Money from House Sale

toptraveller

My wife has just sold her house and come away with £60k great news!  We have 80k left on our mortgage and we are are 49 and 46.  My wife only has a state pension and I have a final salary pension, SIPP and savings.  Our income is fairly low however we own our business premises which will be paid off in 4 years, if rented will return approx £20k rental income per year.  What do we do with the £60k?

Eco_Miser

What do you want to do with it?

toptraveller

The options are spend it, pay off the mortgage, ISA, SIPP or anything else

MaryLongstaff

Hi Toptraveller, 
If you're risk taking enough, the S&P 500 has an average return historically of around 10% a year and FTSE around 8%. I don't know your monthly payments, mortgage term or interest rate, but an investment in either of these stock exchanges would return a sum greater than your mortgage payments. 

A lot of people aren't aware of the increased financial benefits of investing over paying off debts early.

Of course there are pros and cons to both investing and paying off your mortgage and are dependent on your own circumstance. Both are worth a little research as you'll find answers and suggestions easily on google. 

Albermarle

It would be tax efficient for your wife to start a pension . Then when she takes it if she has no other income she can take over £16K tax free pa until the state pension arrives, when the figure would be lower ( as the state pension counts as taxable income as well ) Assuming there are enough funds in the pension of course .
If she has no taxable earnings at present then the maximum she can pay into a pension is £2880 ( and £720 tax relief would be added) If she has taxable earnings she can add more . 

kuratowski

Yes, over the long term, investing in stocks & shares is highly likely to be more beneficial than repaying a mortgage, cash savings or other options such as BTL.  Moreover, pensions benefit from a boost from tax relief, even more so if one of you is a higher rate taxpayer, so if were my money I'd be stuffing as much as I could inside the SIPP (subject to the limits of tax relief available).

Having said that, people are usually recommended against investing solely in a single sector fund - i.e. it's ok to hold say an ETF tracking S&P 500 if it's part of a wider portfolio, but it wouldn't be sensible on its own.  A global tracker is good for 100% equities, or a multi-asset fund for lower risk levels.

Eco_Miser

MaryLongstaff said:

Hi Toptraveller, 
If you're risk taking enough, the S&P 500 has an average return historically of around 10% a year and FTSE around 8%. I don't know your monthly payments, mortgage term or interest rate, but an investment in either of these stock exchanges would return a sum greater than your mortgage payments.

Are you guaranteeing that? Otherwise don't make misleading claims.
Investments in index-linked funds following  those stock exchanges can lose 50% of their value. Investments in individual companies listed on those exchanges can lose 100% of their value.

tichtich

MaryLongstaff said:

Hi Toptraveller, 
If you're risk taking enough, the S&P 500 has an average return historically of around 10% a year and FTSE around 8%. I don't know your monthly payments, mortgage term or interest rate, but an investment in either of these stock exchanges would return a sum greater than your mortgage payments. 

The stock market right now is very highly priced in historic terms, so a lump sum investment at current prices is unlikely to provide anything like historical average (real) returns. 

xylophone

My wife only has a state pension 

How has this come about?