that usually fill any gaps we have.

dunstonh

Would you throw it all at the mortgage and reduce that to £34k? Or some of it or none of it?

Doesnt matter what I or anyone else would do as we all have different circumstances. For example, A higher rate taxpayer could be looking to use up the £7k each ISA allowance before paying off the mortgage as the tax benefits of the "use it or lose it" ISA allowance can be massively more advantageous over early repayment of the mortgage. a basic rate taxpayer may want to do the same to maximise the amounts they have in the tax free investments and savings.

Experienced investors would also be more inclined to invest as interest rates are low for lending and investment returns over much better potential.

Whilst clearing of short term expensive debts is often desirable, this doesnt apply to cheap mortgage borrowing where you have will to invest.

So, its a mix of personal situation and opinion on what to do next.

nadnad

alrighty i'll give you more details!
my husband is on a higher tax bracket and i'm on the lower one. we both have isas filled up. we dont have any short term debts bar a 5k loan which will be paid off before we get this money. we have a credit card each which we pay off each month so thats not an issue.

brodev

consult an IFA. With the amount of money you have it would appear that you need guidance. A PM to dunstanh should get a response that will get you looking in the right direction. Also have a look at https://www.bestinvest.co.uk and https://www.h-l.co.uk . These will give you some education.

plonkee

What I would probably do is use some of it to pay off the mortgage to get the £85K. (Say £30K)

I would use some of it to ensure that I had sufficient emergency funds. (For me that would be about £12K, for you probably less)

The rest I would use to improve my investment portfolio (either by investing through a pension or just investing in funds etc outside of any wrapper). I am quite young so my ideal portfolio is probably 70% UK equities, 30% international equities 0% bonds - but yours is almost certainly different. For me this would be about £38K

OTOH if you pay off most of the mortgage what will you do with the money saved there each month? I would follow the same scheme as above (3 parts investment to 1 part savings).

None of this is meant as a recommendation, just some suggestion as to one possibility. I reckon the most important thing to remember is that you don't have to do one thing with the money you can do a little bit of several.

What a nice problem to have.

Jonbvn

Index linked savings certs (NS&I) are looking good ATM due to high RPI. They are tax-free and you can invest up to 15k per issue per person. They mature in either 3 or 5 years.

(Copied my own post from another thread since it seems applicable!).