What to do with £50K

bowlhead99

To the OP: in your thread back in September '14 you had circa £100k of mortgage which was only being paid down at 10% a year because there was a penalty for the next 3 years, and you had £100k of cash in the bank. You were looking to invest £30k of that cash and were not risk averse. Pensions were suggested as you were both high rate taxpayers so they would have been very efficient and your wife only had a small scheme.

Fast forward to today about 20 months later. You've cleared the £100k mortgage despite the penalty, and you've swelled the savings pot from to £150k. So depending on whether or not you went ahead with the £30k pension investment, you've grown the savings balance by £50-£80k on top of clearing the £100k mortgage and penalty. This implies either you have very low living costs in relation to your income or you came into a windfall. Either of which would seem to imply a holiday is very easily justified and affordable.

You also say you are "fortunate that we have a spare £50k in the coffers" so I'm not sure if you have your £150k in the bank and another £50k on the "coffers" sidelines (total £200k), or whether you just mean you want to invest (or blow on a holiday) £50k of the £150k that's in the bank.

Either way, it seems like as you have two incomes on which you are both paying high rate tax (and potentially one of you is now in a 60% marginal tax bracket having been on a salary-plus-bonus of c.£100k in the thread a couple of years back), you should be making use of your annual pension contribution limits (including carrying back to previous years' unused allowances) to stuff a large portion of your cash into personal pensions and get tax relief.

Particularly as you are both of the age where personal pensions can be drawn straight back out again (after taking a tax free lump sum) there is no real risk of the money being 'locked away' and inaccessible, which is something that sometimes puts people off making extra pension provision when they are younger.

By all means spend some or all of the £50k on a holiday of a lifetime, while you're young enough to fully appreciate it - whether that's one indulgent £50k holiday or ten £5k holidays over the next decade.But given the £150k of cash savings, no mortgage and £14k of gross new salary income a month, there doesn't seem to be any need for much of your savings to be hanging around in cash ; if you've got used to a £14k/month income it's highly sensible to take tax relief now to create a pension portfolio to give you a decent ongoing income for the 3-4 decades you may live through retirement.

brasso wrote: »

OK, so I'm not allowed to use the 4-letter P word. Let's say that the OP is " 'avin' a larf " instead.

Could well be. Maybe you could help me out with this: after doing my tax return I got £3k back from the taxman for 2015/16; should I use it to make investments, open another high interest current account account or should I have some breakfast? I'm leaning towards the latter as it's getting towards 7am and I'm feeling peckish. Are my options mutually exclusive? I'm not considering retirement at this time, and will probably thank you for the advice and disregard it.

brasso

bowlhead99 wrote: »

................Could well be. Maybe you could help me out with this: after doing my tax return I got £3k back from the taxman for 2015/16; should I use it to make investments, open another high interest current account account or should I have some breakfast?.......

Ah, now £3K is worth canvassing opinion on. Could be a very nice long-haul holiday (planned over a fantastic breakfast) vs being boringly sensible and adding to one's pension or whatever.

But £50K? I think we are being wound up. (And if we are not, the obvious answer is that, you never know, £50K might just stretch to a great holiday AND a £47K investment. )

kidmugsy

It's the dry season in Queensland. Go and look at the Barrier Reef.

uk1

If you are both BA Exec Club members .... then until midnight tonight is the last day you can "buy" Avios and get a 40% bonus. They allow you to buy up to 100,000 miles ie 140,000. If you plan more and more travel when you retire ...... or even before .... and you are flexible on your travel dates then this investment" will get you a couple of First Class seats pretty much anywhere ..... as long as you also have a BA Premium Amex card which also gives you a 241 ticket each year.

http://www.britishairways.com/travel/purchase-avios/public/en_gb

https://www.americanexpress.com/uk/compare-avios-credit-cards/index.html?sourcecode=MULT000221&cpid=100122274&veid=sygN0XrDI|dc_pcrid_99767462834_plid__kword_british%20airways%20american%20express%20premium%20plus%20card_match_e

Each of us has a card and we trigger two free First class matching BA tickets each year. and with felixibility have always got some great flights.

That get's your responsible savings and investment for your old age out of the way.



Jeff