Money from sale of a house

Welshy16

Evening all. our sale of our house is due to go through soon leaving us with around £120k.

We have a mortgage on a new property of £228k on a 2 year fix from October paying 1.4% interest. I can overpay by 10% of loan amount per year.

We have credit cards of around 6k but paying no interest until June 2019

No other credit agreements.

I've mentioned buying other property to my other half and she's not keen.

I've used the calculator on this site about whether i should overpay my mortgage or not and it seemed to indicate if i can get something with interest of over 1.8% i shouldn't overpay.

i can't see us needing this money in the short term so any ideas on where to put it?

I have a Santander 1-2-3 account so i'll keep 20k in there probably at the 1.5% for easy access emergencies so prob have around 100k to play with maybe.

grateful for anyones comments on what to do/not to do!

Cheers
Dave

Sarastro

What's your pension situation like? Very tax efficient to put extra into pension if you don't need it now.

I think I'd end up doing a mixture of things thought tbh.

Welshy16

I'm a Civil Servant and wife is NHS so pretty good to be fair. We're both early 30's age wise.

Money_Help

You say you don't need the money in the short term but have you thought about when you will need the money and what you will use it for?

If you don't need it for the next 10 years plus you could consider investing the cash as investment returns will likely outperform cash savings rates over the long term (although not guaranteed).

In terms of being tax efficient it's always good to use your ISA allowance each year and possibly pensions if you are prepared to lock it away until you 'retire'.

ThePants999

+1 for investment. Higher risk rewards higher return, so if it wouldn't be a disaster to lose some of it, invest. By way of example, the FTSE all-share is up 10% over the last year.

greenglide

the FTSE all-share is up 10% over the last year.

But, for God's sake, don't invest in that index. A 100% UK investment like this would be atrocious.

It would have been much better to quote the FTSE all world or similar as an example.

Welshy16

Yeh i've had a nose at investments. S&S ISAs etc but my wife again isn't keen. Lets just say she doesn't like a gamble.

I guess the safe option is to lock it away for 1 year fixed which will then expire by the time our remortgage is due in two years and put most of that money back into the house to lower the LTV.

capital0ne

Open two more Santander 123 accounts so you can earn 1.5% on £60k.

Put £40k into an S&S ISA each in a Vanguard Lifestrategy 80 ACC fund each.

Put the remaining £20k into Premium bonds

Good luck

Eco_Miser

Welshy16 wrote: »

Yeh i've had a nose at investments. S&S ISAs etc but my wife again isn't keen. Lets just say she doesn't like a gamble.

Most savings accounts, over the long term, aren't a gamble - they're certain to lose against inflation.

A well-diversified portfolio is a gamble, with odds in favour of beating inflation by 2% or more, but the possibility of being down when you need the money.

kidmugsy

Welshy16 wrote: »

We're both early 30's age wise ... prob have around 100k to play with

I suggest you open a LISA each with a view to being able to withdraw all the money tax-free from age 60 onwards - it might allow you to retire early without suffering an actuarial reduction from taking a DB pension early. Because it's only a modest £4k p.a. each you might manage to persuade your wife to have it invested in some sort of global equity tracker. If either of you pays 40% income tax then you might be wise to avoid it by contributing to a personal pension of some sort, again with the hope of making early retirement practical.

With £100k I'd also suggest that you keep say £5k to £10k in gold sovereigns if you have somewhere safe to store them. You should also look at using the regular saver accounts that pay 5% p.a. For example, Santander do one. See also Nationwide.

As for the rest, if you really want to hold it in cash with a view to using it largely to pay off the credit cards and a chunk of the mortgage, you could do worse than park it in Premium Bonds: up to £50k each is allowed.

Maybe you'd be wiser to put more into equities via conventional S&S ISAs, but not if it worries your wife. Maybe you will be lucky; if stock markets collapse that would give you a good time to invest.

Many people might reckon that with the job security you presumably have you might be being too cautious by looking at debt reduction rather than investment. The purpose of wealth, however, is to provide comfort and security, and only you two can judge how best to find those.

TheLastMongoose

Do you both plan to work full time until retirement age, presumably 70? If not I would be considering pension options/lifetime ISA.