Investment planning for 67K

jugglingfinances

First time poster, long time reader.

Some brief history, I am 33 years old, I have always been very carefull with money, saving and paying off my mortgage, I am now in the situation that I have money to invest but am completely new to it.

My financial status is:
Mortgage is paid off, however I have an offset morgage with borrowing potential up to £60k, currently in £2.5K credit.
Savings of £67K, £19k of this is in highest paying cash ISA's the rest in in highest paying savings account, easy access. I switch ISA's and savings accounts each year to get highest rates possible.
Pension fund is around £36k, although after the last 12 months payments and growth should now be around £45k. Monthly gross payments are just under £500 to pension including company contribution and tax benefit.

I am risk averse, however I know I need to get over this as the money in the savings accounts and ISA's are essentially losing value with inflation.

I see my options as:

1. Pay more to pension, maybe lump sum investment to it from savings.
2. Stocks and shares ISA's, where to begin?
3. Buy to let property, I live in a University town, and could use a large part of the savings to pay for this.

Any advise would be greatly appreciated.

roundabouthere

Personally based on your previous savings history I would be inclined to steer away from a buy to let. You are going from a cautious approach to an all eggs in one basket approach. In these current times to combat inflation I think you do need to get over your cautious nature and look at some stocks and shares Isa's. I'm sure some other people will be along shortly to offer a more indepth approach though.

Wilkins

Personally, I would go for a S&S ISA. You don't have to commit most of your savings in one go and you can take your time to learn about investing.

jugglingfinances

Thanks for the replies, S&S ISA's are definitely on my list, however the choice is massive!! Are there any relativly safe areas to start looking at, bonds, funds or shares etc? Or reliable investment companies to look at? Albeit understanding the risks of the rise and fall of the stockmarket. (Not saying I fully understand the risks).

Bazofts_Revenge

I took all of my offset mortgage amount and shoved it all into shares I've had to pay £840 roughly in interest but I've seen a large capital gain on paper and I've had a nice amount of dividends pay out. I've mainly invested in FTSE 250 companies with growing dividends and a high yield and a cover value of about 2. National Grid and SSE are in my opinion good value right now. Have a play on a virtual portfolio if you can.

innovate

Buying individual shares is similar high risk to BTL. Using your mortgage offset to buy shares is ok if you are happy to potentially lose your home.

A much more moderate approach is an S&S ISA with a tracker fund, such as the Vanguard Lifestrategy fund which comes in various flavours (see huge long Vanguard thread).

OP, what is your tax rate? if you are a higher rate payer, or about to become one, additional pension contributions might be an idea, alongside an ISA.

kidmugsy

innovate wrote: »

Buying individual shares is similar high risk to BTL.

Except that the shares aren't illiquid and indivisible, and needn't be geared up. And aren't a sitting duck for higher property taxes, Rent Acts, etc.

bigadaj

kidmugsy wrote: »

Except that the shares aren't illiquid and indivisible, and needn't be geared up. And aren't a sitting duck for higher property taxes, Rent Acts, etc.

On the other side of the coin individual shares bought by an inexperienced investor are far higher risk than property for such people, more volatile with the potential for total loss.

Neither is wise in isolation so please don't say one is a better idea.

jugglingfinances

My current tax rate is just below threshold for higher rate. This may change in probably 2 years time. I was not thinking of going directly into dealing shares, only considered it through the wrapper of S&S ISA's. Although I would be interested in looking at a virtual portfolio.

Any other thoughts would be welcome, seems like a general consensus to definitely get involved in S&S ISA's. Can one transfer existing cash ISA's from previous years in to S&S ISA's?

bigadaj

jugglingfinances wrote: »

My current tax rate is just below threshold for higher rate. This may change in probably 2 years time. I was not thinking of going directly into dealing shares, only considered it through the wrapper of S&S ISA's. Although I would be interested in looking at a virtual portfolio.

Any other thoughts would be welcome, seems like a general consensus to definitely get involved in S&S ISA's. Can one transfer existing cash ISA's from previous years in to S&S ISA's?

Yes you can, but you can't go the other way so make sure that's definitely what you want to do in the longer term.

You can set up fund virtual portfolios on trustnet and Morningstar.

Most people tend to hold funds in their isas rather than individual shares, at least initially, so might be best to look at these first, there's no guarantee but it's lower risk than individual shares.

kidmugsy

bigadaj wrote: »

On the other side of the coin individual shares bought by an inexperienced investor are far higher risk than property for such people, more volatile with the potential for total loss.

But even they are not necessarily higher risk than property since you can invest in a diverse set of them.