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Stock market, property or both?

Hi all,

I'm a long time reader but this is my first post as I'm hoping to gather thoughts from people more experienced than myself.

To provide some background:

  • Age: 28
  • Currently own a house that I purchased in February this year for £600k, in which I have around £200K equity
  • I work in sales in the software industry, earnings are north of £200K
  • Have around £100-£125K that I'd like to invest
  • Live in the South East

Goals:

  • Create a large enough monthly cashflow to equal my outgoings - which will be approximately £3,750
    • This includes covering all bills for my partner, who will be going on maternity leave in November
  • Longer term capital growth

Challenges:

  • I don't have alot of time on my hands, so while I appreciate nothing is passive I would like to implement a strategy that does not require my attention all day, every day
  • My second challenge is around tax. I already get taxed a significant amount so would be looking for the most cost effective way to invest.

Other points:

  • I have 6 months emergency cash set aside to cover my expenses
  • I invest around £800 per month into a pension 
  • Can accumulate cash quickly through savings
  • Have initially put the majority of my focus/research on property and the idea of building a BTL portfolio, but i'd be interested to hear people's thoughts on better/other options to meet my goals.

Thanks in advance.


«1345

Comments

  • Diplodicus
    Diplodicus Posts: 457 Forumite
    100 Posts First Anniversary
    My advice: 
    Live the best years of your life -at least 20 more- before thinking about money consumes you.  
    You are well set.
  • dunstonh
    dunstonh Posts: 118,542 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    Have initially put the majority of my focus/research on property and the idea of building a BTL portfolio, but i'd be interested to hear people's thoughts on better/other options to meet my goals.

    That isnt consistent with  either of your "challenges".

    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • Alistair31
    Alistair31 Posts: 968 Forumite
    Seventh Anniversary 500 Posts Name Dropper
    At that level of income, paying the least amount of tax should be your focus. 
  • Diplodicus
    Diplodicus Posts: 457 Forumite
    100 Posts First Anniversary
    I would say the opposite - anyone fortunate enough to live in a free country where superior/intelligence etc allows a good income
    - in this case x7 average wage - should dutifully pay the full tax of the country that facilitates him imho.
  • d_barratt
    d_barratt Posts: 15 Forumite
    10 Posts
    dunstonh said:
    Have initially put the majority of my focus/research on property and the idea of building a BTL portfolio, but i'd be interested to hear people's thoughts on better/other options to meet my goals.

    That isnt consistent with  either of your "challenges".

    Thanks for your message. You've pointed something out without really offering any advice on what could be a better option. As an IFA, what would you suggest to a client in my circumstances?
  • Alistair31
    Alistair31 Posts: 968 Forumite
    Seventh Anniversary 500 Posts Name Dropper
    I would say the opposite - anyone fortunate enough to live in a free country where superior/intelligence etc allows a good income
    - in this case x7 average wage - should dutifully pay the full tax of the country that facilitates him imho.
    I was thinking avoidance rather than evasion. 
  • NorthernJoe
    NorthernJoe Posts: 87 Forumite
    Fourth Anniversary 10 Posts Name Dropper
    d_barratt said:
    dunstonh said:
    Have initially put the majority of my focus/research on property and the idea of building a BTL portfolio, but i'd be interested to hear people's thoughts on better/other options to meet my goals.

    That isnt consistent with  either of your "challenges".

    Thanks for your message. You've pointed something out without really offering any advice on what could be a better option. As an IFA, what would you suggest to a client in my circumstances?
    I think the message is, "don't purchase a BTL property" -  it seems counter to your two main objectives of minimising tax & having hands-off investments. 

    Living in the South East, the second home tax is likely to be significant & BTL is likely to take up significant amount of your time. Illiquid assets in a major economic downturn seems unwise if you can avoid it. 

    I'd maximise pension contributions & put as much as I can into a S&S ISA and LISA. 200k is a significant income but we are entering what is likely to be a very severe recession. I have closer to 12 months of savings for this reason but then again, I have dependents. 
  • tomla
    tomla Posts: 144 Forumite
    Part of the Furniture 100 Posts Combo Breaker
    d_barratt said:
    dunstonh said:
    Have initially put the majority of my focus/research on property and the idea of building a BTL portfolio, but i'd be interested to hear people's thoughts on better/other options to meet my goals.

    That isnt consistent with  either of your "challenges".

    Thanks for your message. You've pointed something out without really offering any advice on what could be a better option. As an IFA, what would you suggest to a client in my circumstances?
    Read further..."If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.". 


  • Gary1984
    Gary1984 Posts: 362 Forumite
    Tenth Anniversary 100 Posts Name Dropper
    edited 13 July 2020 at 11:43PM
    Definitely max out your ISA allowance. If you want a regular income then there's plenty of investment trusts that aim to provide a steadily increasing dividend stream that you could hold in the ISA.

    Also take a look at VCTs for a portion of your investments as they give 30% tax relief. They're risky but you're probably the sort of high income investor that would benefit from them. 

    Beyond that just use a general trading account to buy some passive funds or investment trusts. However be prepared to pay some dividend and capital gains tax. 

    Avoid buy to let - hard to imagine a less passive or tax efficient investment. Also talk to an IFA.

    I know this wasn't what you were asking about but your pension contributions are very low for someone with your earnings. Consider significantly increasing this as it's the most tax efficient saving available to you, though won't help with your immediate goal of achieving an ongoing income. 
  • unkle
    unkle Posts: 338 Forumite
    Part of the Furniture 100 Posts Name Dropper Combo Breaker
    edited 14 July 2020 at 6:26AM
    Partner and baby on way;
    1. Is your partner going back to work? If not pension contributions for her.
    2. Increase your own pension contributions if you can (didn't say how much your employer pays in) but don't forget the taper of what you can do tax free with your earnings.
    3. It may be worth looking at structured products, you can have some of them in an ISA wrapper. But of course use the ISA allowances in full for both you and your partner. DO they still do JISA's for kids?
    4. On BTL, you could partner with someone, i.e. be a silent investor if you REALLY want to go into property, lots of opportunities out there.
    5. Pay down mortgage or switch to Offset

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