What savings investment vehicle(s)

reverse-ftc

I have around £30K in cash ISAs and £45k in the highest paying savings/current accounts I can find. About £10K of the cash is on 0% credit cards and will be repaid in full before the 0% expires. I don't have any other investments other than £200 in premium bonds and I don't own a property. I do have a small pension too and I probably ought to invest more into it. Think it's valued at about £5k. I'm 28 years old.

Myself and OH are considering purchasing a buy-to-let property. She has spare cash too around £40k held in ISAs/bank accounts and we currently have no outgoings for accommodation as we are living rent-free.

I'd like to spread my investments because holding so much cash doesn't seem wise so wondering if anyone can advise where I should start. I've lurked around this forum but there's such a high volume of information I don't know where to begin.

I am prepared to be aggressive/risky and the investments can be long-term. The only thing is I probably need to hold back most of my cash for a property purchase (hopefully during 2014). The property purchase seems like a sensible investment because once the mortgage is paid off we should have a nice steady income stream from it and hopefully some capital growth.

Should I stick all my eggs in one basket and purchase a property with the smallest mortgage possible and then repay as quickly as possible? If not, should I go for a S&S ISA or something else?

Whatever happens I'll hold back 6 months of living expenses for a rainy day.

Any help/advice appreciated!! Thanks

kidmugsy

reverse-ftc wrote: »

Myself and OH are considering purchasing a buy-to-let property.


Should I stick all my eggs in one basket and purchase a property

The problem isn't even "all my eggs in one basket" it's that there is going to be only one egg - an indivisible house - and that the egg may not be sellable when you want to sell it - i.e. it is "illiquid" - and that you won't own the egg yourself but with your OH.

In your shoes I wouldn't do it, but if you insist I suggest that the property you buy be one that you would be prepared to live in yourselves, as that at least gives you a fallback use for it if ever it proves hard to let and hard to sell.

But even better, take your "aggressive/risky" inclination and apply it elsewhere.

reverse-ftc

I don't see what's wrong with purchasing a property. In the long-term it is surely a sound investment. The mortgage will get paid off and it'll just sit there producing income.

I'm open to suggestions so appreciate your comment. My main issue is that right now I have everything in cash and it's wasting away with inflation.

Hominu

reverse-ftc wrote: »

I don't see what's wrong with purchasing a property. In the long-term it is surely a sound investment. The mortgage will get paid off and it'll just sit there producing income

The problem with that is if you just purchase a property and let it sit there for 10 years, nobody will want it at top price as they'll want to modernise it before moving in. BTL is better as at least then you'll have some income, but don't forget about maintenance (The boiler doesn't work, needs replacing, window seals gone, requires new roof, etc). With work, BTL can be a good investment, but less so if you employ an estate agent to do the work because you don't have the time.

So unless you are intending on running a BTL business, I'd just find the house you like and buy it between you rather than trying to find an investment now whilst you search for a property.

kidmugsy

reverse-ftc wrote: »

In the long-term it is surely a sound investment. The mortgage will get paid off and it'll just sit there producing income.

People used to say that the painless way to make money was to become landlord of a country pub. Now it's BTL. Tomorrow?

jimjames

reverse-ftc wrote: »

I don't see what's wrong with purchasing a property. In the long-term it is surely a sound investment. The mortgage will get paid off and it'll just sit there producing income.

I'm open to suggestions so appreciate your comment. My main issue is that right now I have everything in cash and it's wasting away with inflation.

Nothing wrong with purchasing a property.

What isn't clear from your post is if you are buying one to live in as well as BTL or something else.

Having all your money in property isn't very diverse so you may want to use S&S ISAs instead to build up a balanced portfolio. If you are looking for BTL and do not have your own property then you may find it hard to get a BTL mortgage. As explained above you can't sell off part of a house to get some money but you can sell a few shares if you needed smaller amounts of cash.

reverse-ftc

jimjames wrote: »

Nothing wrong with purchasing a property.

What isn't clear from your post is if you are buying one to live in as well as BTL or something else.

We are not looking to buy a property to live in ourselves. Our current rent-free situation is indefinite. Although we may do at some point in the long-term it isn't the plan for now. Right now we have cash as cash and would like it tied up working harder in a long-term investment.

jimjames wrote: »

If you are looking for BTL and do not have your own property then you may find it hard to get a BTL mortgage.

Didn't realise this but thanks for the info. Guess we'll just have to see how it goes, hopefully a decent deposit will relax any concerns a lender may have.

jimjames wrote: »

Having all your money in property isn't very diverse so you may want to use S&S ISAs instead to build up a balanced portfolio. As explained above you can't sell off part of a house to get some money but you can sell a few shares if you needed smaller amounts of cash.

I'm not too concerned about investing everything into a BTL property but I do think there'd be some merit in keeping £10k-£20k in S&S ISAs (between the pair of us) for easier access. So... do we go for a S&S ISA with a generic high street bank?

bigadaj

reverse-ftc wrote: »

I'm not too concerned about investing everything into a BTL property but I do think there'd be some merit in keeping £10k-£20k in S&S ISAs (between the pair of us) for easier access. So... do we go for a S&S ISA with a generic high street bank?

Don't go to a high street bank do some reading on investment, on this site, monevator, motley fool, candid money for example. Also some books such as tim hales smarter investing.

Many people would go for a widely spread tracker such as vanguard lifestrategy to bal krock consensus as a start and basis for investment, through brokers such as cavendish, Hargreaves lansdown, charles stanley direct etc