What do I do with £168k equity from house sale?

Moldoggydog

A few years ago, I had a bad break up and serious ill health. Now I am better, I am waiting to complete the sale of house that I had with my ex partner and have had a substantial health insurance pay our which will mean that I have £168k. 

My current scenario is that I am 36, I will be moving in with someone where I will only pay for the bills, I work full time earning £45k, I have no credit cards or car finance. My only debt is student finance which comes out of my wages monthly. 

I don't feel comfortable with the risk of stocks and shares and I am not very savvy in that respect - or am I ruling this out wrongly and should I swot up? Is the best thing to buy another property and rent it so I have a safety net, or are there other things or sensible savings accounts that would be better? I just want to do something sensible with the money! I would love thoughts, opinions, pros, cons - what would you do?  

Bigphil1474

The really sensible thing would be to put some of it into a safe savings account with a well known bank. Beyond that, you need a financial advisor. Renting properties out comes with a lot of responsibilities, and the margins aren't what they used to. If you are up to the job though, it's probably the best option between risky investments and safe savings IMO. 

You are covered under FSA rules for £85k with a financial institution in the event it goes bankrupt so worth splitting your money if you don't spend it. It is also well worth getting a credit card, using it for your daily spend and getting any perks it comes with, and then paying it off completely each month - helps your credit score more than being debt free completely.

Anything advertised on social media should be assumed to be a scam. 

What about where you are moving in? Any chance you could buy half that house?

grumpy_codger

Moldoggydog said:

I don't feel comfortable with the risk of stocks and shares and I am not very savvy in that respect - or am I ruling this out wrongly and should I swot up? Is the best thing to buy another property and rent it so I have a safety net, ...

Most people here will advise against as it's getting more and more hard to be a landlord. If you pay to a good estate agent to manage your property and insure your income, you are unlikely to beat the interest you can get on savings. Basically, you rely on house prices to keep growing, that is sort of gamble.

...or are there other things or sensible savings accounts that would be better? I just want to do something sensible with the money! I would love thoughts, opinions, pros, cons - what would you do?  

MSE: Top savings accounts

+ https://moneyfactscompare.co.uk/

With £45K income a cash ISA will be your priority. Add £20K before the 4th of Apri and then £20K after.
With the rest don't forget about £85K FSCS limit.

FreeBear

Sit down with an independent financial adviser and have a chat about long term plans. He/she may suggest a range of investments to spread risks and perhaps recommend stuffing some of it in to a pension fund.

Albermarle

This is a house buying forum, and your question is really about personal finance.
You would be better to post in this forum, where similar questions are asked and answered regularly.
Savings & investments — MoneySavingExpert Forum

One question you will be asked is what are your objectives for the money. 
For retirement, for a house purchase, for holidays etc.? as the time scale involved largely defines the best direction of what to do with the money. So include this in any new post.

Also you will find people replying not very keen on buying rental property, and generally only lukewarm on financial advisors for someone in your situation ( although it is a personal decision). 

Moldoggydog

Bigphil1474 said:

The really sensible thing would be to put some of it into a safe savings account with a well known bank. Beyond that, you need a financial advisor. Renting properties out comes with a lot of responsibilities, and the margins aren't what they used to. If you are up to the job though, it's probably the best option between risky investments and safe savings IMO. 

You are covered under FSA rules for £85k with a financial institution in the event it goes bankrupt so worth splitting your money if you don't spend it. It is also well worth getting a credit card, using it for your daily spend and getting any perks it comes with, and then paying it off completely each month - helps your credit score more than being debt free completely.

Anything advertised on social media should be assumed to be a scam. 

What about where you are moving in? Any chance you could buy half that house?

Thank you! I have thought that perhaps it would be sensible to buy a house and assume that the income from that would be neutral ish and that I would rely on (hopefully) property prices rising, 

It is a newish 18 month relationship so I don't think we are quite in a place for me to be on the mortgage but hopefully, one day we will buy together. 

Moldoggydog

grumpy_codger said:

Moldoggydog said:

I don't feel comfortable with the risk of stocks and shares and I am not very savvy in that respect - or am I ruling this out wrongly and should I swot up? Is the best thing to buy another property and rent it so I have a safety net, ...

Most people here will advise against as it's getting more and more hard to be a landlord. If you pay to a good estate agent to manage your property and insure your income, you are unlikely to beat the interest you can get on savings. Basically, you rely on house prices to keep growing, that is sort of gamble.

...or are there other things or sensible savings accounts that would be better? I just want to do something sensible with the money! I would love thoughts, opinions, pros, cons - what would you do?  

MSE: 

With £45K income a cash ISA will be your priority. Add £20K before the 4th of Apri and then £20K after.
With the rest don't forget about £85K FSCS limit.

That makes sense! It would be buying in the right place and hoping the property price rises. I am in Liverpool, so it feels like a place where there could be good opportunity to do that but it is very daunting having never done it before. 

So you mean with the ISA, I could have multiple ISA's to put the money in but only to the value of 85k? 

I wish they had taught this stuff at school! I feel embarrassed not knowing!

pmlindyloo

Your money can actually be protected for 'lifetime' events up to a million pounds for up to six months.

Read this:

Temporary high balances | Check your money is protected | FSCS

This may save some hassle if you need some time to make up your mind what to do with the money.

grumpy_codger

Moldoggydog said:

grumpy_codger said:

Moldoggydog said:

I don't feel comfortable with the risk of stocks and shares and I am not very savvy in that respect - or am I ruling this out wrongly and should I swot up? Is the best thing to buy another property and rent it so I have a safety net, ...

Most people here will advise against as it's getting more and more hard to be a landlord. If you pay to a good estate agent to manage your property and insure your income, you are unlikely to beat the interest you can get on savings. Basically, you rely on house prices to keep growing, that is sort of gamble.

...or are there other things or sensible savings accounts that would be better? I just want to do something sensible with the money! I would love thoughts, opinions, pros, cons - what would you do?  

MSE: 

With £45K income a cash ISA will be your priority. Add £20K before the 4th of Apri and then £20K after.
With the rest don't forget about £85K FSCS limit.

So you mean with the ISA, I could have multiple ISA's to put the money in but only to the value of 85k? 

No.
£85K is the maximum protected in any financial institution - 

Are my savings safe?

Cash ISAs are special accounts where interest isn't taxable. £20K is the maximum you can add in a financial year:

Personal savings allowance

Top cash ISAs 2024/25

• Cash ISA need-to-knows
• Top easy-access cash ISAs
• Top fixed-rate cash ISAs

saajan_12

Moldoggydog said:

I don't feel comfortable with the risk of stocks and shares and I am not very savvy in that respect - or am I ruling this out wrongly and should I swot up? Is the best thing to buy another property and rent it so I have a safety net, or are there other things or sensible savings accounts that would be better? I just want to do something sensible with the money! I would love thoughts, opinions, pros, cons - what would you do?  

Re stocks & shares & swotting up - 
That's really up to you on how interested you are. Ultimately there's always things people could do more perfectly, whether that's better researching a car purchase or how to dress or how to invest money. How easy do you find it to understand such things and would the time be worth the extra few % you could get? Even within stocks & shares, there's different degrees of how complicated you make it - eg a bespoke leveraged portfolio of stocks vs a general  stock index tracker S&P or FTSE. The latter is much simpler. 

Re letting a house - 
That should come with an equal, if not higher amount of swotting up, as there's actual penalties  and/or enforcement orders if you get it wrong which are designed to be severe so you don't do it. Even if the cash flow of rent v mortgage is roughly even, that's considered a profit for tax purposes, and there can be negative cash flow if say there's a rental void or major repair, so you'd need the funds to sort those out. Even if all goes well on the rental, you're essentially hoping prices go up similar to hoping a share value goes up. Its also a lot less flexible, so if its not working out or if you need the money out, it make take months / years to evict and sell.