Headache isn't it :)

YSRL

Not for you knowledgeable folk, but for me it is anyway.

So, I'll try and give some background and then hopefully gain some of you knowledge and advice.

I've recently closed a company and have money to invest, with the proviso that I don't mind taking a risk with some of it, but would never want to leave myself or my family short in the long term.

I must confess that after working silly hours for many years I have made a couple of impulse buys which should see us enjoying some family time (UK) in our new holiday home, which I hope will be of benefit to all the family, whilst in no way being an investment.

Aside from that, we have no debt (mortgage paid off) and I have kept one of the company properties (commercial), which should bring in 18K per annum in rent (property value £250K)

So, based on the worse case scenario - that I decide not to work again (or circumstances dictate that) and I have £250K to invest wisely, what would you recommend?

I am 48 years old and have no other income since closing the company (other than the rental yield).

I have filled the ISA allowance this year and have 10K in RateSetter (5 year at 5.9%) both outside the 250K mentioned.

I suppose, what I'm asking is - can I be comfortable in that I do not need to work again or should I be thinking of looking for something in the long term?

I've only just started looking into investing, having never been in this situation before (which I am truly thankful for) and have looked closely at the Vanguard Lifestyle products, but I'm really not sure, because I just have no experience in this.

Thanks in advance for any input/advice

bigadaj

Depends on how much you see yourself living on really.

How secure is the income from the commercial property?

A safe withdrawal rate from investments assuming you want some growth to maintain the sum in real terms is typically 4% so your looking at £10k from your pot, which isn't a lot really.

Pincher

£18k on £250 implies 7.2% yield.


You obviously know a good thing when you see it.


Asset strip it. Get a 60%+ LTV mortgage. Unlike residential Buy-To-Let, which is under attack, commercial property should be fully tax deductible on the interest. Get a 5 or 10 year low fixed rate.


You have £1,000 tax free interest from April 2016, so does your wife. Load up on 5% interest accounts, and Regular Savers. Space them out around the year, so you get maturing accounts every few months.


£5,000 a year tax free dividend each.
So your wife keeps her own S&S account, with £100k generating 5%, and you can do the same.
That takes care of ~£200k.


ISAs, pensions.

YSRL

Thanks for the feedback, I appreciate it.

bigadaj - realistically I think £20K - £25K per year to live on

Pincher - Yes, the building is a bargain and it is also recently fully renovated which is good. Not sure about mortgaging it because I just don't like the idea of any debt now I'm finally free from it.

Just to clarify - the 250K I have is cash as aside from the property

So looking for the best way to invest that really, to top up the property income.

Glen_Clark

bigadaj wrote: »

A safe withdrawal rate from investments assuming you want some growth to maintain the sum in real terms is typically 4%

That may have been so in the past but it looks over optimistic now. 10 year secure (German) Bonds pay 0.7%, you have to pay them to take your money for shorter periods. Thats why Asset prices have risen so much. So I don't think it realistic to expect that kind of growth from here.

BLB53

I've only just started looking into investing, having never been in this situation before (which I am truly thankful for) and have looked closely at the Vanguard Lifestyle products, but I'm really not sure, because I just have no experience in this.

I like the Vanguard LifeStrategy funds - I have a significant percentage of my portfolio (ISA and SIPP drawdown) in the VLS 60. You could do a lot worse than this globally diverse index fund.

However, depending on the level of risk you want to take, it is unlikely you will generate more than 5% from such investment long term - so, £10 to £12K on average.

Whether this combined with other income would be sufficient I don't know.

Maybe read up a little more on strategy - a good book would be Tim Hale's 'Smarter Investing'.

Also a couple of investment blogs worth a look are https://www.monevator.com and https://www.diyinvestoruk.blogspot.co.uk

Good luck!

Linton

You shouldnt plan on any more than £10K/year with a reasonable hope for appriximate inflation matching as a long term sustainable income from £250K. Perhaps it may be prudent to go for a bit less, you could well get more but best to plan pessimistically at this stage. Is £10K sufficient for your needs?

If yes the problem is how to achieve it at minimum risk and tax. An IFA would be able to advise on this and if you wish manage your investments with that objective. For a sum as large as £250K that is vital to yor future well-being and with your lack of experience of investing not taking professional advice would in my view be foolish.

A couple more thoughts...

How safe is the commercial property income? Having half your wealth in one asset seems risky to me, especially as you will be reliant on the income perhaps for 40-50 years.

Presumably in around 20 years time you will both get State Pension. How many NI years do you each have? It would be sensible to aim for the full 35 even if you arent working. How will an extra possible £15K/year fit into your long term financial plans? Would you want to take more than the long term sustainable income out of the spare £250K before SP age and cut back afterwards? Something to discuss with an IFA?

prosaver

Sometimes i think its a blessing to be skint..
i worry about buying a carrier bag lol

redux

YSRL wrote: »

Pincher - Yes, the building is a bargain and it is also recently fully renovated which is good. Not sure about mortgaging it because I just don't like the idea of any debt now I'm finally free from it.

The idea of Pincher's suggestion is that if you can get a mortgage rate cheaper than the rental yield rate, the effect is to gear up the rate of return on the capital you are still using.

For instance, with a mortgage rate of say 3.6% on £150,000, your net position would be a return of £12,600 on £100,000. Less other expenses in both cases of course.

YSRL

I would say the commercial property is reasonably secure rental wise, being in a good location and demand is quite high. My plan would be to sell it once the sales market is more realistic.

We've both made full NI contributions since leaving school, so around 31-32 years now.

I'm thinking that the combination of the rental on the property and any gains made from investing the other 250K would be more than enough to carry us through - even with some possible non rental income periods.

atush

Do either of you have pensions? Did you ever take advantage of a company pension thru your business?