How to invest £220k for min 12 years

recruit18

Dazed_and_confused wrote: »

This all assumes she hasn't applied for Marriage Allowance.

Haven't thought about this either as I earn over £50k and thought we weren't eligible. Are you saying that as I put sufficient contributions into my pension to bring me into 20%, then we can make use of this?

Dazed_and_confused

She is paying into a council pension scheme

My previous figures may be slightly out then. From your earlier post I was assuming she had £8,000 taxable salary.

But if it is £8,000 salary and pays say 5% into the employers pension scheme through a "net pay" arrangement her taxable salary (the amount which goes on her P60) will only actually be £7,600.

So more spare Personal Allowance.

Dazed_and_confused

Haven't thought about this either as I earn over £50k and thought we weren't eligible. Are you saying that as I put sufficient contributions into my pension to bring me into 20%, then we can make use of this?

You should be able to yes.

Eligibility for Marriage Allowance, either as the applicant (your wife) or recipient (you) is determined by the rates of tax you pay, not your taxable income.

So providing you aren't considered a higher rate payer then you would be eligible for the Marriage Allowance tax credit that recipients get.

For Marriage Allowance you must not be liable to any higher rate tax AND would not be liable to higher rate tax on dividends if it weren't for the dividend nil rate of tax (aka dividend allowance).

recruit18

Dazed_and_confused wrote: »

You should be able to yes.

Eligibility for Marriage Allowance, either as the applicant (your wife) or recipient (you) is determined by the rates of tax you pay, not your taxable income.

So providing you aren't considered a higher rate payer then you would be eligible for the Marriage Allowance tax credit that recipients get.

For Marriage Allowance you must not be liable to any higher rate tax AND would not be liable to higher rate tax on dividends if it weren't for the dividend nil rate of tax (aka dividend allowance).

Cheers will look into that pronto. The only shares (dividends) I will have will be in ISA's & pensions so assume that doesn't affect this?

You have pointed out 3 things I've completely missed so massive thanks to you Dazed & confused

recruit18

Dazed_and_confused wrote: »

You don't even have to be earning to be able to pay something.

There is a very popular thread on the pensions board all around being able to contribute £2,880 and get £720 tax relief added to the fund even if you have no earnings.

£3,600 being the maximum gross contribution unless you earn more than that

She is paying 5.5% into a LGPS WARCC Warwickshire county council pension. Can I set up a personal SIPP for her in addition to the council pension to get the additional 25% top up?

Dazed_and_confused

Yes. Presumably this is a defined benefit pension so I'm not 100% certain quite how the existing pension contributions are treated as far as impacting what she could pay into a SIPP.

Might be worth you starting a new thread on the pensions board about this specific, there are some LGPS experts who will know this.

But absolutely worst case scenario she will be able to do the £2,880/£3,600 thing.

Zero_Sum

recruit18 wrote: »

She is paying 5.5% into a LGPS WARCC Warwickshire county council pension. Can I set up a personal SIPP for her in addition to the council pension to get the additional 25% top up?

LGPS do operate an AVC scheme through Prudential

Alexland

recruit18 wrote: »

Thanks but I thought up to £60k that Vanguard 0.15% platform fee was cheaper, especially if you trade monthly? Was planning to drip feed in £1,666/month into an ISA for both myself and my wife. Therefore put £40k per year into the market and keep the remainder in 1.4% Cash ISA and 2-2.5% in fixed rate cash accounts. This is to take advantage of £ cost averaging and to hedge for if the market has a downward correction in the next 3-4 years.

If you have up to £220k to invest and are going for something balanced like VLS60 there's not a huge point drip feeding at £1,666 per month per ISA. If you just invested £20k each at the start of each tax year you would still get an averaging effect over the years it takes to wrap the money. However you might find that there are no crashes until you have completed gradually wrapping the money at which point you have missed out on some of the market return and still suffered a 25% drop. Your method would gradually increase risk as you get closer to retirement.

Personally I would just get on with investing the money that is not needed for the next 5+ years in ISA, pensions and general investment accounts and just accept the volatility knowing you have an appropriate asset allocation.

Alex

recruit18

Alexland wrote: »

If you have up to £220k to invest and are going for something balanced like VLS60 there's not a huge point drip feeding at £1,666 per month per ISA. If you just invested £20k each at the start of each tax year you would still get an averaging effect over the years it takes to wrap the money. However you might find that there are no crashes until you have completed gradually wrapping the money at which point you have missed out on some of the market return and still suffered a 25% drop. Your method would gradually increase risk as you get closer to retirement.

Personally I would just get on with investing the money that is not needed for the next 5+ years in ISA, pensions and general investment accounts and just accept the volatility knowing you have an appropriate asset allocation.

Alex

Hey Alex

Your logic makes a lot of sense. I think I'm just struggling with the psychology with suddenly having a lump sum to invest and the thought that we are well into a bull market run...I will have a good think about it, cheers

Thrugelmir

recruit18 wrote: »

Was looking at the Vanguard Lifestyle 60 to roughly match my risk profile and age (ie 40% in bonds for a 42 year old). This would hopefully shield me from the full force of any stock market crash.

With a committed buyer in the form of the BOE, bonds as in the form of UK Gilts offer little value. The net result is that the other 60% invested in equities has some heavy lifting to do if you are going to achieve a reasonable return. Central bank policy has been to encourage investors to take on greater and greater levels of risk by chasing the yield available on equities. Prices being pushed higher and higher. Resulting in a fair number of stocks now being on a demanding rating. Professional investors are sitting on piles of cash. Might not offer them much return. However they aren't going to lose capital.

Personally I'd be in no rush at the current time. Being selective and cautious may well be the appropriate. Until the fog begins to lift.