Better use of cash

mp80

Hi, me and the missus have managed to build up about 200k in cash which is currently split in ISAs (Tembo, Leeds, Paragon) with the rest in Marcus - we are paying 45 percent tax on that!

got a mortgage balance of about 200k, but that’s on a 2.9% fix until 27.  I’ve got a company operated pension which I pay 1500pcm into and reticent to put more in as it’s not wonderful.

The kids are coming up to high school starting with the oldest in a couple of years so we’ll get fees from that 

I don’t really know what to do with the money- perhaps I’ve done what I can to max out the returns at a moderate risk? (I’m 45)

El_Torro

Do you have any Premium Bonds? If not you can put up to £100k (£50k each) there. The return isn't great but if you're paying 45% tax on interest you should beat a savings account. Anything you win from Premium Bonds is tax free. 

How much of this £200k will you need in the next 10 years? If not all of it then investing is a good option. The easiest way to do that is to convert some of your Cash ISAs to Stocks & Shares ISAs. 

Someone paying 45% income tax should be paying a fair bit more than £1,500 a month into their pension. Anything you do to get your income down to £100k a year will give you big tax benefits.

wmb194

Low coupon conventional gilts bought below par (par is £100 or 100p). Capital gains on these are tax free. Bought via a stockbroker.

https://www.dividenddata.co.uk/uk-gilts-prices-yields.py

InvesterJones

Pension - if you don't like your workplace one then put it somewhere else.

kempiejon

InvesterJones said:

Pension - if you don't like your workplace one then put it somewhere else.

Quite, or leave the current one as is, paying the minimum and DIYing a SIPP. With the tax relif for 45% income tax leveraging the potential difference in retirement could be a driver. Again, with a tax hit at 45% savings vrs mortgage overpayment looks marginal.

Hoenir

mp80 said:

  I’ve got a company operated pension which I pay 1500pcm into and reticent to put more in as it’s not wonderful.

The rewards from investing come over the much longer term. 

Notepad_Phil

mp80 said:

...  I’ve got a company operated pension which I pay 1500pcm into and reticent to put more in as it’s not wonderful. ... (I’m 45)

What's not wonderful about it? It sounds as though you may be in the wrong funds. Have you just left it in whatever the default fund was, which usually is a lower risk than many, but lower risk does not mean that you're guaranteed to not lose money and certainly many lower risk funds have had a poor recent history. At age 45 you may be at or close to peak income and you're not that far from when you may want to start accessing it, so it may well be worth your while looking into it and see if you can make it a bit more wonderful.

mp80

El_Torro said:

Do you have any Premium Bonds? If not you can put up to £100k (£50k each) there. The return isn't great but if you're paying 45% tax on interest you should beat a savings account. Anything you win from Premium Bonds is tax free. 

How much of this £200k will you need in the next 10 years? If not all of it then investing is a good option. The easiest way to do that is to convert some of your Cash ISAs to Stocks & Shares ISAs. 

Someone paying 45% income tax should be paying a fair bit more than £1,500 a month into their pension. Anything you do to get your income down to £100k a year will give you big tax benefits.

Hadn’t even thought about premium bonds. I’ll take a look.

My salary is 190k with a bonus that on FY24 year took me to 262k. Wife earns 50k.  I can’t afford to sal sac as much as I’d need to get below 100 taxable and I think I’d exceed the maximum anyway.

I think in terms of access, the school fees is the obvious one but we may be able to pay out of operating budget. It’s all dependent on employment of course and I’m assuming things continue as they are which could be somewhat of a big assumption! 

We do have some very long term assets. My wife owns half of a property which has no mortgage but a family member will be living there until they can’t, and there’s inheritances etc.  So I’m thinking with the pension plus those liquidated, downsizing our house etc we should be alright if we live that long!

mp80

El_Torro said:

Do you have any Premium Bonds? If not you can put up to £100k (£50k each) there. The return isn't great but if you're paying 45% tax on interest you should beat a savings account. Anything you win from Premium Bonds is tax free. 

How much of this £200k will you need in the next 10 years? If not all of it then investing is a good option. The easiest way to do that is to convert some of your Cash ISAs to Stocks & Shares ISAs. 

Someone paying 45% income tax should be paying a fair bit more than £1,500 a month into their pension. Anything you do to get your income down to £100k a year will give you big tax benefits.

Hadn’t even thought about premium bonds. I’ll take a look.

My salary is 190k with a bonus that on FY24 year took me to 262k. Wife earns 50k.  I can’t afford to sal sac as much as I’d need to get below 100 taxable and I think I’d exceed the maximum anyway.

I think in terms of access, the school fees is the obvious one but we may be able to pay out of operating budget. It’s all dependent on employment of course and I’m assuming things continue as they are which could be somewhat of a big assumption! 

We do have some very long term assets. My wife owns half of a property which has no mortgage but a family member will be living there until they can’t, and there’s inheritances etc.  So I’m thinking with the pension plus those liquidated, downsizing our house etc we should be alright if we live that long!

QrizB

mp80 said:

My salary is 190k with a bonus that on FY24 year took me to 262k. Wife earns 50k.

Considering your income and assets, might I suggest spending some of your £200k on some professional financial advice from an Independent Financial Advisor?

mp80

I did speak to one last year who suggested US tech stocks and AI companies were the best thing.  If I’d had put my cash there I would have lost a fortune.  May as well go to the casino and roll a dice than listen to them, I genuinely don’t believe they have any better insight than ChatGPT does