Excess Cash - What to do with it?

michaels2411

Hi folks,

I'm in a very fortunate position, as I have a good sum just sitting in my bank account.  Just looking at views of what folks would do with it in my shoes.

Over 20 years away from retirement

I'm a high tax payer

Have a mortgage which is fixed for a number of years at 1.64%

Mortgage is only 28% of house value

Fully maxed my pension and ISA for the year

Got some NS&I bonds already (never won anything)

Dont want to buy another property to stop a someone getting on the housing ladder.

Welcome any thoughts on what you'd do.

Thanks

Michael.

ColdIron

michaels2411 said:

I'm a high tax payer

Fully maxed my pension and ISA for the year

What does this mean in terms of your pension? Have you added £40,000 to it? Pension is usually a no brainer for higher rate taxpayers. Do you have any unused allowance from the last 3 years?

Flugelhorn

anyone in the family you can help out? had a relative who had xs cash and bought a house for his sister and children to live in. Good investment for him and solved problem for sister.

nothing wrong with buying another property - plenty around that are not FTB territory 

InvesterJones

michaels2411 said:

Dont want to buy another property to stop a someone getting on the housing ladder.

Wish more people thought like this!

In a similar situation myself and what I did was:

1. Look at charitable giving. There is also a tax benefit for doing so and/or see if your employer has a give as your earn or even a matched giving scheme. I wonder if there's a board on here about charities? I wouldn't presume to recommend any, but there are some which aim to help the housing situation for example.

2. Actually sit down and think about some goals. For years I had a mindset of 'I must grow my wealth' without actually stopping to think what I would do with it (besides the obvious housing/pension etc.). We're not going to live for ever, so better to think about what will give you enjoyment - and I'm not talking about purely material things, it could be a new skill/hobby etc.

Daliah

Have you got a partner - is their pension fully funded for the year?
Have you got children - is their education fully funded?
Sponsor a child?
Install a heat pump? 
Install solar panels?
Install air conditioning?
Buy an electric car?
Take a sabbatical and travel for a year?

MovingForwards

How much is 'some' PBs as you should have the full £50k in as wins are tax free.

When you say 'max pension' what do you mean? The maximum to have your employer contribute or is it a defined benefit pension? Or do you mean touching close to LTA?

I'll never earn big money to worry about being a higher rate tax payer, but as a below average earner I distribute my money into short-term (next year or so), medium term (10 years) and long term (retirement).

Short-term I've money saved.

Medium term I'm aiming to be mortgage free and probably replace my car during that time, so I'm saving.

I'd like to retire early and so have a SIPP and S&S ISA on the go and pay into that monthly, plus I always join the company pension when I change employment. I'll also want to replace my next car at some point during retirement.

I also donate to charity and help others, cash, handing bags of clothes etc into shops to resell or give away on social media, also add extra food to my shopping to put in the food bank box on my way out.

If I had a lot more money, I would donate enough to fund a full scholarship and give someone a chance at achieving a dream. I'd look at other charities where they make a difference to people's lives and fund enough to help several.

Without knowing hopes, dreams and what you want to achieve, it's hard to make suggestions.

michaels2411

Thanks for the suggestions folks, really welcome.  To answer a couple of the points above.  I contribute towards pension out of salary sacrifice and have employer contributions which equate to 40k per year, done this last few years so cant over contribute to previous years allowances.  Got an Electric car through work, perhaps may well look at Solar panels.

I do give to charity out of payroll and it is tax deductable in my yearly self assessment, also to the RSPCA (animal lover).   Just out of relationship so no partner to fund and already helped my dad so thats why I was at a lose end for ideas.

Wine...hmmm may look into that.

Thanks again everyone.

Albermarle

michaels2411 said:

Hi folks,

I'm in a very fortunate position, as I have a good sum just sitting in my bank account.  Just looking at views of what folks would do with it in my shoes.

Over 20 years away from retirement

I'm a high tax payer

Have a mortgage which is fixed for a number of years at 1.64%

Mortgage is only 28% of house value

Fully maxed my pension and ISA for the year

Got some NS&I bonds already (never won anything)

Dont want to buy another property to stop a someone getting on the housing ladder.

Welcome any thoughts on what you'd do.

Thanks

Michael.

From a financial planning point of view ( just for now ignoring the valid points about spending it/giving it away ), it depends to some extent how this lump of cash sits with your other investments. If you had say a much larger amount invested in the stock market, then having a largish amount of cash might be a good balance to that. For example some people prefer not to have bonds in their investment portfolio ( especially recently) and just have higher risk equity ( share) investments and cash . 
If your investments are more medium risk, then you do not need so much cash.

If your pension and S&S allowances are fully used, you can invest via a general investment account. You do become liable for CGT and dividend taxes, but there are allowances and you may end up not actually paying them.

It is not clear if you have a partner or not. If you have then it can be a good idea to invest in their name, especially if their ISA and pension allowances still have some space.

MX5huggy

Are you using your dividend tax allowance (£2000, I think you still get this as a higher / additional rate tax payer). Then you have your Capital Gains allowance £12300 per year. 

Basically you can run a General Investment Account of £100k plus without generating any additional tax liability. 

Bump up the premium bonds to £50k
Buy some gold (UK legal tender, sovereigns etc, are tax free). 

P1Fanatic

Depending on your provider a Fixed Rate Mortgage should normally still let you overpay by 10% of the balance at the start of this mortgage year. Its not going to save you masses in interest but still nice to see it go down whilst you have the spare funds.

jimjames

michaels2411 said:

Wine...hmmm may look into that.

Be very wary unless you know exactly what you are doing. There are many scams out there selling wine & whisky. If you don't have possession of the asset it may not exist.