Best way to start off with £190k

wheelygreat

In our mid 40's and due to relocation we find ourselves with no debt other than mortgage, a 48% LTV with current balance of £160k fixed for 5 years at 1.3%, and £190k cash sitting in a bank account getting 0.01% interest.

We have never been in this position before so have never had an ISA or anything like that.  I also have an ii share dealing account with c.£25k of UK equities in it that I have built up over about 15 years by complete random purchases of a variety of all sorts of penny shares etc..

I also have 3 different workplace pension schemes behind me that total c.£100k in fund value.

Where do we start??

I was going to open up a stocks and shares ISA each for me and my wife - so thats £40k invested, and £150k left to do something with.

I was also going to move my pension pots over to Pension Bee to consolidate them - I'm not sure I am game enough to do the SSIP route just yet.

it is a bit terrifying to see that I will only get £20 bank interest income if I leave it alone...

Is this enough of a pot to get the services of an IFA or is it too "small beer" and go the DIY route?

MX5huggy

A SIPP is no more or less difficult than a S&S ISA. Just with a lock on it meaning you can’t access it until 55 plus.

You would find an IFA happy to talk to you with £300k to manage. Emphasis on Independent.

I would be making pension contributions equal to total salary (max £40k) for both of you this tax year and next and live off the savings. Exactly how depends on your work place pension options (either got a salary sacrifice option?) but into a SIPP if that is best. 

Do you have any savings? An emergency fund, if not decide what you feel comfortable with (6 months spending maybe) and put this in Premium Bonds. Also use Premium bonds for any money not invested while waiting for next tax year. (Max £50k each), or use a General Investment Account for the spare (have to manage income capital gains tax potential liability).

Your penny share investment worries me (unless you have a great skills at it) don’t invest in any more individual shares and look at selling up, look at diversified funds. All World trackers being the ultimate result of this. 

barnstar2077

I would put what you can into an ISA and pension for you and your wife every year, with a chunk in premium bonds.

kidmugsy

wheelygreat said:

In our mid 40's ... we find ourselves with no debt other than mortgage, a 48% LTV with current balance of £160k fixed for 5 years at 1.3%, and £190k cash sitting in a bank account getting 0.01% interest.

What is your ambition e.g. do you want to clear the mortgage debt when the "fix" expires?
Or even clear it now, paying whatever penalty exists? (I imagine that the latter would be too costly.)

Or might you want eventually to replace the mortgage with a smaller one e.g. an offset mortgage?

Or would you be happy to keep, say, £100k in cash - e.g. Premium Bonds - while investing the rest within pensions and ISAs?  (Well, the rest minus a bit to allow some spending on pleasure.)

Anyway, let me just observe that: 

(i) It's often a profitable proposition to even up pensions a bit - commonly by making better pension provision for a wife.  Because it's a good idea in retirement to try to use both Personal Allowances against income tax if you possibly can.

(ii) You should almost certainly move the money from the share dealing account into tax shelters, either pensions or ISAs.

(iii) Are you in the world of trying to save for offspring?  If so do look at using JISAs, and eventually LISAs, over the next few years.

Albermarle

I was also going to move my pension pots over to Pension Bee to consolidate them - 

You say you have got three different workplace pensions . Presume you are employed and one of them is still being contributed to ?If so you will not be able to move this one to Pension Bee. Also before moving any of them , make sure  you are fully aware of the charges on each one - they may be cheaper than Pension Bee .

There is often an assumption that workplace pensions are somehow inferior , when often they can be perfectly OK .

Is your wife working ? does she have any pension provision at all ?

wheelygreat

Albermarle said:

I was also going to move my pension pots over to Pension Bee to consolidate them - 

You say you have got three different workplace pensions . Presume you are employed and one of them is still being contributed to ?If so you will not be able to move this one to Pension Bee. Also before moving any of them , make sure  you are fully aware of the charges on each one - they may be cheaper than Pension Bee .

There is often an assumption that workplace pensions are somehow inferior , when often they can be perfectly OK .

Is your wife working ? does she have any pension provision at all ?

I have moved to a new job so these 3 are schemes at old employers so I think I can move them.  Fortunately my new job is highly paid at £180k p.a. and I have up to 75% bonus potential so I have been reading that me contributing to a pension is reduced.  My wife is giving up work to move with me (opposite end of the country) so we plan to also save £3k per month.  She wont have any pension contributions as she wont be working (at least in the near term).

wheelygreat

wheelygreat said:

Albermarle said:

I was also going to move my pension pots over to Pension Bee to consolidate them - 

You say you have got three different workplace pensions . Presume you are employed and one of them is still being contributed to ?If so you will not be able to move this one to Pension Bee. Also before moving any of them , make sure  you are fully aware of the charges on each one - they may be cheaper than Pension Bee .

There is often an assumption that workplace pensions are somehow inferior , when often they can be perfectly OK .

Is your wife working ? does she have any pension provision at all ?

I have moved to a new job so these 3 are schemes at old employers so I think I can move them.  Fortunately my new job is highly paid at £180k p.a. and I have up to 75% bonus potential so I have been reading that me contributing to a pension is reduced.  My wife is giving up work to move with me (opposite end of the country) so we plan to also save £3k per month.  She wont have any pension contributions as she wont be working (at least in the near term).

so we should be putting that £3k per month into my wifes pension for a start? make it up to £40k p.a. shouldnt be too hard.

So if we put money into ISAs each year and max the £40k into my wifes pension that should be a good platform to build on, if we hold back, say, £50k for any emergencies etc..

If i have £50k not in ISAs and put half in premium bonds how easy is it to get the money back out if i needed it?

NedS

wheelygreat said:

My wife is giving up work to move with me (opposite end of the country) so we plan to also save £3k per month.  She wont have any pension contributions as she wont be working (at least in the near term).

In that case she can still contribute £3600 gross (£2880 net) each year into a pension (SIPP) and get the tax relief even though she is not earning/paying tax.

wheelygreat

MX5huggy said:

A SIPP is no more or less difficult than a S&S ISA. Just with a lock on it meaning you can’t access it until 55 plus.

You would find an IFA happy to talk to you with £300k to manage. Emphasis on Independent.

I would be making pension contributions equal to total salary (max £40k) for both of you this tax year and next and live off the savings. Exactly how depends on your work place pension options (either got a salary sacrifice option?) but into a SIPP if that is best. 

Do you have any savings? An emergency fund, if not decide what you feel comfortable with (6 months spending maybe) and put this in Premium Bonds. Also use Premium bonds for any money not invested while waiting for next tax year. (Max £50k each), or use a General Investment Account for the spare (have to manage income capital gains tax potential liability).

Your penny share investment worries me (unless you have a great skills at it) don’t invest in any more individual shares and look at selling up, look at diversified funds. All World trackers being the ultimate result of this. 

On the penny shares yes it is complete luck and very volatile, I was starting to sell those today and transfer that cash into a S&S ISA.  

Bimbly

wheelygreat said:

so we should be putting that £3k per month into my wifes pension for a start? make it up to £40k p.a. shouldnt be too hard.

So if we put money into ISAs each year and max the £40k into my wifes pension that should be a good platform to build on, if we hold back, say, £50k for any emergencies etc..

You cannot do that. Your wife can put all of her earned income into a pension in any financial year up to a maximum of of £40k. But if she is not working, she has no earned income and that avenue is therefore closed.

From what you say, she hasn't quite given up work yet, so the amount of her earned income this financial year could still be put into a pension. For example, if she is paid £1,000 per month and worked April, May & June this financial year, that means she could put £3,000 into the pension maximum (including the tax relief!).

From next year if she's still not working, as NedS says, pension contributions are limited to £3600 gross (£2880 net).

MX5huggy

£180k salary plus 75% bonus, non working wife. All bets are off go and see an IFA. Should be able to guide you to some tax efficient savings beyond ISA’s and Pensions.