£40-£50k Ideas

[Samcotton85]

Hi Ladies,

I currently have £50k in my bank as I have sold a 2nd property I was renting out. I don't want this money to be spent willynilly so I'm looking for investing it. My son thinks I should put it into Bitcoin but obviously that could go very wrong. But on the other hand it could go very well (looking at the price increase over the years and the current interest in big companies)...

What would you guys do with £50k? Please no silly answers like spend it on holidays, I need this to keep me going well into my retirement.

Thanks

Sam

You need to think about how much risk you want to take with the money.
You have already decided that Bitcoin is too much risk.
You are not happy having it in the bank, so that's too little risk.
So you need to determine what amount of risk you want to take... and that will often depend on the time involved.

This short video may help you learn a bit more about risk.

Put it in premium bonds maybe whilst you decide. It only takes a few minutes to set up, although not eligible for first draw.

I would use it as a deposit for a btl. However it sounds like you may have just sold one.

I would put what you can in your pension then above that maybe a SSISA with Vanguard, and if any left in their general investment account. That is assuming can leave money for a few years.

You then need to determine where the money would go.
There are tax advantages to using certain types of tax wrapper.

ISA - Individual Savings Account
You can contribute up to £20,000 per tax year. The allowance is shared across all the types of ISA. Stocks & Shares ISA is where you would put money which is invested for a time of 5+ years.
ISA is Tax Free growth and Tax Free on withdrawal.

Pension - SIPP, Personal Pension, Workplace Pension
There are many different types of Pension but the core aspects of this tax wrapper are that money going in gets tax relief added.
If you put £80 in, then it becomes £100 and then grows by what it is invested in within the Pension.
On withdrawal, some of it is tax free (such as taking a tax free lump sum, though it can be taken in stages using Flexi Access Drawdown / UFPLS). The rest is taxable income, so what tax you pay on it depends on your tax rate at the time.
A downside to a pension is accessibility - there is generally no access before age 55, which is increasing to age 57 in April 2028.

There are limits to what can be paid in, which depends on your income now. So if you had a gross income now of £40,000 then you could pay in up to £32,000 to pension (as £32,000+tax relief = £40,000). If you have no income at all from employment, then you can pay in £2880 per year (which becomes £3600 once tax relief is added). If you have a very large income then there are some rules that apply... look it up if you are earning over £150,000.

Would you do it all to one place... probably not. You might want to keep some money accessible, and some money for retirement. You may want some instant access for use as an emergency fund.

Think about how accessible you want the money to be and then look at tax efficient ways you can invest the money.

[quote nannynick]You need to think about how much risk you want to take with the money.
You have already decided that Bitcoin is too much risk.
You are not happy having it in the bank, so that's too little risk.
So you need to determine what amount of risk you want to take... and that will often depend on the time involved.

This short video may help you learn a bit more about risk.

[/quote] I wouldn't rule BTC out as I already have some money in it but I think 50k is too much. What would you do with it?

@Silkieschickens

I would put what you can in your pension then above that maybe a SSISA with Vanguard, and if any left in their general investment account. That is assuming can leave money for a few years.

Oooooh, just looking at this now. Looks interesting. Have you done the same?

There is no money in bitcoin or other cryptocurrencies any more as countries like China are launching their own & development of blockchain currencies which take the risk and reward out of it. I would suggest going to Hargreaves lansdown and invest it in their Top 3 recommended funds.

Yes I have a Vanguard account, the SSISA and general investment account. You can see returns on their funds and choose what to invest in, can get money out quickly but it does fluctuate but mine esp the equities one have considerably outperformed bank accounts. There have been a couple if times its been under what I put in so you need to hold your nerve with that and be a bit flexible over when you withdraw or shift to less volatile products. The general investment one is subject to tax, ssisa isnt. I opened a SSISA end April with 20k and now at around 21.7k, its across 4 funds, more equity based ones.

I would split it between my S&S ISA and Pension. Due to my income and investments already made this year, I would need to split across two tax years. So I would put some in now, then park the rest in Premium Bonds or a With Notice account, and then fill S&S ISA again in the new tax year (6th April). Currently I have more money in ISA than in Pension, so I would aim to balance that up a bit... though how much to ISA vs Pension is very much up to each individual.

My current split in my mid-40s is

10% Workplace pension (Lifestyle Fund)
45% SIPP (90% NA tech large caps)
30% property (single BTL)
10% SSISA (50:50 UK/US)
5% crypto (50% ETH/BTC, +4 others)

Where you invest your £50k should balance your financial goals/timeline and appetite to risk. I'm quite happy with risk when diversified in industries I'm familiar with.

I'm more conservative with my shorter term goals (2-5 years) as they're less tolerant to unexpected losses. Longer term (10+ years) I'm more aggressive as there's time to ride the out the losses.

Appreciate that's not answered your question, but hope it at least gives you a view point to consider.

@BasicDad

My current split in my mid-40s is

10% Workplace pension (Lifestyle Fund)
45% SIPP (90% NA tech large caps)
30% property (single BTL)
10% SSISA (50:50 UK/US)
5% crypto (50% ETH/BTC, +4 others)

Where you invest your £50k should balance your financial goals/timeline and appetite to risk. I'm quite happy with risk when diversified in industries I'm familiar with.

I'm more conservative with my shorter term goals (2-5 years) as they're less tolerant to unexpected losses. Longer term (10+ years) I'm more aggressive as there's time to ride the out the losses.

Appreciate that's not answered your question, but hope it at least gives you a view point to consider.

This looks interesting. I like the idea of splitting it up. ETH and BTC are good shouts!

I am a bit reluctant to do another BTL as I had nothing but hassle with my last property. Bad tenants etc...

SSISA is something I am just researching now. Thank you for your reply

Slightly off topic, but seeing as it's been mentioned, does anyone mind telling me what the tax implications of opening a general investment account are? I don't need advice on maximising tax allowances for this year on ISA and pension, thanks, as that's all in hand. I just want to know how you go about paying the tax on gains in a GIA? Does it mean having to fill out an annual self-assessment tax return? I've managed to avoid doing that so far but wondering whether it will be worth it for the gains or just a pain in the arse every year?

I recently had 60k to invest and put 20k in a stocks and shares isa at the end of the last text year, then another 20k in this year and bought Crypto with the rest.

@CurlyhairedAssassin i would like to know the answer to this too

This has details on p13 of the tax on a GIA but there are allowances against them so think I won't pay anything, its £2000 of dividends tax free, £1000 of interest tax free and your capital gains tax allowance tax free. I fill in a tax form, the first time I filled one in took me a few hours to learn how to do it, though that was for self employment, but now have done one they are quick, maybe 30 mins or so once a year. You only fill in relevant parts. Registering was the hardest part, quite a few codes to get and one had to come by post, but it is partly the same codes used for state pension forecasts so useful to have.

customerdashboard.aegon.co.uk/content/dam/common/documents/aegon-gia-key-features.pdf

This is interesting. I have a constant dilemma over what to do with excess cash. Pension or ISA.

I'm not maxing out full pension allowance which I probably should as the higher rate tax relief is great but as pp said it's less accessible than an ISA and withdrawals are taxed. Just can't decide what to do. Seems silly to put post tax income into an ISA.