How to invest £20-40k

onlyroz

Due to the company I work for being taken over I have received £20k after the sale of my shares. This money was always earmarked to cover the shortfall in a crappy endowment policy my husband took out before we met. The endowment matures in 2020 and has an approx £15k shortfall, so we have that covered. We currently have £144k left on the mortgage (due to end in 2028) and the endowment is currently projected to pay out about £30k. My husband also inherited about £20k last year from his mother. That money is currently offset against the mortgage (interest rate base plus 0.49%).

The hope is that my husband can retire in 2020 once the endowment has paid out. At that point I'd like to be in a position where I can take on the mortgage payments on my own, and have investments building up with a view to paying off the mortgage early.

So I definitely want to invest my own £20k, and if that goes well we would look to do something more interesting with my husband's £20k than have it earning a megre 1.24% (although this will rise if the base rate goes up further). Does anyone have any suggestions?

I have an account with Fidelity and am used to the platform, and I have this year's £20k ISA allowance available to me. My thoughts at the moment are to put £15k into an S&S ISA through Fidelity and then £5k into peer-to-peer lending (perhaps Funding Circle?). When I had an ISA before I picked the funds pretty much at random but this time I'd like to think it through a bit more. If you google "best investment funds" you find 20 different articles with 20 different recommendations. Does anyone here have any thoughts?

tacpot12

The selection of the right fund for you will depend to some degree in what and where you want to invest. It's unclear from your post how long you would be investing the money for. If you are clear on this point, you need to consider, over that time period, where do you think the best return will be received for the risk you are prepared to take.

The Vanguard LifeStrategy funds are well regarded (if you want a diversified global fund) and I would suggest you use these as a baseline and see if you can find something that suits your needs better than they do.

onlyroz

I would like to invest for around 5 years I think, unless I get to a point before then where we could pay off the mortgage.

Audaxer

onlyroz wrote: »

I would like to invest for around 5 years I think, unless I get to a point before then where we could pay off the mortgage.

5 years is fairly short term. As we have been on a long bull run there is a good chance of an equity crash in the next 5 years, so your investment could be worth less in 5 years time.

onlyroz

Audaxer wrote: »

5 years is fairly short term. As we have been on a long bull run there is a good chance of an equity crash in the next 5 years, so your investment could be worth less in 5 years time.

And so what would your suggestion be?

xylophone

You have earmarked this money for the mortgage repayment.

Why not repay £40,000 now and £30,000 in 2020 - this would leave you with a manageable mortgage for you to repay from your own salary?

onlyroz

xylophone wrote: »

You have earmarked this money for the mortgage repayment.

Why not repay £40,000 now and £30,000 in 2020 - this would leave you with a manageable mortgage for you to repay from your own salary?

Because my mortgage rate is only 1.24%. I would have thought I could get a higher return than this without much difficulty.

kidmugsy

Open three nationwide FlexDirect current accounts: one each and one joint. That's £7,500 earning 5% AER for the first year. Open three current accounts at TSB: that's £4,500 earning 5% AER until whenever.

At Nationwide open a Flexclusive saver each: £250 p.m. each, earning 5% AER. Carry on in similar vein until you've snaffled all the good current accounts or regular savers.

Be careful to read the T&Cs, especially of the current accounts.

onlyroz

Doesn't the current account trick involve shinting money from account to account each month? Also I'd prefer to put as much as I can in an ISA, because I'm a higher rate tax payer and it wouldn't be too hard to go over the tax threshold.

ColdIron

Would you rather earn 5% taxed or 1.35% untaxed?

onlyroz

ColdIron wrote: »

Would you rather earn 5% taxed or 1.35% untaxed?

With an S&S ISA wouldn't I expect to earn 5-10% untaxed?