What to do with large pot of money

bloke91

I will soon be coming into some money, around 100k.

Always wanted to own a second property and rent it out until I retire and then either sell it or pass it down to my children, so could perhaps add to the 100k pot for a two bedroom semi or terraced.  Also conscious there could be some other better ways to invest the cash though.

I am looking for some recommendations, advice and suggestions on what to do with in terms of longer term investment.  The drive behind it is to allow us to be more comfortable in retirement or pass the investment down to my children.

Have summarised some additional background below:

·         I am married with two children.

·         I am aged 38 and a 40% tax payer.

·         Both myself and my wife in full time employment.

·         Mortgage will be paid off in 10 years time and we have good jobs and both me and my wife have 9 months of our monthly salary in cash.

·         In terms of pensions my wife has a good local government employer pension on top of the standard government pension.

·         In addition to the standard government pension.  I have a local government employer pension yearly income expected to provide 7k a year from a previous job.  Also a 80k pot in a defined contribution stock market based pension, where my employer pays 8% and I pay 10%. i.e Combined total of 18%

·         No other debt.

Welcome your thoughts and thanks for your time.

MallyGirl

Passing a property on to your children could be a bit of a hassle - they have to sell but having inherited it they won't qualify as first time buyers when buying their own property.
Do you want to be a landlord? £100k won't buy much.
IMHO you would be better off funnelling it into pensions if it is for a nicer retirement- tax relief will boost it significantly 

eamon

Quick ideas. Pay of any credit cards, car finance  etc. Pay a chunk of your mortgage and AVC the rest. Don't do any of those and instead get an expensive hobby/pastime. Probably best to chuck at leat 1/2 at your pension.

Marcon

bloke91 said:

I will soon be coming into some money, around 100k.

Always wanted to own a second property and rent it out until I retire and then either sell it or pass it down to my children.  Also conscious there could be some other better ways to invest the cash though.

I am looking for some recommendations, advice and suggestions on what to do with in terms of longer term investment.  The drive behind it is to allow us to be more comfortable in retirement or pass the investment down to my children.

Which is the priority? The two aren't mutually exclusive, but the route you choose might be different. Could be worth spending some of the windfall on properly-informed financial advice (the sort you pay for), rather than relying on strangers who are responding on the basis of very little information. 

xylophone

Do you really want to run a property business (and it is a business) with all the headaches it can involve?

Do you want to be at a tenant's beck and call?

https://www.telegraph.co.uk/property/buy-to-let/landlords-will-lose-money-next-year-buy-to-let-britain-falls/

https://www.gov.uk/renting-out-a-property

Depending on your mortgage terms and interest rates, would you be better off paying down your mortgage and then increasing your pension contributions?

tacpot12

I have my pension invested and it is producing an income of over 4% per year, and when the stock market does well, I also have some capital growth. It's less than I get from my property investments, but it's a lot easier than being a landlord. 

Ciprico

Money put in DC pension is an efficient way to pass money to children as exempt from iht.... 

Grumpy_chap

bloke91 said:

I will soon be coming into some money, around 100k.

Always wanted to own a second property and rent it out

·         I am married with two children.

·         I am aged 38 and a 40% tax payer.

·         Both myself and my wife in full time employment.

·         

Should you decide to follow the BTL route, it is worth taking some advice about splitting the ownership of the property and the appropriate proportion of the split depending on whether your wife is also a 40% tax payer.

bostonerimus

eamon said:

Quick ideas. Pay of any credit cards, car finance  etc. Pay a chunk of your mortgage and AVC the rest. Don't do any of those and instead get an expensive hobby/pastime. Probably best to chuck at leat 1/2 at your pension.

This    !

ader42

Get rid of any non-mortgage debt first - including cars.

Then fill your kids Junior Sipps and LISAs for a few years - and invest those in low-fee trackers.

2nd_time_buyer

If the numbers work, then buy to let can be a very good mid-life investment. I did the calculations based on yield/profits and assumed no appreciation. We have re-invested any profits into our pension rather than viewing it as extra income. For us, it has worked well but obviously the landscape has changed in the last 8 or so years since we bought. However, there still seems to be places around us with a similar yield to when we bought. FWIW my advice is:

-buy somewhere local

-manage it yourself
-buy freehold or share of freehold 

But mainly, focus on the annual profit after tax  and consider whether it is worth the hassle of managing it. 

Our current plan is to use our two buy to lets to supplement our early retirement up to state retirement age. And then sell them and accept the capital gains tax hit.

I appreciate this goes against the flow of advice on here. In our situation it has definitely been one of the best financial moves we made as it has enabled us to invest much more into our pensions.