What Should I do with this money?

[millypeggyandpandora]

Hi all
Your sound financial advice would be really appreciated ladies.
I have sold a house recently and I have 200k net profit.I don't need the money for anything urgently and I could invest it for a couple of years.I don't need to put it into my pension pot and I will be taking 25% of my pension out next year when I turn 55.
I was thinking of putting 50k into premium bonds as I believe even 1 £25 win a year is better than interest I would get in the bank.Where else could I invest this money?

What do you mean when you say you don’t need to put it in your pension? Do you mean you have the Max £1.073M ( or whatever it is ) that’s tax free?

And why are you going to take out 25% of it at 55? Are you still working and when do you plan to retire ?

Speak to an IFA.

Iona
I don't need to put it into my pension unless that's the best option for financial returns. My pension is in a defined contribution scheme.
I rent out another house and live off the rental currently. I was going to take out 25% from my pension to buy a house with my partner.
Tambora
My financial advisor said to put the money in premium bonds and the rest in national savings.
I wanted to know if anyone on here had any other ideas.

So you have a job with an occupational pension scheme ? But you live off rental income ? Isn’t that very tax inefficient?

Do you have a personal pension too?

Is your partner putting half the cash into the next property ? And not you end up paying even more tax?

What’s your return on your proposed rental? And how much will you get in national savings ?

Sorry so many questions

Iona
Thank you for asking questions!
Sorry my pension is personal not an occupational scheme. Due to lockdown complications (I should be travelling abroad!) I live at my partners house and my house is rented out. I pay for our food and live off the rest of my rent.
We would buy a property together at the beginning of next year, paying 50 % each. Or I may buy a little house on my own.
If I put my 200k in national savings the return is only 0.01%

It would be a bad idea to take money out of your pension if you don't need to (ie because you have this cash).

@Palavah

It would be a bad idea to take money out of your pension if you don't need to (ie because you have this cash).

This - why not just use the £200k to buy the house instead of taking money out of your pension pot?

I want to invest the money and get some increase in value within up to two years. I will have decided on buying another house by then and will use it with the 1/4 pension if need be.

I would invest the max into Premium Bonds in your position - but the increase in value will be a matter of chance. (My family has 3 x max in Premium Bonds and winnings are frequent but small).

Ok so you don’t have a job and you had two properties which you rented out. You have sold one and now you are living off the income from the second one - is that right?

( I’m impressed that you are now making enough to live off from once BTL)

In that case you must know what yield you can get from buy to let compared to the interest you will get from national savings.

Savvy
Yes I have been mulling over putting 2 lots of 50k in premium bonds ( in my name and my daughters)
Iona
Yes I am living off money from one rental ( the house is in popular London commuter city, so very lucrative rental). Not sure doable when lockdown totally eases!
I would have kept the house I just sold, but was bound to sell due to divorce agreement

@millypeggyandpandora

I want to invest the money and get some increase in value within up to two years. I will have decided on buying another house by then and will use it with the 1/4 pension if need be.

No financial adviser will be able to guarantee you growth within two years (of they could, everyone would be doing it) that's why yours has suggested premium bonds.

I personally think premium bonds useless for growth. However, two years is not very long to invest for, so not sure what to advise.
At the least, put £20k into a stocks and shares ISA, such as with vanguard or similar. Leave that as long as you can, and you will get far better return than premium bonds.

Tbh we have the max amount in premium bonds and we get wins almost every month, this month it was 4 x £25.

Thanks all
I will put some in ISA ( stocks and shares) some in premium bonds and rest in savings account

Get proper financial advice obviously
I assume your £200k is post capital gains tax?
Keep 3-6 months monthly expenses float in the bank
Pay off all debts
Invest the rest in a varied portfolio of 10-12 assets - mixture of equities and fixed interest bonds - can get a return of 3-4% quite easily if invested right.
Premium bonds median returns are scarcely better than a bank account total waste of time from an investment perspective

If you have the ability to make pension contributions, using c/f relief from previous years, then you'll get an immediate boost of your marginal tax rate. Definitely worth exploring whether than option is a possibility.

Approach someone like cannacord genuity and see what they suggest. Should get around 5% net of fees with a medium/low risk portfolio.