Sell small property to invest the money instead? Stupid? Dh says its ridiculous and to keep it and it won't get as much.

[Alpacinoshoohaa]

Small property gets about 7 grand a year after taxes etc.

Property worth around 100,00 maybe a little more maybe a little less.
I'm wondering about investing it instead in stocks and shares funds and removing the human aspect of this type of investment. I've spent a lot of money on it in recent years and something always seems to go wrong eg I paid for new doors and there were issues, paid for new windows and also issues.

It's commercial not housing.

I'm thinking about selling and putting some into a sipp and some into stocks and shares isa (drip it in)
Silly idea or sensible?

@HotChoc10

If it's your main pension you could put it into a SIPP (over a few years as the max you can contribute in one year is £40k, I think?) and claim the tax relief

to get the tax rebate, you are not allowed to contribute more to your pension in one tax year, than your taxable earnings in that tax year. There is a small exemption for low-earners or no-earners.

But if you have a fat wedge to invest, you can put another £20k per year into your ISA.

Pensions get tax relief when you put the money in

ISAs are tax free when you take the money out.

If you pay higher tax rate in your contributing years than in your drawing years, pensions have an advantage. Otherwise, not much in it, and ISAs are more flexible. But pensions can avoid inheritance tax if you have a fund remaining when you peg out, and have an estate exceeding £325,000.

Piglet John, I don't spend much time there as its a long way away.
However the mental worry and not easily being able to sort things out gets me, esp as every issue I've had with the tenant is not clear cut the lease has been no good.

I'm not a high earner at all and unlikely to be.
I'd probably put some into sipp and try and get bulk into an isa.

@Kitfish

I recommend you don't try and pick the stocks yourself but go to a good financial advisor. You want a balanced portfolio over a wide range of stocks/funds that reflects your risk profile. I have a very good financial advisor, who I would recommend. DM and I'll give you his contact details.

People who've ever read any books on investing will know that the consensus is that financial advice reduces your returns by the amount you pay the advisor.

It would be utter madness.

@Viviennemary

Why, please

Re stocks I'm fairly confident to just stay with long term investing and staying with index funds.

What I'm not clear about is how I get that income from the stocks.

I wouldn't necessarily want it yet, but my income form the property goes back into the property at the moment.

Or am I being spoilt...

Because you'd be hard pushed to get 7% return on a safe investment. Property usually = steady rental income plus capital growth. Invest the rental income if you want to invest.

Some funds are income funds - not sure if it's dividends or growth in value.

I would find a consultant who could teach you about crypto and get you invested in that as well as regular stocks.

[quote Alpacinoshoohaa]@Viviennemary

Why, please

Re stocks I'm fairly confident to just stay with long term investing and staying with index funds.

What I'm not clear about is how I get that income from the stocks.

I wouldn't necessarily want it yet, but my income form the property goes back into the property at the moment.

Or am I being spoilt...[/quote]
I have a SIPP that I currently draw income from, at the rate of about 3%. This is a bit less than it generates in dividends so I reinvest the left overs.

It holds about a half a dozen different funds and shares, with a European and International bias. My funds are Income versions.

You can get higher yielding funds or shares, but they may not have the same long term growth prospects.

I wouldn't recommend something volatile, you're better off getting a low-cost tracker, and I am moving that way myself.

It is sometimes said that if you withdraw 4% p.a. from a mixed portfolio, it will not diminish, because growth and income will tend to equal or exceed what you draw out.

If you have decided that you will die in, say, 20 years or 10 years, you could choose to take more with the intention of using it all up.

Income from the SIPP is taxable, so if I have any high-yielders, I put them in an ISA which is not taxed.

I'd recommend reading or listening to How to own the world by Andrew Craig as he addresses the negatives/positives of keeping your money in property versus investing. Very easy/read listen and might help you. You've got plenty of time to make the decision.

Sell it - to a local buyer, Council or Housing Trust and invest it in something else. You shouldn't 'lose' any Capital so why not? I have done similar many years ago and have never regretted it, even though I have since been on my arse.

Be just a little part in helping mitigate our housing crisis and if others do too, then those little actions add up.

The hate.

It's not a house?

And I'm really surprised you wrote that you sold an asset and have since been on your arse.

This property is my barrier to stop me from ending up on my arse and this is what scares me having previously been very much on my arse and no safety net.

You could go for income funds, best yielding ones seem to be around the 4/5% range. Safe withdrawal would be JUST the natural yield, otherwise you may sacrifice growth by taking more.
Otherwise a cheap passive tracker like a Vanguard lifestyle, the VLS60 is 60% equity / 40% bonds for example.

I would keep 2/3 years of income in cash so you don’t have to sell funds in a downturn.

It would be optimistic to assume an average 10pct return over the long term from stocks and shares. Something around 6-7pct is probably more realistic, or 5-6 pct after fees.

Stocks and shares may provide a dividend yield on the order of 2-3pct depending on the type of stocks and funds chosen, and that may be before fees, which could easily eat up half of that. Any further cash from the portfolio would have to be gotten by selling some shares, so needing a distribution rate of 5-7pct for living expenses would put you in a position of having to sell into a market downturn.

That does not mean that it’s a bad idea to buy stocks and shares, just that it’s imprudent to assume 10pct returns and 5-7pct withdrawal rates.

An important input to your decision would be to work out how much cash you’ve cleared from the property, net of ALL expenses, and then compare that vs what you think you might get elsewhere.

@LostButtons

I've just found him on Spotify. It looks very interesting there are tons of episodes though.

[quote Alpacinoshoohaa]@LostButtons

I've just found him on Spotify. It looks very interesting there are tons of episodes though.[/quote]
I actually meant his original book which I linked to rather than the podacasts, that would give you the basics to his approach. And I've found very useful in my own approach to finances.

All the advice I've read about finances says spread your money so some in ISAs some in property, some in funds Then if something tanks due to a disaster eg covid when I think most shares fell in value you have other stuff safe eg property going up. Shares have recovered now.

@PattiPritell

All the advice I've read about finances says spread your money so some in ISAs some in property, some in funds Then if something tanks due to a disaster eg covid when I think most shares fell in value you have other stuff safe eg property going up. Shares have recovered now.

Spreading your money ie "diversification" among different investment types makes sense, but one challenge is that real property is "lumpy": either you own one or you don't. You cannot easily sell half of a property, and I think the OP has to be either 100% property or 0% property.

Also in reading language about ISAs, funds, SIPPs, stocks and shares, etc. it is important to distinguish between containers and contents. Funds and ISAs are both more like types of containers than contents.

An ISA is a type of container that is designed to deliver certain tax benefits: after-tax money goes into it, but earnings within the container are tax free and money can generally be taken out when you need it. A SIPP is a different type of tax-related container: pre-tax money goes into it, but access is very restricted and the money including earnings gets taxed upon withdrawal.

A fund is yet a different type of container that is designed to hold a basket of assets, often stocks or bonds, so that an individual investor can invest more easily and with more diversification than if they bought individual stocks or bonds. A fund can be purchased within an ISA, or a SIPP.

Diversification is worth having in the sense of having different types of contents, so for example some stocks, but not everything in stocks. In normal times you'd also want some bonds, but currently bonds yield next to nothing so it might be better to have stocks and cash and skip the bonds.
Whether that is best done within ISA, SIPP, normal taxable account, or a mix of the three, depends on the person's tax circumstances. But "diversifying" among ISA / SIPP / taxable account does not really make sense, and more importantly, it is possible to have a poorly diversified portfolio while holding all three of those or while holding many different funds. What matters is what's contained inside the funds / ISA / SIPP / taxable account.

Going back to the original question, having investment property in a diversified portfolio, is a good idea in general, but in the OPs case, as
I read it, it's either 100% investment property or a mix of stocks and bonds, but not both, because the OP would have to sell 100% of the property in order to buy any liquid financial investments (which include stocks and bonds).

Yankee dad thanks

I have a small stocks and shares isa and a smaller sipp.

The rent was supposed to boost these but I can't seem to get ahead with it, ie expensive work needing to be done on the property, then if the tenant does stay next year that's another grand on a new lease.
More ££ on checking electrics and all that stuff. If the tenant stays I'm going to have to pay to get someone to run through the lease with her and what her responsibilities are.

I don't pay for management but I'm thinking of it but it's extra cost.

I'd prefer to consolidate it all.

Within the isa I mostly have vanguard stuff which is a little of everything and vanguards life strategy fund.

@PattiPritell

All the advice I've read about finances says spread your money so some in ISAs some in property, some in funds Then if something tanks due to a disaster eg covid when I think most shares fell in value you have other stuff safe eg property going up. Shares have recovered now.

Remember that the UK still has a lot of homeowners, and homes are expensive.

So it would not be unusual for a family to have (say)

£250,000 in the family house
£50,000 in pension funds
£1,000 in premium bonds
£500 in a the bank

You can see that some 80% of their "wealth" is invested in domestic property

so for a balanced portfolio, the last thing they need is to buy more.

Alpaca life changes, I sold and assigned the Lease to a local person for half the market price many years ago, since been on my arse but not now. Many years later I'm still happy with that decision.

Yes, making the most out of 'investments' is good for the investor, unless things 'change'. There is always a choice about how, where and what an 'invesor' places their money in.

An investor can choose to invest ethically and given the 'housing crisis' currently experienced by those on low incomes for renting and those on middle-incomes that can't even buy...just ask yourself about your part in this. Sell the property and invest in something else to make money.

If you think that stocks and shares will net you 12% per year you shouldn't be investing. 7% I a fantastic return and you also have the possibility of capital appreciation. Keep the house.

Presumably you will have capital gains tax when you sell the property so there is that to consider - it's not like you will be able to straight swap the value straight into investments.

I would have thought if you have spent a lot on major maintenance recently then this expense should not be so great going forward as you will have sorted a lot of the big jobs, and you should be able to achieve better overall profit in the future.

I would keep the property in your situation I think.

@TheHateIsNotGood

It's not, I repeat not... A residential property. There is no way I'm going selling it for half it's value .

I find your post odd sorry. Patronising and strange.

Saucy 99

10% on average on long term investment.

That smooths out the rough years on index funds.

I don't think tyere is that much head way in capital appreciation.