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Stock market, property or both?

d_barratt
Posts: 15 Forumite

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.
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Comments
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My advice:
Live the best years of your life -at least 20 more- before thinking about money consumes you.
You are well set.0 -
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.1 -
At that level of income, paying the least amount of tax should be your focus.0
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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.1 -
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".
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Diplodicus said: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.0 -
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".
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.0 -
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".
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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.
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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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