Where to invest 150k?

isayhello

Hi I posted a message recently which gave me help with some Vanguard info but I wanted some help for investing so thought I'd ask for this specifically.

I will have 150k to invest in about 1-2 months and looking for some advice from more experienced investors.

I already have a S&S ISA that is fully used with Vanguard, I also have some money invested in work pension scheme, am in my 40's.
I'm open to a bit of risk in investing, are there any suggestions for platforms to try or is direct share investing a good option (perhaps for dividends)?

I've been recommended to try property as a landlord but I don't have the interest in dealing with tenants and fixing issues etc but maybe it's worth it, any views on this would be helpful too?

I am currently leaning towards continuing to use Vanguard as I know the platform but open a general account and continue to invest in funds as I currently do, I know however that I will need to pay CGT and maybe dividend tax depending when I sell.

Thanks for all help

Linton

You are starting at the wrong end.  Where to invest depends on what investments you want to use and how you want to use them (eg trading vs long term holding). But the investments that are suited to your situation depend on why you are investing and in what timescales  eg retirement in 20 years time is very different to a new house in 3 years.

So what is your objective and when will you want to access the money?

If you are asking these sort of questions I suggest that you do not consider direct shares, they require significant understanding and time to research.  A portfolio of funds is easier and safer, though of course the funds be appropriate for your circumstances.

El_Torro

Assuming you do want to invest and not save (saving being a better option if you need the money in less than 10 years) then putting what you can in a pension and S&S ISA is a good idea. Even if you can't add any more in this tax year there are future years to consider.

Even if some of the money won't fit in wrappers investing in an unwrapped account is still an option. Yes, you'll have to pay Capital Gains Tax, though you should still be better off than saving the money when investing for the long term.

Regarding your question about Buy To Let, most people on this forum don't recommend that. It's not as tax efficient as it used to be, and comes with its own set of risks (some of which you have already highlighted). 

I personally don't use Vanguard, mainly because it limits you to investing in Vanguard funds. If you don't consider this a downside though it is cheaper than some alternatives.

isayhello

Linton said:

You are starting at the wrong end.  Where to invest depends on what investments you want to use and how you want to use them (eg trading vs long term holding). But the investments that are suited to your situation depend on why you are investing and in what timescales  eg retirement in 20 years time is very different to a new house in 3 years.

So what is your objective and when will you want to access the money?

If you are asking these sort of questions I suggest that you do not consider direct shares, they require significant understanding and time to research.  A portfolio of funds is easier and safer, though of course the funds be appropriate for your circumstances.

@Linton I mentioned a few investment types in my post such as shares and property so I'm open minded and looking for advice in general of where best to invest such a sum. I don't need the money urgently and happy to let it sit somewhere for a while.

The objective is to let it grow as much as it can. For the portfolio of funds do you recommend any platforms or types of funds, I'm also aware that this might lead to CGT and dividend taxes,

isayhello

El_Torro said:

Assuming you do want to invest and not save (saving being a better option if you need the money in less than 10 years) then putting what you can in a pension and S&S ISA is a good idea. Even if you can't add any more in this tax year there are future years to consider.

Even if some of the money won't fit in wrappers investing in an unwrapped account is still an option. Yes, you'll have to pay Capital Gains Tax, though you should still be better off than saving the money when investing for the long term.

Regarding your question about Buy To Let, most people on this forum don't recommend that. It's not as tax efficient as it used to be, and comes with its own set of risks (some of which you have already highlighted). 

I personally don't use Vanguard, mainly because it limits you to investing in Vanguard funds. If you don't consider this a downside though it is cheaper than some alternatives.

@El_Torro thanks, I have a pension already through work which gets added to each month, I haven't ever thought about adding more into it, would that be a better option than investing in an unwrapped account?

With an unwrapped account do you have any experience or recommendations of any platforms or investments?

Just curious as I'm new to this, why is BTL less tax efficient now than in the past?

I've just used Vanguard as it was recommended by some folks on here when I first started. Can I ask what you use? recommend? and whether it would be suitable for me and the amount I'm investing.

Thanks

Billycock

isayhello said:

Linton said:

You are starting at the wrong end.  Where to invest depends on what investments you want to use and how you want to use them (eg trading vs long term holding). But the investments that are suited to your situation depend on why you are investing and in what timescales  eg retirement in 20 years time is very different to a new house in 3 years.

So what is your objective and when will you want to access the money?

If you are asking these sort of questions I suggest that you do not consider direct shares, they require significant understanding and time to research.  A portfolio of funds is easier and safer, though of course the funds be appropriate for your circumstances.

@Linton I mentioned a few investment types in my post such as shares and property so I'm open minded and looking for advice in general of where best to invest such a sum. I don't need the money urgently and happy to let it sit somewhere for a while.

The objective is to let it grow as much as it can. For the portfolio of funds do you recommend any platforms or types of funds, I'm also aware that this might lead to CGT and dividend taxes,

If you do eventually purchase funds in a GIA, in all probability you'll have purchased your holdings cheaper now than later and you can then transfer the holdings via Bed and ISA once the next ISA allowance is available.

AlanP_2

isayhello said:

El_Torro said:

Assuming you do want to invest and not save (saving being a better option if you need the money in less than 10 years) then putting what you can in a pension and S&S ISA is a good idea. Even if you can't add any more in this tax year there are future years to consider.

Even if some of the money won't fit in wrappers investing in an unwrapped account is still an option. Yes, you'll have to pay Capital Gains Tax, though you should still be better off than saving the money when investing for the long term.

Regarding your question about Buy To Let, most people on this forum don't recommend that. It's not as tax efficient as it used to be, and comes with its own set of risks (some of which you have already highlighted). 

I personally don't use Vanguard, mainly because it limits you to investing in Vanguard funds. If you don't consider this a downside though it is cheaper than some alternatives.

@El_Torro thanks, I have a pension already through work which gets added to each month, I haven't ever thought about adding more into it, would that be a better option than investing in an unwrapped account?

With an unwrapped account do you have any experience or recommendations of any platforms or investments?

Just curious as I'm new to this, why is BTL less tax efficient now than in the past?

I've just used Vanguard as it was recommended by some folks on here when I first started. Can I ask what you use? recommend? and whether it would be suitable for me and the amount I'm investing.

Thanks

Pension contributions attract tax relief but withdrawals are taxed and a pension can't be accessed until 55 (going to 57).

Does that suit you?


If you want the money before then for something then probably not, but if you have retirement in mind then a pension will have the greatest benefit.

The investments that can be in a pension, a S&S ISA or unwrapped are all the same the pension / ISA is just a tax wrapper to keep them in.


BTL, as in a 2nd property attracts a higher rate of Stamp Duty and the profits are taxable. Depending on your overall income and tax rate this is typically "worse" than it used to be when all mortgage interest could be offset against tax at marginal rate (now limited to Basic Rate). In addition there will be Capital Gains Tax to pay once sold.


We all (mostly) want our pot to grow but many of us have a more specific objective or time frame. If you were 70+ and just wanted your pot to tick over with limited downside you would choose different investments than if you were 40 and were trying to build a pot so that you could retire before say 60.  

El_Torro

isayhello said:

I've just used Vanguard as it was recommended by some folks on here when I first started. Can I ask what you use? recommend? and whether it would be suitable for me and the amount I'm investing.

For my investments I use Hargreaves Lansdown and AJ Bell. HL is expensive, especially compared to Vanguard. It does let you invest in a wide range of investments, if that's what you're after. If you're going to put the whole amount in a Vanguard fund you're probably better off investing with Vanguard though. Another benefit of HL is that their website is very user friendly and their customer service is said to be better than many other platforms too. I'm not as big a fan of AJ Bell, though they are cheaper than HL.

For £150k it might be a good idea for you to use a platform that charges a flat fee rather than a percentage. Vanguard, HL and AJ Bell all charge a percentage. There are various articles out there comparing the charges of different platforms, it's worth you spending some time looking at some of these. Bear in mind though that cost isn't everything and it might be a case, to some extent, of getting what you pay for.

pip895

I wouldn't worry about CGT - you will probably never exceed the CGT allowance - you just need to make sure you use up your allowance each year.  If you are planning on using global trackers on a site like HL this is easy - just sell enough to fully utilise your allowance each year and move 20k into your isa and put the rest in a near identical tracker from another fund house.  If using Vanguard platform you may need to be a little more inventive but there are plenty of overlapping funds & ETFs.

isayhello

Billycock said:

If you do eventually purchase funds in a GIA, in all probability you'll have purchased your holdings cheaper now than later and you can then transfer the holdings via Bed and ISA once the next ISA allowance is available.

This seems like a sensible approach, have just come across it recently and seems like a good way to keep topping up the ISA each year. Any negatives to it?

isayhello

AlanP_2 said:

Pension contributions attract tax relief but withdrawals are taxed and a pension can't be accessed until 55 (going to 57).

Does that suit you?


If you want the money before then for something then probably not, but if you have retirement in mind then a pension will have the greatest benefit.

The investments that can be in a pension, a S&S ISA or unwrapped are all the same the pension / ISA is just a tax wrapper to keep them in.


BTL, as in a 2nd property attracts a higher rate of Stamp Duty and the profits are taxable. Depending on your overall income and tax rate this is typically "worse" than it used to be when all mortgage interest could be offset against tax at marginal rate (now limited to Basic Rate). In addition there will be Capital Gains Tax to pay once sold.


We all (mostly) want our pot to grow but many of us have a more specific objective or time frame. If you were 70+ and just wanted your pot to tick over with limited downside you would choose different investments than if you were 40 and were trying to build a pot so that you could retire before say 60.  

Ah ok thanks, so it seems with a pension the benefits cancel each other out a bit in the end as you are taxed eventually right?

If I've never bought a property is it a better investment then to have a BTL as I live with family or rent sometimes.

Any suggestions for platforms/investment types for 150k?