investment

andyhobbs

Hi

i am currently going through a divorce, once house sells, and all debts are paid, rent deposit on a new place, i should be left with around 100k 

i earn enough to pay rent, household bills out of my wages, so what do i do with the 100k? 

ideally i would like to invest in two ways, one that gives me a monthly income, I.E play money, i know its not going to be a lot but every little helps, and then invest the rest in a more long term investment

what are my best options and what could i expect shot term, monthly? and also long term 

Alistair31

Are you planning on purchasing your own property any time soon? 

Short term you could get 5.1% with no risk. 

andyhobbs

Alistair31 said:

Are you planning on purchasing your own property any time soon? 

Short term you could get 5.1% with no risk. 

its something i have toyed with, but i am 52 with a bad credit rating, mainly from the marriage! so i would have to put a lot of the money down as a deposit, might only get a 10 year mortgage with high interest rates because of history!

so thinking rent as can get a 3 bedroom place so kids have somewhere to stay when needed, and can down size when time is right

i know renting is not ideal, but in my time of life feel its best for me now 

tacpot12

£40,000 invested in a couple of good Investment Trusts should return about 5% pa (£2000) or £166 pcm before tax. You can put £20K into an ISA this tax year, and have the remaining in a General Investment Account. You will also have a dividend allowance of £500 for 2024/25, so you'll only pay tax on £500 of dividends. You can put £20K into the ISA in sugbesquent years to reduce your dividend tax liability and CGT on investments for the long term. 

Long term investments in the stock market should return about 7% on average, but you will pay CGT on some of the returns until you can move all your assets into ISA.

You should also look at what you can put into your penison as this is a very long term investment vehicle with some good tax benefits. Perhaps put £20K into your pension? In 20 years, this could be worth £80K-£100K. 

andyhobbs

tacpot12 said:

£40,000 invested in a couple of good Investment Trusts should return about 5% pa (£2000) or £166 pcm before tax. You can put £20K into an ISA this tax year, and have the remaining in a General Investment Account. You will also have a dividend allowance of £500 for 2024/25, so you'll only pay tax on £500 of dividends. You can put £20K into the ISA in sugbesquent years to reduce your dividend tax liability and CGT on investments for the long term. 

Long term investments in the stock market should return about 7% on average, but you will pay CGT on some of the returns until you can move all your assets into ISA.

You should also look at what you can put into your penison as this is a very long term investment vehicle with some good tax benefits. Perhaps put £20K into your pension? In 20 years, this could be worth £80K-£100K. 

Did think about pensions, but as part of the divorce settlement wife is entitled to half my pension! Trying to sort this at the moment by claiming half of hers, so hopefully she will drop this 

Voyager2002

andyhobbs said:

tacpot12 said:

£40,000 invested in a couple of good Investment Trusts should return about 5% pa (£2000) or £166 pcm before tax. You can put £20K into an ISA this tax year, and have the remaining in a General Investment Account. You will also have a dividend allowance of £500 for 2024/25, so you'll only pay tax on £500 of dividends. You can put £20K into the ISA in sugbesquent years to reduce your dividend tax liability and CGT on investments for the long term. 

Long term investments in the stock market should return about 7% on average, but you will pay CGT on some of the returns until you can move all your assets into ISA.

You should also look at what you can put into your penison as this is a very long term investment vehicle with some good tax benefits. Perhaps put £20K into your pension? In 20 years, this could be worth £80K-£100K. 

Did think about pensions, but as part of the divorce settlement wife is entitled to half my pension! Trying to sort this at the moment by claiming half of hers, so hopefully she will drop this 

At the very least, she should agree that her claim against your pension would be based on the value of the 'pot' on the date of the divorce, or perhaps an earlier date that marked the end of the marriage. 

MEM62

andyhobbs said:

Alistair31 said:

Are you planning on purchasing your own property any time soon? 

Short term you could get 5.1% with no risk. 

its something i have toyed with, but i am 52 with a bad credit rating, mainly from the marriage! so i would have to put a lot of the money down as a deposit, might only get a 10 year mortgage with high interest rates because of history!

so thinking rent as can get a 3 bedroom place so kids have somewhere to stay when needed, and can down size when time is right

i know renting is not ideal, but in my time of life feel its best for me now 

The real disadvantage with rent is that you will be paying it in retirement.  Therefore whatever retirement provision you have has to be that much greater to cover housing costs.  Playing the long game, it may be better to bite the bullet now, buy a home, even if it is modest in size, with a view to getting it paid off before retirement.  After all, you have a very decent deposit.     

Albermarle

andyhobbs said:

tacpot12 said:

£40,000 invested in a couple of good Investment Trusts should return about 5% pa (£2000) or £166 pcm before tax. You can put £20K into an ISA this tax year, and have the remaining in a General Investment Account. You will also have a dividend allowance of £500 for 2024/25, so you'll only pay tax on £500 of dividends. You can put £20K into the ISA in sugbesquent years to reduce your dividend tax liability and CGT on investments for the long term. 

Long term investments in the stock market should return about 7% on average, but you will pay CGT on some of the returns until you can move all your assets into ISA.

You should also look at what you can put into your penison as this is a very long term investment vehicle with some good tax benefits. Perhaps put £20K into your pension? In 20 years, this could be worth £80K-£100K. 

Did think about pensions, but as part of the divorce settlement wife is entitled to half my pension! Trying to sort this at the moment by claiming half of hers, so hopefully she will drop this 

This should normally be sorted out as part of a full and final financial settlement. 
Not sell/split the house first and sort pensions out later. Have you both got solicitors negotiating on your behalf?

In any case once it is all sorted you can always open a new pension, if that works out easier. It is very easy to do online.

Alexland

andyhobbs said:
its something i have toyed with, but i am 52 with a bad credit rating, mainly from the marriage! so i would have to put a lot of the money down as a deposit, might only get a 10 year mortgage with high interest rates because of history!

so thinking rent as can get a 3 bedroom place so kids have somewhere to stay when needed, and can down size when time is right

i know renting is not ideal, but in my time of life feel its best for me now 

Hey I've just been through a divorce so appreciate it's probably a tough time. My circumstances were different in that I was able to maintain my credit rating, move to a sole mortgage with additional borrowing via a new lender to buyout my ex and take control of the family home.

It might be worth spending a few days really getting to understand the mortgage market to assess your options.

When interest rates were a few percent higher last year I was struggling to raise enough to do the buyout but I found that by working my way down the list of Building Society Association members talking to some of the smaller regional ones they would listen to my circumstances and I was surprised at how much borrowing and the length of term offered. I found one willing to lend me 6x income until I was 80 even though I had childcare responsibilities but that's probably too much debt for anyone to take on alone unless they have a very good repayment plan.

However if the family home needs to be sold then having somewhere suitable in the short term where the kids can stay overnight is most important so if that means you spend a year in rental then I guess that's fine. However with a £100k deposit it's worth trying to get in the best position possible to get back into the property market to rebuild financial security.

andyhobbs said:

Did think about pensions, but as part of the divorce settlement wife is entitled to half my pension! Trying to sort this at the moment by claiming half of hers, so hopefully she will drop this 

It's not that simple and it's worth considering any differences in your ages (the younger one has more time to contribute and accumulate returns/benefits), the types of pensions you hold, the different proportions built up before the relationship (and how that would have accumulated) and how any pension sharing fits into the overall settlement.