Feedback welcome on plans for my £77k

dk7

Hi

After a busy year, i've finally had time to look at my finances. Its not pretty. My £77k in liquid assets is currently split thus:

ISAs £22.2k
£5.5k Santader Cash ISA at 4% fixed till May 14
£5.5k Virgin Cash ISA at 3.75% fixed till Nov 13
£5.6k Tesco Cash ISA at 2.3% variable
£5.6k Hargreaves Lansdown S&S ISA - to be allocated to funds/shares, currently earning 0%.

Cash holdings £55k
£5k Ex Lloyds Vantage now TSB @ 3% variable.
£12k Santander esaver @ 0.5% variable. (Just dropped from 3.2%)
£1k Santander c/a @ 0% but used to fulfill funding requirements
£37k Cahoot c/a @ ??? interest - used for sports gambling/trading/arbitrage. Generates circa £12k per annum tax free.

I also have one Reward account with BoS which i cycle £1k per month through. This generates an effect net return of 4.5% on the £1k.


About me

I'm early 30's, 40% tax payer, mortgage free (luckily) homeowner, married (partner is also 40% tax band), no kids yet.

I have no pension savings at all. (I know i really should look into my current company scheme, but given getting a new job is also on my radar its not a priority right now).

My current salary exceeds my average monthly expenses by circa £1k per month.

As mentioned above I trade/gamble/arbitrage sports markets in my spare time. I have kept detailed records now for over 4 years and in that time I've only had 3 negative months, so consider this capital relatively risk free.

The income derived from this varies widely and is dependent on how much time and effort i devote to it, and like all investments, how lucky i get.

Over the full period of my records my average income from it is just over £900 per month, but I make more now I'm more experienced so would consider £1k per month a reasonably conservative estimate of my future income from this.

The Plan

From reviewing my trading records I really only need a float of circa £20k to maintain the estimated future level of income, so I can free up £17k from my gambling float for savings/invesments.

This means I have £57k in total to save/invest.

I will keep my current £22.2k of ISAs inside their tax wrapper. Obviously i need to get the £5.6k in HL invested into something. Ideas?

I plan to transfer the Tesco cash ISA and, when it matures, the Virgin cash ISA into a S&S ISA - again investment ideas welcome. This will give me £16.7k in S&S and £5.5k in cash from exiting funds

I will probably also move the Santander Cash ISA into S&S when that matures next year unless a decent cash fix above inflation appears.

I will also put £11.5k into a S&S ISA for the 13/14 tax year as i'm yet to subscribe this year.

I think i should go fully S&S inside my ISA wrappers - is this sensible?

This leaves me with £23.3k

I plan to keep £10k of this in cash. This would act as my emergency fund. Alongside the £20k gambling float, if the worst happened and i ended up without work and unable to gamble/trade I could use both to support myself for 12 months.

If i just lost my job, the £10k alongside my gambling/trading income would keep me at my current standard of living for 10 months. With the obvious belt tightening that no job would entail this could easily stretch to 12+ months.

Is this a good idea or a waste of cash? I plan to keep the £10k between Nationwide flex @ 5%, my tsb vantage @ 3% and another vantage at 3%.

I will also keep the £1k used to fund to Vantage and reward a/c as the reward account income alone means this £1k effectively earns 4.5% net.

That leaves £12.3k + at current income levels an extra £2k per month to invest.

Any ideas what to do with this? Zopa, funding circle? Save to invest in a BTL?

Any ideas and thoughts welcome. I'm really quite new to managing this sort of money, as i only became debt free about 4 years ago, and this has built up quickly from finally finding my gambling niche/getting a decently paid job.

jem16

dk7 wrote: »

That leaves £12.3k + at current income levels an extra £2k per month to invest.

Any ideas what to do with this? Zopa, funding circle? Save to invest in a BTL?

As a 40% taxpayer with no pension provision at all, your first priority should be a pension.

Look into your company pension scheme and join if the employer contributes. Even if you move jobs you can take the pension with you.

DigForVictory

Pension.
Sorry, but when you are too old to work (eventually) you'll need something & I wouldn't trust the politicians to have my interests on their agenda.

Archi_Bald

dk7, you seem to be quite happy to pile money into your S&S ISA but you don't appear to know how to invest it. You shouldn't expect to pick up the odd red hot tip on the Internet on what to invest in - - there are literally tens of thousands of options at your disposition, and only a lunatic would allocate their money to tips on the internet.

You should consider reading some books and websites on investments. Search the forum, there's been a thread not too long ago about best reading for investing. Once you have read one or two of the books, you should be able to create the portfolio that suits your needs and that you are comfortable with.

Alternatively, consider going to an IFA. Though they might not be interested on anything less than £100 to fully invest.

WoodM

£12k per annum from gambling - you must be pretty good at this! What's your secret to consistent returns?

kidmugsy

dk7 wrote: »

£37k Cahoot c/a @ ??? interest - used for sports gambling/trading/arbitrage. Generates circa £12k per annum tax free.

Fifty years ago I ran a "book" at school and made a tidy sum. The only lesson I remember is that gamblers are mugs. Are you the exception?

dk7

Thanks for the feedback.

Ok, first things. I don't gamble in the strictest sense of the word. Its more advantage play. I use offers, odds movements, arbitrage opportunities etc to create situations where my risk is zero (or minimal) but my expected value is positive, hence guaranteeing a profit on average.

Head over to the matched betting forum to learn the ropes, although my understanding is that is a zero risk forum, so the more lucrative ways to make money are not discussed. Oh and I've worked in online gambling, which helps. I know how the industry works and I know that very very few gamblers, in the strictest sense of the word, make a positive return in the long run.

Back on topic i've been off reading a bit about investing. I'm starting the learn the ropes, but there is still plenty to absorb.

Found this on a interesting blog about passive investing (which btw appeals to me a lot).

In my view, new investors should:

1. Read up on investing
2. Meanwhile get out of debt
3. Build up an emergency fund with your monthly savings
4. Use a tax-free cash ISA
5. Move your savings to follow the best rates

Next steps:

6. When your emergency fund is big enough, think about equities
7. Direct half of the monthly savings into a cheap total market index tracker
8. Run the tracker in a tax-free stocks and shares ISA
9. Keep saving the other half as cash, into a new account
10. (Keep the emergency fund cash separate and untouchable)

I'm working on step 1, but 2-4 are complete, and 5 is being sorted as we speak.

So really i'm onto step 6.

The bit i was trying to get at in my 1st post was now I have an emergency fund I'm comfortable with, shouldn't I really look to put 100% of my savings (or my income I don't spend) into riskier assets such as equities/bonds etc?

Having £20k+ in cash ISAs barely outstripping inflation seems a dumb move to me when i have up to £30k of cash savings outside ISAs ready for emergencies?

Surely my ISA investments should be invested for better returns than cash on a long term horizon?

Given i'm a 40% tax payer, i don't want to lose savings in ISAs - hence why i want to keep my emergency funds outside of them.

Then the next step is assessing my attitude for risk. I feel its quite high, as i'm early 30's with no dependents (atm), no mortgage, looking to invest over a 25-30 year horizon.

I then design a portfolio that mirrors that. Then i drip feed my money in to get pound cost averaging, and bar re-balancing my portfolio every so often I sit tight, resisting the temptation to panic when times turn bad or get over excited chasing a hot sector etc.

If I can keep investing £24k+ a year, get real returns of say just 3% pa, then I could have £1m+ portfolio to keep me sweet in my later years. Easier said than done obviously!

mgdavid

..but a pension scheme which your employer contributes to is FREE MONEY. Plus your contribution gets 20% income tax rebate added to it. And if employer will do the contributions through Salary Sacrifice it comes out of your 40% tax band AND saves on NI too.
I'm not sure you appreciate what a good deal an employment-related pension scheme is. It has to be your P1..

ChopperST

WoodM wrote: »

£12k per annum from gambling - you must be pretty good at this! What's your secret to consistent returns?

As a gambler myself generally those who make that kind of money bet on low odds with high stakes in a similar way to one would invest, you make small modest returns relative to the stake you are outlaying but if you are staking £10k on something that is 1/10 you will return £1k.

Its having the balls to do that in the first place however.

Abatement

As a gambler myself generally those who make that kind of money bet on low odds with high stakes in a similar way to one would invest, you make small modest returns relative to the stake you are outlaying but if you are staking £10k on something that is 1/10 you will return £1k.

Its having the balls to do that in the first place however.

errr...no.

BarrBru

Okay I've been told not to post links so I will post the website names only
Hi dk7,
I am an investor and at times I've had a lot in passive funds but right now I don't because I think of this as being more of a stock pickers environment.
The motevator website or vanguard .co.uk has tips and advice on passive investing.
Right now I am making high returns from equities, both direct and investment trusts.

Investment trusts are probably better for you than direct equities which take more effort. Heaps of research confirms they out perform other types of funds. They have an independent board that can sack the manager and so they have lower fees and better performance.
I use theaic .co.uk it's the trade body so I use it for research only but I get buying tips from whichinvestmenttrust .com and sometimes from fool .co.uk or even the Daily Telegraph.

Happy to share what I have and what I've bought recently for me and for my Mum.

Best of luck in any event!

.....oh aye, almsot forgot, get a pension!!! Where else for you turn £600 in to £1000 in day one! (20% from Gov immediately and 20% in your tax return).

I have a low cost SIPP on a platform.