Investing £250k for growth

Hoot_2

Hello,

If I may tell you a little about our situation and plans.

My wife and I are looking to relocate from Surrey to Scotland. Our house is on the market so hopefully our move is imminent. With our equity, we will have enough capital to buy a property and have somewhere in the region of £250-300k for investment.

Our initial thought was to buy a holiday let, but not sure if this is suited to us. Alternatively, we would perhaps invest in equities and bonds via funds. VLS60, 80 or something similar.

Question is, how do we maximise the use of our ISA's?  Would we put in our full allocation of 20k each and the balance into a general account? Then transfer 20k each year into the ISA's to benefit the tax relief?

I'm 50 so the first 5 - 10 years, I'm happy to leave the money invested for growth but would eventually like to take an income from it.

Any advice for someone with limited investing experience?

Albermarle

You need to give more details , especially about the pension situation for you both .
Plus do you have any other investments or savings ?

tacpot12

Your plan to maximise the use of your ISAs is all you can do. I'm currently doing the same with the proceeds of a rental property. I've got £47K in so far, with £76K left to go. Not bad to say the proceeds of the rental property were only £100K in September of last year. (These investments got a big boost from the post-Covid recovery).

I think you are on the right track with VLS80. VLS60 seems a bit cautious. Have a look at VLS100 to see  if that might suit you better. My £76K is invested with Vanguard in their Vanguard FTSE Developed World Index Ex UK Index fund as I have a retirement portfolio that was too heavily weighted to the  UK. I'm buying City of London (CITY) and JP Morgan Global Growth & Income (JGGI) investment trust shares in the ISA. This is producing an yeild of 3.5% pa as I'm buying three times as many JGGI as CITY shares.  

I think you could buy VLS80 in your ISA and in your General Investment Account (you might want to hold these at Vanguard for their low charges), and when you want to start taking an income, sell the  VLS80 and buy something that produces an income. My retirement portfolio (which is mainly designed to produce income with enough capital gain to keep pace with inflation) is mainly comprised of Investment Trust shares, but I also have some EFTs and one unit trust fund.

Hoot_2

Sure,

I have no private pension but should have a full state pension by the time I retire. My wife has a couple of small work pensions which amount to about 2k per year. I'm not sure on her state pension situation as she has only worked part time for the past 20 years. Will need to look into this.

I don't have any other investments but have a small amount of savings.

MX5huggy

Are you currently working or your wife worked in this financial year (sine April). You can contribute all your earnings up to £40k to a pension, if you earn more than £40k you may be able to contribute more. 

How have you ended up with no private pension? Self employed maybe. 

Nebulous2

Hoot_2 said:

Sure,

I have no private pension but should have a full state pension by the time I retire. My wife has a couple of small work pensions which amount to about 2k per year. I'm not sure on her state pension situation as she has only worked part time for the past 20 years. Will need to look into this.

I don't have any other investments but have a small amount of savings.

Why no pension? Are you self-employed? When do you plan to retire? 

Putting some of it in a pension each would be a good start, subject to any limits. 

I've semi-retired, and relocated which freed up quite a bit of cash, not as much as you expect to have. We filled 4 ISAs  at the end of the financial year, two each. None of these are in bonds, predominantly index trackers with some managed funds.

We also put about the same in premium bonds. That is more than we need for emergency funds, but we intend doing some work on our house and are still undecided on how much to spend, so we may need it. 

Hoot_2

Yep, Life long self employed. I always hoped our property would help fund our retirement years.

I have no immediate plans to retire but would like to slow it down a bit when we move. My trade has worn my body out somewhat. Retirement age will be determined by level of return on investments if this is a sensible way to go about it?

I am open to ideas and advice, and I won't rule out seeking professional advice when we have moved if necessary.

Hoot_2

MX5huggy said:

Are you currently working or your wife worked in this financial year (sine April). You can contribute all your earnings up to £40k to a pension, if you earn more than £40k you may be able to contribute more. 

How have you ended up with no private pension? Self employed maybe. 

Thanks,

I am still actively and my wife has a small independent business, although the pandemic hasn't been good for her as she relies heavily on small retail outlets.

I've not seriously considered a pension as stated in my previous post, and something in me wants to have control of my money.  comes from being self employed I guess.

MX5huggy

Ok so you’re on the right track with the ISA plan. The Pension is similar it’s a tax wrapper which within you can hold investments (the same things as within the ISA or different it’s up to you). The good thing about the pension is the government gives you a minimum of 25% tax relief. Now you have to pay tax on money you take out of your pension at your marginal rate at the time but the 25% of any withdrawal is tax free. So put £20k in a pension today the government tops this up to £25k then once you are 55 (or maybe 58, there’s some movement on this) you can take it possibly tax free if you stay under 0 rate tax allowance at the time. 

The amount you can put in a pension is dictated by how much you earn and the same for your wife with no earning the limit is £2880 plus the 25% per year. Are you true self employed or do you work for your own company or partnership? 

Dh6

Question is, how do we maximise the use of our ISA's?  Would we put in our full allocation of 20k each and the balance into a general account? Then transfer 20k each year into the ISA's to benefit the tax relief?

You mention tax relief on the ISA, are you understanding this correctly?

The ISA wrapper means you pay no tax on any investment gains.

Paying into a pension benefits from ‘tax relief” whereby the government boosts your contribution by 25%. 

If I was you I’d be contributing it all to a pension as you can access it in 5 years and you’d be up 25% before you started.

I’m 34 and also self employed btw.

Thanks DH

Albermarle

I've not seriously considered a pension as stated in my previous post, and something in me wants to have control of my money.  comes from being self employed I guess.

So when you invest £250K in non pension funds , why do you think you will have more control than if you invested in funds via a pension ? In both cases the value will go up and down at the whim of international financial markets and the economy ( as will the value of property ) 

The only differences from investing via a pension to investing in other ways , is that the pension gives you a tax benefit ( as explained in the previous post ) but on the other side it is not available to take until you are 55/57.

As the usual advice is that you should invest for the long term and you are already 50, then this is not really an issue anyway .