What to do with £50.000

franr43

If you have someone who is paying a mortgage that you can trust completely e.g.mum...

Become her mortgage lender and she pays you what she is currently aying her mortgage lender as interest

That way you both gain. You get a higher income for your investment than the mortgage lender would give you as an invester. The other person has a secure and decent 'lender' - you!

Should you need the money back as a lump sum, the other person returns to a conventional lender.

Depends on having someone you absolutely trust.

May be possible to get it legally drawn up properly by a solicitor.

Probably can be more tax effective as well than conventional /dividends whatever.

Vectra

chesky369 wrote: »

I'm sorry Vectra, but that's just why Jack should go for INDEPENDENT advice. Any advice he would get from an individual bank or building society would be highly suspect - apart from anything else, the quality is not particularly wonderful. Additionally, he should rely on a professional rather than people like you or me who are full of goodwill but lack both the expertise and time to give him proper advice.

Well the" independent" advice is loaded in my experience whereas the bank in my case Lloyds TSB gave free tuition even suppling a printout for perusal.Of course I am only speaking from my experience.
Too many financial advisors have sprung up and most know little more than anyone reading on these forums. When it comes to my money if not the young mans in question then a good bank where at least things are done lawfully and properly is the only way if you don't have too much" savvy"

Aegis

franr43 wrote: »

If you have someone who is paying a mortgage that you can trust completely e.g.mum...

Become her mortgage lender and she pays you what she is currently aying her mortgage lender as interest

That way you both gain. You get a higher income for your investment than the mortgage lender would give you as an invester. The other person has a secure and decent 'lender' - you!

Should you need the money back as a lump sum, the other person returns to a conventional lender.

Depends on having someone you absolutely trust.

May be possible to get it legally drawn up properly by a solicitor.

Probably can be more tax effective as well than conventional /dividends whatever.

There are so many potential pitfalls with this idea that I don't know if I'll catch them all!

1. No insolvency protection: there's no guarantee you'll get your money back if you lend it to family
2. The growth rate won't match the risk: lending like that will just about beat cash accounts, but because it's totally unofficial lending, unless you want to pay a lot for solicitors to get involved, the risk is just too great for the return
3. Lending to family members always runs the risk of tearing apart the relationships if things go wrong
4. If the mortgage has a tie in period, this might incur additional charges
5. It's a lot of hassle for the homeowner compared to just continuing to direct debit the current lender
6. There are a lot of legal implications with secured lending, not least of which is the protection of the loan amount by using a charge on assets: this is unavailable to unofficial lending, at leas from a legal perspective
7. The other person has the trouble that you might call back the loan as and when you need it, leading to another hassle of arranging a mortgage through a normal lender

You could always go ahead and do it anyway, but the level of trust and complication would suggest that you should only do it if the relative is utterly trustworthy and you fully understand all the financial and legal ramifications of the position. Of course, if you were happy to go ahead and make a gift like that, you'd also run the problem of possible inheritance tax liabilities on your own money if your relative died before paying you back and left the money to you in a will.

In short, unless you know the situation extremely well from all these angles, it might be better to stick to more conventional methods of earning money.

chesky369

The financial advisers at banks and building societies are actually only salespeople and the FSA are in the middle of setting out guidelines that in future, they will only be able to call themselves salespeople, NOT financial advisers. The banks love people who are easily impressed by computer-generated printouts but, in reality, whilst just within the law, their advice often borders on the unethical.

Aegis

Vectra wrote: »

Well the" independent" advice is loaded in my experience whereas the bank in my case Lloyds TSB gave free tuition even suppling a printout for perusal.Of course I am only speaking from my experience.

Bank advisers are almost always tied or multi-tied, meaning that they only offer a limited range of products. Often this range does not include products that most independent people would call any good, but the bank advisers aren't required to actually find the best product which meets your needs. Instead they are only required to pick A product from their range which meets your specifications. If this is a unit trusts that ranks bottom in the league tables for 10 years running and has huge initial and annual costs, that doesn't matter because the goals and risk profile fit your own.

If the adviser isn't at the very least multi-tied, you could end up with an absolutely appalling product because you listened to the tied adviser rather than going independent. With a multi-tied advisers, there's a panel of products to dilute this effect, but there still isn't the depth available to a fully independent adviser.

The final issue is that a tied adviser cannot portfolio plan for you. They don't have the necessary skills or resources to look at your existing products and come up with a strategy for a new investment.

In short, if you can pick one or the other, independent would undoubtedly be the way to go.

Too many financial advisors have sprung up and most know little more than anyone reading on these forums.

"Most"? Can I ask where you got that data from? All IFAs have at least one set or regulatory exams under their belts, and the good ones have several. Even the basic exam puts their level of knowledge way above the average person. An IFA is then required to be regulated by the FSA in accordance with their long list of rules, which includes ongoing development requirements that the IFA needs to carry out in order to remain compliant.

Even the worst IFA has access to tools and information that no-one here apart from other IFAs will have access to, including in depth data on the various funds and sophisticated portfolio planning tools.

If you've had a bad experience with an IFA or two, then that's a terrible situation to be in. However, if you took bad advice and lost money, an IFA is required to be able to explain why they selected a product for you in the event of a complaint. If the complaint is escalated, they invariably have indemnity insurance to protect you in the case that they issue bad advice. As such, if you've been given bad advice by an IFA, complain about it. Of course, if you willingly went in to a high risk venture and lost a lot of money, the complaint is unlikely to be upheld, but if you were obviously a low-medium risk investor and had all your money put into emerging markets (they're safe, right?), then you'd have grounds for complaint.

There are going to be a few bad eggs in any group, but it seems unfair to tar all IFAs with the same brush because a bad experience with a couple.

When it comes to my money if not the young mans in question then a good bank where at least things are done lawfully and properly is the only way if you don't have too much" savvy"

Banks are good for savings. Most other financial matters can be done better.

I should point out that a lot of banks actually employ Independent Financial Advisers... I wonder what you'd think of them?