Advice on future investments

Lufeplanner44

Hi All,

I am in the fortunate position to have come into £300K.  I work full time and earn £80K per year.  I have a rental income of £1,180 per month (after costs) and my partner earns around £12,500 per year too.  We don't have any debts or mortgage.  I currently don't have any ISAs. Our monthly costs (which include still investing in my private pension of £320 a month) is around £2,400 excluding any holidays or socialising etc.

I would like to reduce my working hours/simplier job and therefore the stress that comes with it.  I know its a good position, but I could do with some advice on how to invest or make a return so I can improve my quality of life.  I am happy to invest in another property in the west midlands, but concerned that it soaks up so much cash.  Any advice would be gratefully appreciated.  

Marcon

Lufeplanner44 said:

Hi All,

I am in the fortunate position to have come into £300K.  I work full time and earn £80K per year.  I have a rental income of £1,180 per month (after costs) and my partner earns around £12,500 per year too.  We don't have any debts or mortgage.  I currently don't have any ISAs. Our monthly costs (which include still investing in my private pension of £320 a month) is around £2,400 excluding any holidays or socialising etc.

I would like to reduce my working hours/simplier job and therefore the stress that comes with it.  I know it's a good position, but I could do with some advice on how to invest or make a return so I can improve my quality of life.  I am happy to invest in another property in the west midlands, but concerned that it soaks up so much cash.  Any advice would be gratefully appreciated.  

Maybe using some of your inheritance to pay for properly-informed financial advice would be a very worthwhile investment? People here can chuck in ideas, but nobody has anything much to go on save a couple of lines of information about you, which rather limits how relevant/helpful etc they can be.

Dazed_and_C0nfused

Lufeplanner44 said:

Hi All,

I am in the fortunate position to have come into £300K.  I work full time and earn £80K per year.  I have a rental income of £1,180 per month (after costs) and my partner earns around £12,500 per year too.  We don't have any debts or mortgage.  I currently don't have any ISAs. Our monthly costs (which include still investing in my private pension of £320 a month) is around £2,400 excluding any holidays or socialising etc.

I would like to reduce my working hours/simplier job and therefore the stress that comes with it.  I know its a good position, but I could do with some advice on how to invest or make a return so I can improve my quality of life.  I am happy to invest in another property in the west midlands, but concerned that it soaks up so much cash.  Any advice would be gratefully appreciated.  

If £80k is taxable earnings you might want to think about making larger pension contributions in this tax year to mitigate your higher rate tax liability.

Lufeplanner44

I’m 45. I’ve got around £300k in my pension pot currently. Always could do with putting more in. Just thinking of other options really

poseidon1

£20k each into ISAs both now and in the new tax year, appears to be obvious. Whether cash or stocks and shares, your choice depending on attitude to risk.

Not sure about BLT. The one you have at present should be funnelling the net rent via your spouse as the lower rate tax payer.

As to the remaining funds, consideration could be given to parking some in low coupon government gilts for 'safe' tax free capital gains to redemption, and of course the usual premium bond option if you have an average degree of luck,

I note you are considering a lump sum Sipp contribution. Depending on your provider it does not need to be committed to equities immediately. It could intially be invested in a money market fund or similar etf, pending a decision as to an appropriate long term home.

At least benefit from the tax relief bonus added thereto by HMRC in the weeks to come, together with the prospect of reducing your current year's tax bill.  However, you should certainly resume your monthly contributions in addition thereto. The bigger your pension pot, the more options for earlier retirement.

Just a few thoughts.

Vitor

The biggest mistake would be chasing returns instead of designing a life with lower stress. You already won the hard part. Now it is about not giving the victory back through complexity or tax drag.

If you dropped to a simpler job or part-time role earning, say, £35–40k, your shortfall versus current income might be £20–25k a year. That can be bridged safely for many years using a mix of investment income and rental income without touching the core capital much at all. In other words, the money does not need to replace your income forever. It just needs to smooth a transition.

The next useful step would be modelling how many hours you could drop right now without touching capital at all, using only income and tax planning. That often changes how people feel overnight.

jimjames

Well if you (and partner) haven't used your ISA allowances yet this year then putting £20k in each will secure that allowance and you can add another £20k each in April

Keep_pedalling

Going off at a slight tangent, may I ask if you are married or in a civil partnership with your partner? If not and you are in a long term relationship you might like to consider your marital status. Could save a lot in income tax if your rental income was going to a spouse on a low income, and in the event of your death would avoid a IHT liability that could put your partner in financial difficulty.

If you don’t have wills or LPAs in place then that should be a top priority for the new year as well. 

Lufeplanner44

Thanks keep pedalling. Good advice

Albermarle

Lufeplanner44 said:

Thanks keep pedalling. Good advice

Be aware that most posters on here are usually quite negative about BTL,and positive about investments, pensions etc.
However as you already have one/have some experience, you are probably in a better place to judge.

Do not forget to enjoy some of it - holiday, new car etc 

SVaz

Owning a rental property outright is always a better position than having it mortgaged,  it’s a true asset and with a £300k pension pot at 45 you are in a fantastic financial position, let alone your windfall/inheritance. 
I agree that some paid advice from an independent advisor is a very wise choice,  especially from a tax perspective,  for example a being a ltd. Company might be better as a landlord, with you and your spouse as Directors.