When to sell if cash poor and asset rich? Dilemma.

Cyberman60

I've also got a 400K house but do have a DB pension, having taken early retirement six years ago. I'm aiming to downsize but still think it's too early at 60, and will try to hang on until full retirement age.

The problem I envisage with realising cash at the moment is where do you hold it when interest rates are so low. Cash halves in value every 15 years or so, so you'd need a good investment vehicle, but the best investment vehicle is funnily enough, housing IMO.

Then you have the instability of the UK with the deficit and National Debt and the dreadful prospect of a Labour/SNP government, and potential bank/government failure as debt becomes unfinanceable. There are so many potential pitfalls at the moment that I'd keep my money in the house. A house is the nearest thing to gold at the moment.

FatVonD

Do you want to stay in the same area? Would your £400k buy you two properties elsewhere? One to live in and one to rent out to give you an income both now and for your retirement?

(I should point out that everyone jumped on me like a ton of bricks when I mentioned something similar on the pensions board so take further advice other than mine.) :rotfl:

Fruitbat59

Thank you to all for your replies. To answer everyone as best I can.

I am reasonably healthy at the moment but with rubbish genes so who knows. I have lived here for 26 years in a four-bed individual cottage in an lovely village, with a pub but no shop. Four children have left the nest. I have a new partner after a divorce after 25 years of marriage, who unfortunately is unable to work due to to ill health. I am the sole earner - a freelancer whose hourly rate covers bills and food. It will be a wrench after all these years but the sensible thing seems to be to downsize and save on council tax, heating etc. After all, life is short. 10 years of worry seems a high price to pay. Thank you to you all.

audigex

The natural thing is to hold onto the biggest house possible right now, as any percentage increase in value will be more valuable on a larger house.

But if, as you say, every month is a worry, I'd rather be able to eat now rather than have an extra couple of thousand pounds in a few years... Do you have to downsize "all the way" right now?

I'd be tempted to downsize enough to free up some cash, but not so much that you're losing all your assets. ie work out how much more you need per month to get out of "worrying" territory, multiply that by 132 and aim to free up that much, plus enough for a couple of holidays.

Obviously your personal finances are your own concern, but I found that when my income increased, the difference between "Oh dear lord, where's my next meal coming from" and "I've got a spare few quid for treats" was actually only 200 or so per month. Surprisingly, perhaps, but then my bills were fixed and being short 50 quid some months quickly swings into having 50 quid extra every month, with a relatively small increase.

A 400k house gives you a lot of leeway to free up even 400 extra (50k) a month until retirement and still have a valuable property at 350k. You'd then only lose 12% of any house price rises (eg if they go up 10%, you lose 10% of 50k, or 5k) - not a particularly bad tradeoff, in my opinion, for 11 years of peace of mind.

That said, if you live in London or somewhere you can expect prices to rise unusually rapidly, keep hold of the house for as long as physically possible.