First time invester / long time lurker

Rickster1978

So I’ve been a member on the forum for 10 years and I’ve posted in various different sections but investments is a new section to me.

I’ve just come into a bit of money from a share scheme. It will be just over £75k once the capital gains tax is sorted.

Myself and my wife bought a buy to let property last year as a long long term investment which will hopefully add significantly to my pension pot. The mortgage is due to end when I’m 60 so it’s at the right time. My work pension isn’t great so I’m hoping to increase my monthly payments once I’ve cleared some other debt. Speaking of which, I have 4 months left on my student loan (£180pm) and a fairly new loan on a car (£220 pm and £11,000 redemption, loan is 2.9% with Sainsbury’s) No credit cards or other loans. Our house has 14 years left on the mortgage and the next 4 of those are fixed at 1.95% so I’m limited as to how much I can pay off that.

I’ve read quite a few forums and I’m taking my time in deciding what to do with the money. I’m thinking the obvious thing is to clear the car loan and the rest of the student loan which should leave me with circa £65k.

I’ve been looking at the Vanguard funds and think this may be a good way of investing some of it. Is that a commonly shared view?

Once the money lands with me in the coming weeks I’ll probably put £50k straight into premium bonds whilst I decide what I want to do. Again does these make sense for the short term as it’s safe and accessible.

Alternatively I’m still pondering another BTL. Obviously the new changes in stamp duty and tax relief don’t make it quite so appealing but our view on the other property was that as long as it clears the mortgage and can continue to do so with a significant interest rate rise we were happy. We did a lot of work on the property ourselves and increased the value of it if we did need to sell (subject to general housing conditions obviously).

So I’m probably rambling a bit but just wanted to introduce myself and get a bit of guidance.

Thanks in advance

kidmugsy

Parking £50k in PBs while you gather your thoughts is pretty reasonable. Or you could use one of the savings accounts that pay about 1.5% AER at the moment.

Between the two of you you could open three FlexDirect current accounts at Nationwide; if you honour the T&Cs you'd get 5% AER on up to £2,500 per account for the first year (1% thereafter). There are also regular savers that pay that rate - Nationwide's are probably the best, in the sense of the most flexible. There's also money to be made by becoming a new Nationwide customer.

After that I'd guess that it makes sense to look at the pension provision for both of you. If either of you can use salary sacrifice in an employer's scheme then that's very attractive. You want to make sure that in retirement you both have enough pension income to exploit the whole of your Personal Allowances against income tax.

Vortigern

Rickster1978 wrote: »

I’ve just come into a bit of money from a share scheme. It will be just over £75k once the capital gains tax is sorted.

Your first step should be to find ways to avoid paying CGT on your shares.

You may be able to transfer £20,000 worth to a S&S ISA within 90 days of exercising your option to purchase. These shares could then be sold immediately with no CGT to pay.

If appropriate you could gift/transfer some shares to your spouse who could then sell using their CGT allowance rather than yours.

You can sell sufficient shares now to utilise this years CGT allowance and sell some more after 5th April using next years allowance.

Rickster1978

Thanks for the replies

I don’t think there’s any way of avoiding the CGT as this was an employee share scheme and the company has just been sold with the new owner purchasing all of our shares. The money has hit my account this evening which is nice.

Now to decide the best way to invest. I’m still pondering another buy to let but still not sure if I’m better off looking at a vanguard fund for a chunk of it.

AlanP_2

Decide what your objective and timescale is before deciding what to invest in.

This is US focused but the principles and steps are absolutely correct https://www.morningstar.com/articles/789005/how-do-your-financial-priorities-stack-up-with-our.html