What to do with 200K and where to save to?

Alexland

tryingtogetmyheadaround said:

You can tell i'm new to investing with this type of comment..... is a Vanguard 80/20 a "balanced" type investment as it splits the money out over different markets.

With 80% equities I would have VLS80 down as adventurous with VLS60 being balanced due to the higher ratio of fixed income bonds. However balanced isn't always best as a slant to equities has often (and in recent decades) produced an enhanced result even if the journey is less smooth. Still there have been long periods of time that equities have not done well. Looking back much depends on timings (hard to control when you reach certain points in life of having money to invest or withdraw) and investment duration.

AlanP_2

tryingtogetmyheadaround said:

You can tell i'm new to investing with this type of comment..... is a Vanguard 80/20 a "balanced" type investment as it splits the money out over different markets.

I'd say it was a balanced fund as it has wide geographic coverage and covers Equities and Bonds. The balance between Bonds and Equities requirement can vary between individuals and over time so it is just one example, a better term would be multi-asset fund that diversifies your investments across markets and assret types.

snowcat75

Thanks for all the reply's,
To add a bit more info, I have things like life insurance and critical illness, I have a decent amount of assets in the shape of land, buildings and a yard where I run an established company,  so although self employed I'm not in the position of a sole trader.

I have thought about pensions, however although I say I have no short or medium term use for the money it doesnt mean that if I saw a nice derelict barn in need of conversion in 5-10 years time at the right money then I wouldn't be tempted and friends already are asking what the next project is. 

My wife also has a very good LA pension she's paid into since 16, so we shouldn't starve into retirement especially as I could easily just let the yard if I packed up wanting to run the business. 

For these reasons I'm looking more at the investing side/saving side of things.

HCIMbtw

snowcat75 said:

Thanks for all the reply's,
To add a bit more info, I have things like life insurance and critical illness, I have a decent amount of assets in the shape of land, buildings and a yard where I run an established company,  so although self employed I'm not in the position of a sole trader.

I have thought about pensions, however although I say I have no short or medium term use for the money it doesnt mean that if I saw a nice derelict barn in need of conversion in 5-10 years time at the right money then I wouldn't be tempted and friends already are asking what the next project is. 

My wife also has a very good LA pension she's paid into since 16, so we shouldn't starve into retirement especially as I could easily just let the yard if I packed up wanting to run the business. 

For these reasons I'm looking more at the investing side/saving side of things.

The benefit of money in an ISA over a pension is obviously that you can access it much easier if you ever need to withdraw and  because it is in an ISA you do not pay any tax on the interest you earn. 

The problem with S&S ISAs is the money is at risk.. with cash ISAs (where you are offered a fixed rate return by a bank) rates are absolute garbage. So if you invest in S&S it is a risk, global equity funds do what they say, track global equities, with this comes a lot of volatility. I only started with them last year and was down significantly at points this year (double digits easy), am currently 1% negative based on all my investments but totally content with my strategy, money locked away for another decade at least.. can access it any time I need in case of emergency. 

The benefit of sticking £100k straight in premium bonds (50k each) is you do not pay any interest on any earnings, the money is safe (you will not take out less than you put in), but any profit is a gamble, literally random number generators issue prizes.. and you will likely be talking a 1-2% rate of return (below inflation). 

But all that said.. I think these are still the easiest and best ways to wrap up a bulk of the money. 

They leave most of it accessible and I would revert to my original post where I would look to live off the cash and increase pension contributions a bit for a while just to pump a chunk in there. 

Speculator

Just opened two Junior ISAs for my daughters @ Coventry BS paying variable 2.95%.
Going to try and pay in the full 9K per year until they reach 18.
They had Child trust funds previously so I am transferring these to their new Junior ISA.

MaxiRobriguez

tryingtogetmyheadaround said:

You can tell i'm new to investing with this type of comment..... is a Vanguard 80/20 a "balanced" type investment as it splits the money out over different markets.

It depends by what you mean by "balanced".

80/20 simply means 80% equities, 20% bonds. Whether that is balanced or not depends on what the underlying investments are, your appetite for risk, your goals etc.

For *most* people an 80/20 split would be seen as adventurous, and a 60/40 split would typically be seen as more "balanced" for want of a better word. That doesn't mean that an 80/20 allocation is wrong, just that it's *probably* going to be more prone to volatility, but that additional volatility you incur should be rewarded with greater gains if left long enough.

Personally speaking, my appetite for risk is pretty high as I'm a relative youngster on here, so my equity allocation is around 90-95% with the rest in cash ready to go into equities at any given time if equity prices get cheaper. My allocation could be deemed as "balanced" because it contains large and small cap companies across the globe across many different sectors, but it might be unbalanced to others because ultimately it's very, very heavy on equity. An 80/20 allocation is still heavy on equity. 

Albermarle

The benefit of sticking £100k straight in premium bonds (50k each) is you do not pay any interest on any earnings, the money is safe (you will not take out less than you put in), but any profit is a gamble, literally random number generators issue prizes.. and you will likely be talking a 1-2% rate of return (below inflation). 

If you have the max amount is premium bonds , the law of averages means it is not really a gamble at all over a period of a year or more . The official return is just dropping to 1 % but in reality it is more like 0.8% + an infinitesimal chance of winning a Million

Eco_Miser

Monevator is an excellent resource for learning about investing, including a list of the 'best' (for various values of best) places to invest through.

S&S ISAs and pensions are both investments into shares (owning a bit of a business) and/or bonds (lending to businesses or governments); the difference is in the way they save you tax and when you can get your money back.

Both have the same investment risk, if they have the same investments.

If you choose to use either (and you should) you need to get your current year's allowances (and any possible previous year's allowances for pensions) into the wrapper before April 2021. That's five months, plenty of time for proper consideration, but not so long that you can keep putting it off.

You say you have an established business, are you actually a company director (of your own company) rather than a sole trader? If so, have the company pay all your pension contributions for extra tax relief.

csgohan4

the danger of looking at your investments in the short term is knee jerk reactions and potentially cutting your losses. If you are investing for the long term, there will be ups and downs, but on the whole over 10+ years there will generally go up. 

I wouldn't worry too much, assuming you've invested wisely and not bought a boat load of shares and hope for the best. 

Cheap index tracker and job done and leave it to mature in a decade + time. 

Now is the best time to buy in a recession as hopefully you will get more back when the economy improves. 

Holding back cash seems reasonable, but inflation will eat away at it. 

snowcat75

Eco_Miser said:

Monevator is an excellent resource for learning about investing, including a list of the 'best' (for various values of best) places to invest through.

S&S ISAs and pensions are both investments into shares (owning a bit of a business) and/or bonds (lending to businesses or governments); the difference is in the way they save you tax and when you can get your money back.

Both have the same investment risk, if they have the same investments.

If you choose to use either (and you should) you need to get your current year's allowances (and any possible previous year's allowances for pensions) into the wrapper before April 2021. That's five months, plenty of time for proper consideration, but not so long that you can keep putting it off.

You say you have an established business, are you actually a company director (of your own company) rather than a sole trader? If so, have the company pay all your pension contributions for extra tax relief.

I'm actually both I have a limited company, and am also part of a trading partnership. This is where the accountant comes in although in may ways I like to distance personal money from business money.