£300k Saving / investment Advice

DSG20

Hi
I am after some advice on how I should invest £300k plus for the short term which is currently sat in a low interest savings account. My circumstances are as follows:
Widowed with 2 young children. I moved out of what was my main residence and have letted out on a 12 month rolling contract. The property is mortgage free. I moved into a smaller house which I purchased outright last year to get my eldest child into the correct catchment area for school, so I view the move into this property as a temporary move. My current thinking is that I will eventually rent this property out when I find a new main residence. I plan to keep my old main residence and leave it let out as it brings in circa £1100 per month.
I am employed full time and a Higher rate tax payer, enrolled in the work pension scheme for the last 18 years. I do not make any AVC's.
I have a couple of Cash ISA's which have matured and paying low interest so I am open to move the money into something where I will get a higher return.
I have a S&S ISA which I have for the last 2 years maxed out and this year reduced my direct debit so I pay approx £4k per year into this S&S ISA.
I have no credit cards or other debt. 
I have in excess of £300k sat in a low paying savings account which at this moment I do not need access to. I already have an emergency fund in place which would cover my bills/living expenses for 6 months. 
I am keeping a close eye on the property market and if the market drops in 12 months or so I plan to invest some money on further properties (B2L, property to flip, land for development opportunity etc)
So just after some opinions on what I could do with my £300k, should I max out my S&S ISA? Make Pension AVC's? Move Into higher paying savings accounts? Other? I cant see myself needing access to the money for the next 12 months (unless a fantastic opportunity in property presents itself)
Interested in peoples thoughts and opinions. 
Thank you in advance.

respectmymonah

Firstly, investing is not for the short term.
Secondly, please tell me you haven't got all this £300k in the same bank, potentially risking £215k without FSCS protection?
IMHO
Your first move, while you're researching and deciding what to do, should be to get most all of that money into NS&I. You may as well max out your £50k premium bonds allowance and use both your kids allowances too - you cab open gift accounts in their name but officially any interest earned/prizes won would be theirs. Put the rest into premium bonds. You can also stick £9k in junior ISAs per child, best deal is also currently NS&I. I don't know if the allowance will be the same next year. FYI the kids can access the money and do what they want with it at 18, you can't control it.
Personally I would transfer the cash ISAs to the stocks and shares ISA and carry on paying in maxing out every year's ISA allowance, and pension allowance too either buying additional pension, with AVCs or SIPP contributions.

So to answer your question "So just after some opinions on what I could do with my £300k, should I max out my S&S ISA? Make Pension AVC's? Move Into higher paying savings accounts" ... You can afford to do all 3 for a good while.

El_Torro

The main thought that jumps out at me is that you are putting a lot of focus on Buy To Let properties. Sure, it's an option, though not particularly tax efficient, and I would say that the more properties you own the more you should focus on other investments, i.e. your pension and Stocks & Shares ISAs. I appreciate that you have 2 kids to worry about as a single parent, but don't ignore your own future. By that I mean make sure you are investing adequately in your pension. This might mean putting more into it, even if your employer won't increase their contribution. Especially since you're a Higher Rate tax payer the pension relief is good, at least until you get your income down to the level of a basic rate tax payer.

If you want to use a big chunk of your £300k in the near future (in a year or so) then the standard rule applies, don't invest it. Interest on savings is pretty dire but at least the money is safe. For such a big chunk make sure it's safe, either all with NS&I or spread out across enough banks so that it is protected in case the bank you are with goes bust.

steampowered

It is very contradictory to say you want to invest "for the short term", then to talk about property investment. Things like buy-to-let are long term investments given all of the acquisition taxes and acquisition costs involved.

As you are a higher rate tax payer, you will get an instant 40% return on money put into your pension due to tax relief. Achieving that sort of return with property investment would take decades. Not to mention salary sacrifice could help with child benefit tapering.

As you are willing to contemplate high risk investment strategies that can result in major capital loss such as flipping properties or buying land for development, you should be able to stomach the more modest risks associated with a diversified stocks & shares portfolio - such as a tracker fund.

As you are a higher rate tax payer the recommendation would be to make high pension contributions and max out your S&S ISA allowance before considering BTL.

tacpot12

If you can afford to lose some of the £300K, invest it, but if you need all of it to buy the property you envisage, you need to keep it in a savings account and accept that it is not going to earn a much interest. Premium Bonds might be an option for you, the prizes are paid tax free and in theory you should get a return of about 1.4% on the money. In practice, returns can be variable, but the money is safe as the government can't go bankrupt  (or so we hope). 

respectmymonah

tacpot12 said:

If you can afford to lose some of the £300K, invest it, but if you need all of it to buy the property you envisage, you need to keep it in a savings account and accept that it is not going to earn a much interest. Premium Bonds might be an option for you, the prizes are paid tax free and in theory you should get a return of about 1.4% on the money. In practice, returns can be variable, but the money is safe as the government can't go bankrupt  (or so we hope). 

/
And if that does happen, were going to have bigger problems to worry about that money.

Albermarle

As above but you will need to be clear on the rules for how much you can put in your pension and the best way to add the extra.
You can't just put £100K in, as I am sure you know anyway .

DSG20

Thank you all for your advice... I will look at increasing my pension contributions in the first instance. Out of interest, if my circumstances were that I didn't need access to the money for atleast 7 years when (and if) my children decide they want to go to university, is a S&S ISA still the best option? 

csgohan4

DSG20 said:

Thank you all for your advice... I will look at increasing my pension contributions in the first instance. Out of interest, if my circumstances were that I didn't need access to the money for atleast 7 years when (and if) my children decide they want to go to university, is a S&S ISA still the best option? 

possibly, but ideally you want to invest as long as possible. 

Have a read of:
https://monevator.com/

and understand what S+S is all about first

steampowered

DSG20 said:

Thank you all for your advice... I will look at increasing my pension contributions in the first instance. Out of interest, if my circumstances were that I didn't need access to the money for atleast 7 years when (and if) my children decide they want to go to university, is a S&S ISA still the best option? 

Yes, 7 years is a good amount of time to be holding stocks & shares.

Over long time periods:
- Holding stocks and shares becomes lower risk, because longer time periods mitigate the year-to-year fluctuations you get with the stock markets. 
- Holding cash in a savings account becomes higher risk, because inflation eats away at the money each year, over time that adds up.

There is a very analysis of the impact of different holding periods for stocks at https://www.nutmeg.com/nutmegonomics/increasing-your-chances-of-positive-portfolio-returns-the-facts-about-long-term-investing/.

The graph in that article shows that on stocks & shares, over a 7 year time period, there is a 90% chance of making a profit and a 10% chance of making a loss.