£30,000 to invest for 5 years...

jimjames

There is no reason why all the money needs to be in exactly the same thing. Rather than thinking you need to find a home for £30k you could look at 3 pots of £10k or 2 pots of £15k.


If you are risk averse you could invest half of it in a S&S ISA where you are taking some risk and keep the other £15k in cash, either ISA or current accounts. Or as above put some into a pension so you get tax relief - but that's investing too.

ronaldadio

Playing_with_Fire wrote: »

What band of tax do you both pay? If you pay 40% tax, in your position, I would be thinking about opening a new personal pension, putting it in an index funds at around 50-60% high quality bonds and 50-40% global shares. To me, the risk in the shares would be balanced out (to my risk tolerance) by the tax uplift. Without the tax uplift, if this £30k was the bulk/all of my savings I would think about being more conservative and try to juggle high interest current accounts. You could put a portion into an S&S ISA and hope for some growth.

Depending on where you are planning to live, you may need to make additional contributions if you are looking to buy a house in 5 years time. You can leave cash or other valuables to your children just as well as a house, the changes in the Inheritance Tax rules are for joint estates over ~£650k or single estates over £325k.

Be wary about planning to use your house as a pension, it will reduce your housing costs, but the only way to extract money for food etc would be to downsize or have an equity release/reverse mortgage. In either of the above you couldn't leave it (all of it) to your kids.

Low rate tax

teddysmum

Don't leave trying for a mortgage too long. I know of someone, who has a mortgage free house, but wanted to buy a second and was turned down due to their age ( mid fifties).

eskbanker

ronaldadio wrote: »

By looking to buy a house in say 5 years, our outgoings would be reduced (no rent to pay any more - or a very little mortgage)

This doesn't sound realistic, starting from a £30K deposit (plus a bit of interest) and buying in your mid to late 50s (repaying over how long?), unless you're buying in a very cheap area.

ronaldadio

Just to clarify. By invest I mean to get a return on our cash.
Some of you guys suggesting that it might be best to look at getting a mortgage/ house with the cash sooner rather than later?
Our quandary is that at the moment we have a 25 year old, 22 year old and 17 year old all working and living at home (decent jobs btw)
Our 22 year old is looking for a house now, our 25 year old will be looking for a house.
So we are in a 4 bed house at the moment.
I think we are waiting for the oldest 2 kids to move out leaving us looking for a 3 bed.
The area we live in is very nice, but has some cheaper parts.
We could get a real nice 3 bed semi for £120 - £150k, but obviously after the kids leave home.

badger09

jimjames wrote: »

There is no reason why all the money needs to be in exactly the same thing. Rather than thinking you need to find a home for £30k you could look at 3 pots of £10k or 2 pots of £15k.


If you are risk averse you could invest half of it in a S&S ISA where you are taking some risk and keep the other £15k in cash, either ISA or current accounts. Or as above put some into a pension so you get tax relief - but that's investing too.

Seriously jj? You're suggesting possibly putting £15k in a cash ISA:eek:

Care to explain why?:o

eskbanker

ronaldadio wrote: »

We could get a real nice 3 bed semi for £120 - £150k, but obviously after the kids leave home.

Sorry to harp on about this but it sounds like you're contemplating being able to take on a new mortgage of circa £100K when you're well into your fifties and self-employed, with an expectation that this will reduce your outgoings? Obviously none of us knows your incomes, what you're currently paying in rent or when you'd plan to retire but I wouldn't underestimate the difficulty and expense of securing a mortgage, have you investigated this in any detail to verify if your aspirations are realistic?

ronaldadio

eskbanker wrote: »

Sorry to harp on about this but it sounds like you're contemplating being able to take on a new mortgage of circa £100K when you're well into your fifties and self-employed, with an expectation that this will reduce your outgoings? Obviously none of us knows your incomes, what you're currently paying in rent or when you'd plan to retire but I wouldn't underestimate the difficulty and expense of securing a mortgage, have you investigated this in any detail to verify if your aspirations are realistic?

Roughly £40,000 PA nett. Will be working til I'm at least 65. Outgoings are around £3,000/ month including rent.
We had also thought of buying a flat/ cheap house for £30,000 and renting it out. This would reduce our monthly outgoings and at the same time leave the £30,000 in property that may, or may not increase or decrease in value.
Harp on as much as you want, I'm all ears my friend

jimjames

badger09 wrote: »

Seriously jj? You're suggesting possibly putting £15k in a cash ISA:eek:

Care to explain why?:o

I seriously wouldn't do it hence the current account suggestion. But some seem to be attracted to cash ISAs regardless of their relative merits.

Having said that, I've taken out a cash ISA this year for the first time for 15 years thanks to some comments on here. It currently has a balance of £20 (after moving £300 through it) and will pay me back £120 over the next 12 months.

jimjames

teddysmum wrote: »

Don't leave trying for a mortgage too long. I know of someone, who has a mortgage free house, but wanted to buy a second and was turned down due to their age ( mid fifties).

I wonder if there is more to it than that. I can understand why a 25 year mortgage would be rejected but 10 years if their retirement age was 65?