where best to invest £180,000?

bowlhead99

neilsolaris wrote: »

Thanks Linton, that clarifies it a lot. I currently don't have any sort of pension, so that's something I'd like to look into. I formed the impression that I'd maybe left it too late though. I'm 42. What do you think?

If you don't have pension and you are employed, you are paying more tax each year than you would if contributed to a pension. If you're 42 then you might conceivably be alive another 60 years. You will need some sort of retirement provision or you'll have a very unhappy last 40 years. Putting your head in the sand and your windfall into a low risk account that doesn't grow, is not going to help situation vary much, IMHO.

You are right that you have indeed left it late. But on the bright side you have a house paid for and a big slug of cash to start it off, so you have not left it impossibly late to start putting a good chunk o f your income away. If you have left it late to do something, the amount you need to put away is "as much you can afford". Giving up and putting £0 away in the pension is unlikely to be the right thing to do

Archi_Bald

Don't forget that your employer will contribute to your pension, too, as long as you do.

Linton

neilsolaris wrote: »

..... I currently don't have any sort of pension, so that's something I'd like to look into. I formed the impression that I'd maybe left it too late though. I'm 42. What do you think?

You have left it very late. Ensuring you are comfortably off in retirement will be much more expensive than if you had been steadily investing for the past 20 years. However your cash pot of £180K will go a long way to solving that problem. So I suggest you do some retirement planning - when do you want to retire? how much money will you need to provide an acceptable standard of living? what investment return would you need to achieve your needs given where you are now? All of this can be calculated with the help of a few assumptions and the use of a spreadsheet. The H-L pension calculator may also be helpful. If you need further advice talk to an IFA.

Do you have an employer? Does the employer offer a pension scheme? If so it is almost certainly very much in your interest to join.

I suggest you focus on your retirement plans at the moment rather than looking at specific investments or even paying off the mortgage, though the latter may well turn out to be a sensible thing to do.

dunstonh

Whilst you have left it late, its not too late. A pension is just a tax wrapper that contains your investments. The same investments can be held in ISAs, unwrapped or in investments bonds. So, you should not eliminate pension and go with a different tax wrapper because you have started very late. Moving money from left to right doesnt change the value and wont suddenly make things better. Tax wrapper use is more about fine tuning to get the most appropriate outcome. However, the single biggest difference is the amounts you put aside.

haven't decided whether I'd like to keep using my ISA allowance. That pretty much depends on the advice here. I'm not sure what you mean by tax wrap.

An ISA is a tax wrapper. As are pensions and investment bonds. you can also hold investments unwrapped. Tax wrappers are just the containers for your investments and dictate the tax handling.

You mentioned an investment bond in post #1. An investment bond is a niche tax wrapper suitable for a minority of people. you thought that was a good idea. It is unlikely it is.

This site and the posters on it are not authorised or regulated to give advice. In fact the board does not allow it. Anything posted here is just discussion and opinion. Not advice.

xylophone

Does your employer offer a pension scheme? If so you should join it.

https://www.gov.uk/new-state-pension/overview

It certainly makes sense for a higher rate tax payer to contribute to a pension.
http://www.hl.co.uk/pensions/interactive-calculators/tax-relief-calculator

You plan to pay off your current mortgage and to sell the house and move elsewhere within a year or so.

You plan to buy your new house outright? If so, how much of the £108000 do you think will be needed to top up the sale price of your existing house to enable you to do this?

You might set that sum aside in cash accounts ( using current accounts where possible)?

You could consider using the balance to contribute to a pension/making stock market investments?

https://www.unbiased.co.uk/ to assist in finding an IFA if required.

neilsolaris

Thanks everyone for your advice. I have stuck my head in the sand for a long time regarding getting a pension. I've been self-employed all of my working life, and mostly on a low income. From what you all say, I think the best thing would be for me to see a financial adviser and work out a plan of action! Many thanks for your help.

dunstonh

I've been self-employed all of my working life

Which also means you get lower state pensions than an employed person. (although qualification is changing but not being applied retrospectively).

Ryan_Futuristics

I'm self-employed too - which on the one hand means I don't really plan to stop working (I want to pursue things I'll always want to do ... and it certainly keeps you young, as long as you don't hate your work)

I'd say with good investing and *some* tolerance to risk you can make £180k go a LONG way

I'd probably be thinking £100k in high-rated equities funds and investment trusts, £25k in fixed income and/or P2P lending, £25k in the bank, and maybe £30k to invest in yourself (expanding your business, learning new skills, marketing, funding a short film) ... Often the most overlooked asset

SeekTruth

dunstonh wrote: »

Which also means you get lower state pensions than an employed person. (although qualification is changing but not being applied retrospectively).

The OP reaches State Pension Age after April 2016.

A person reaching SPA on or before 5 April 2016 with 35 years of self-employed NI contributions, and no employed contributions, will receive a state pension of £113.10 in today's money.

A person with the same record reaching SPA on 6 April 2016 will receive a state pension of £148ish in today's money.

Totton

A person with the same record reaching SPA on 6 April 2016 will receive a state pension of £148ish in today's money.

Apparently not everyone will. It gets a bit murky if you look under the surface of Government announcements :-)