What would you do with 57k?

[Alabamahammer]

Hi

At the moment I have £50,000 sat in Premium Bonds. I win a little bit every so often, but nowhere near the 5% of so I would probably get from a S&S ISA. I have been speaking to a FA and they have suggested an ISA for £20000 and then a GIA for £37,000. I think this is a good idea, but the fees they want to charge are pretty big and I wondered if I might be better just using a robo-advisor instead and saving the fees.

I don't own a house at the moment, but also have no debt. My plan is to try and grow this money as much as I can over the next 5/10 years and then buy a house outright. I also have the capacity to save around £500 a month for the next 6-8 years (hopefully).

The other thing I thought was just to leave 30k in Premium Bonds, put 20k in the S&S ISA this year, and then transfer another 20k over next year... I'm really not certain about the best way around this so would appreciate any thoughts.

I would buy now and over pay the mortgage with the £500 you can save. House prices are only going to go up

Put a deposit on a property!
I doubt over the next few years that you will get the return you are looking for.
£500 a month over the next 6 years is £36000 , unless you are somewhere very cheap, how will you buy outright?

I can't get a deposit on a house as I'm self employed and so can't get a mortgage, I don't have enough book keeeping records. That's why I was wanting to invest the amount, as well as continue adding to it through savings.

I'm currently getting 13.7% on a S&S ISA which is amazing but I know it can go down as well. Id move your £20k to one if you're not going to buy a property now. I always keep some money in PB as it's fairly easy access and you could win big - I pray every month 😂.

Get a BTL mortgage.

@Alabamahammer

I can't get a deposit on a house as I'm self employed and so can't get a mortgage, I don't have enough book keeeping records. That's why I was wanting to invest the amount, as well as continue adding to it through savings.

Do you mean you have no accounts? Erm that sounds a bit dodgy. Is your income declared?

Premium bonds aren’t an investment. They are only worth it if you can replace a lottery habit with them. I’d put them in a fund with a low risk profile. However, if you might be able to get a mortgage in a year or two, might not be worth moving them.

I use premium bonds as my reasonably easy access savings vehicle because the potential upside is more than a cash isa or savings account. So keep 3 months salary there. Invest the rest sounds like a plan.

Do you have a pension though?

What sort of fees is your advisor talking about? If you invest, you're going to pay some, but it's important to keep them under control.

My approach would be to put £8k a year lump sum into an ISA along with your £500 monthly payment. That gives you some pound cost averaging - you'll buy more when the price is lower, so volatility works for you. Leave the rest in premium bonds for now if you're happy with that.

I hesitate with the next bit as I usually get my arse handed to me by the risk averse of Mumsnet, but I'd invest the ISA in relatively high risk funds. My reason is that you're looking at 10 years or so, and also you'll need stellar returns to meet your aim of buying a house outright. Popular funds at the moment are Fundsmith Equity, Vanguard LifeStrategy for trackers, Baillie Gifford American, Marlborough nano cap.

Note that this isn't 'advice', just what I'd do. You've got a FA for proper advice.

£14k/yr, not £8k. Can't do sums!

@Templetreebloom of course my income is declared. I haven't got enough years of accounts showing a good enough income for a mortgage. When the business was first started it wasn't making any money.
It's only the last two years I've earned enough they they would even consider me for a mortgage - and even then I could only borrow 40k, which wouldn't be enough!

@Rollercoaster1920

I use premium bonds as my reasonably easy access savings vehicle because the potential upside is more than a cash isa or savings account. So keep 3 months salary there. Invest the rest sounds like a plan.

Do you have a pension though?

I do have a pension which has about 30k in it from a previous job years ago. I've also set up a SIPP recently but it only has about £1000 in it so far.

[quote Alabamahammer]@Templetreebloom of course my income is declared. I haven't got enough years of accounts showing a good enough income for a mortgage. When the business was first started it wasn't making any money.
It's only the last two years I've earned enough they they would even consider me for a mortgage - and even then I could only borrow 40k, which wouldn't be enough![/quote]
Ok thats different to not having enough book keeping records which is how you worded it.
Usually 2 years accounts and proof of any upcoming contracts is the minimum required.
Do you mean your income is very low ?
I doubt with the current economic climate that 57K is going to make you enough to buy a house outright.
I guess it depends on how much properties are where you live?

ISA -Vanguard Investor charges 0.15% plus fund fee, such as 0.23% so you can put £20k in a S&S ISA with Vanguard for less than 0.3% annual fees.

@nannynick Sorry to ask a potentially pedantic question, but I genuinely don’t know. The .15% vanguard fee plus the .23% fund fee would equal .38%. How do you get below .3%? Or does the fund fee of .23% include the vanguard investor fee?

Should have been 0.4% though there are some funds which Vanguard does which have fee of 0.1%.

For example you could use a FTSE Developed World UCITS ETF which has an OCF of 0.14%, so combined with the 0.15% platform fee, gives a 0.29% ongoing charge.