Sizeable investment help/thoughts

Mr.Saver

tmack wrote: »

Hi Again. Sorry, I cant figure out how to use the “” in replies. malthusian and mr saver. Which makes this less cohesive but hopefully you know what parts i am responding too.

You can use "[ QUOTE]" and "[ /QUOTE]" (remove the space in them) to wrap the text around.

tmack wrote: »

1. Re Pensions/Property. I know this is weak, hence my initial post to see thoughts/ideas on what Would be potential ways forward for income from investments etc. I may go back to part time work but no guarantee and unlikely to gain a position with any great salary, so trying to do the best with what I have got.

Any part time work that can give you income above £2,880 per year will help, and the more the better. You can then top up your pension with the same amount and get 20% extra. Plus, the extra income will help you too.

tmack wrote: »

£265k from house sale will be for investing into S&S to provide an some income but not in the short term as I have cash reserves. Less would go in if I buy a flat for my son or purchase myself as a BTL. If for my son IHT shouldn’t be a problem as I have my late husbands unused allowance carried forward too. However who knows what will happen between now and seven years and it may not be worth the risk and better I purchased it. I am still not sure that if something happened to me in less than seven years whether tax is payable on the gift (PET) as unlikely to go over the IHT threshold.

Based on the info you gave, your total estate is worth more than 530k, and this is above the IHT threshold. But as you said, some of them might be a part of your deceased husband's estate. Unfortunately I don't know enough about IHT, and can't help you on this. Hopefully someone else on the forum saw this and give you some help.

On the other hand, if the gift is liable for IHT for 7 years, a term life insurance will be more than enough to cover the IHT if the unfortunate happens within 7 years. And if you are healthy, this should not cost much. This should be in your consideration too.

Buying a house for your son is going to be more tax efficient than BTL, but please make sure you have enough left for your retirement. In another word, you are helping him get onto the ladder, he doesn't need to start high.

tmack wrote: »

2. p2P as above, already reducing by a considerable amount.

Good to know.:money:

tmack wrote: »

3. My S&S isa and Gia accounts are all equity based. No bonds and the only cash in them is minimal to pay fees/charges. This is where I need to look at a good risk spread with the capital I have and will have shortly but wanted to work out whether to buy a second property, either for my son to live in or as BTL first, so I would know how much I would be looking to further invest.

OK, so in this case, you currently have 22% in P2P and 38% in equities.
Your investable asset (including the cash reserve) is between 267k and 532k depending on what do you do with the house sell proceeds.

Considering that you are in early/mid 50s, and would expect more than 30 years in retirement, you should stay on the conservative side of withdraw rate of 3% each year in line with inflation. This will give you between 8k and 16k per year income before state pension kicks in. Do this sound enough? I doubt about it. As you said you are expecting to pay up to 24k per year bill for your son's tennis. Unfortunately I cannot find a sustainable way to get more than 24k per year from the 532k investable. Should you talk to your son and reduce / pause / cancel this spend? If this is not an option, then you will have to deplete the pot faster than you should, and live poorer in latter life.

If you buy a house for your son, then the rent a room income is not going to be able to cover his tennis, and you would have to fork out more (percentage wise) from your own savings, this would put you in a worse position.

The best course of action is to have a talk with him, and find out if this cost can be cut.

tmack wrote: »

4. I didn’t downsize but moved area when my husband died and I deliberately purchased a home where, if necessary to provide income, I could rent a room out, either for students in the Summer, AirBnB or M-F room. Its not something i am intending in the short term but its an option DTL.

My question was to find out whether part of the £265k would be used to pay for your current home. But based on your replies to above questions, I feel the £265k is net cash and not facing any deductions. Some of the things I wrote above also assumed this.

tmack wrote: »

5. I would prefer to reduce the P2P and cash and increase equity exposure. As you rightly said, I am a novice but learning all the time and enjoying it too. We haven’t even explored equity options yet �� you will likely think what I have invested is a major car crash ��
Thank you.

TBH, the planning is more important than the portfolio itself. If you don't have a plan, you can only invest for the best return within your risk appetite. This is not necessarily bad, it works if you don't have a goal and invest in very very long term.

But in your case, you have imminent financial goals, which is your and your son's expenditures and your long term retirement plan. Without knowing the goals and possibly make necessary adjustments to the controllable things, only an investment portfolio is not going to help much.

jimjames

tmack wrote: »

Full time Mum to our son who is now in first year Uni on a tennis scholarship (aspires to become a pro player but if doesn’t happen , a life in tennis in some capacity).

Lots of good comments already but this particular section stood out to me. If your son is at university then are you really still a full time mum to him? I'd always thought of this term in relation to minor kids rather than adults. Are you funding everything for him or does he get any fees paid or loans given?

If he has part time course can he work to earn his own money to support himself? Maybe coaching if he has the skills for tennis or some other job that would earn enough to pay his course and living costs.

In terms of the plan if you are intending spending a big chunk of the money buying a BTL then that doesn't sound like a great idea to me as it reduces your spread of investments and reduces flexibility as you can't easily realise cash from it.

tmack

Thanks all for your information. I am reducing my P2P investments and looking at making up the shortfall for state pension. Potential for son to change to full time at Uni that would mean he could get a student loan. So lots to ponder and will look at increasing my investment portfolio once house sale proceeds are complete.