How best to invest 70K

[Michtyme]

Hi all,

Name changed for this.

DH and I are in the very fortunate position of having around £70k pounds to invest. It's part inheritance and part money from an endowment which is paying off after 25 years.

Would really appreciate thoughts on what is the best thing to do with the money.

DH would like to pay off a chunk of the mortgage. We have approx £110k outstanding with 11 years to go, so it would be a significant reduction if we pay all £70k into that. He'd like to re-schedule the remaining £40k so that it could be paid off in under 5 years.

I had thought about buying a buy-to-let flat. Where we live we could probably get a small one bedroom for about £160k, so we'd have around a 45% deposit. The drawback to this is that I'm worried it would be a lot of work, I'm also worried that we would only see any money from this in the long term, and in the short term it might be lots of hassle for not much gain.

I also have an ethical quandry - if we buy a flat we would be pushing out first time buyers who wouldn't have the kind of deposit that we have.

Any thoughts / advice / experiences very welcome!

thanks

[imsorryiasked]

What position are your pensions in and how old are you booth.

[Figgygal]

We've just invested £70k I can get details from dh later (he works in financial services). We are drawing £350 a month from it and it's still made £1000 in 2 months.

I wouldn't BTL it's a lot harder to make profit now is risky in terms of rental voids and there are costs associated with it.

Paying off mortgage is all good but once you've done that the money is gone. We have a much bigger mortgage than you but decided not to pay any off as returns from investment pay a Chunk of mortgage every month but still have the capital for if we need it.

[Michtyme]

I'm late 40s, DH early 50s.

I have a work pension, which is ok. Due to pay around £14k a year, if I continue with it until I retire (this is much less than I earn tho). DH had a work pension, but the company went bust so it is now worth a fraction of what it was. At the moment it looks like paying around £8k a year.

I should have put this info in the OP actually. It was worry over our pensions that first led me to consider buy to let, as I thought it might be an additional income.

[snowgirl1]

Not a financial adviser, but investigate whether putting it into your pension might be the best thing. You get tax relief on pension contributions (up to £40K per annum and believe you can use previous 3 years unused £40K 'allowance').

When you come to draw your pension you can take 25% tax free (so could use the lump sum to pay off any outstanding mortgage).

DH spoke to a Financial Adviser recently and the adviser said that many people want to pay of their mortgage if they come into a lump sum, but that often putting it into pension is a financially better decision).

[Michtyme]

Thanks Figgygal and Snowgirl1 for those suggestions. We hadn't really considered an investment as neither of us know much about them, but it's something to think about.

The pension suggestion is also a really good one, although I suppose it means the money is really tied up until you reach pension age?

[dragonslair]

Figgygal I would really like to know how you are generating £350 pm income off £70,000. I am in a position where I need to achieve this. Have sold my house due to DH death and made some bad decisions (relationship related) which have cost me money. I don't have enough to buy another house, but do have money to invest and income is my priority right now, as I have decided to go back to study.

[daddy2kids]

btl is a good short and long term investment depending on you area friends reguraly buy houses near me for 40/50k spend 10k and remortage them so virtually get all their money back and gives them positive cash flow a month of £250/300. they invested 100k and now make about £2500 a month enough for her not to work and watch kids. Plus think their plan is 25 and he will stop

[MummyShah369]

Any info on how to make 350 pm from 70k investment?

[daddy2kids]

From that I’d expect about £900 a month if you were doing houses in my area just depends where you are

[Sunflowersforever]

£350pm from 70k is only a 6% return, which most share portfolio investments will achieve.

Means your core 70K is deprecating though if you pull out the whole £350pm every month.

BTL should give a return plus your core 70k investment continues to grow if the housing market grows.

All options come with risk as shares and housing prices can go down as well as up, so depends what the long term goal is?