House or money?

[WalterHWhite]

I have the opportunity to own a house worth 180,000 and then £70,000 cash or to have the £250,000 cash.
Can anyone help? My instinct is to have the cash but that might be a daft idea. It’s a really well maintained house and a shame to see it sold. Thanks

Do you need a house to live in?

If not, then I'd take the cash.

250k will give you interest at about 5% which is about 900 a month.

A house will only generate income if you rent it out and that's a big hassle. You'll be lucky to make 5%.

Thanks for your reply. No I have a mortgage free house. Renting doesn’t appeal to me for the hassle reason and my dc’s are not really ready to be that independent yet. (Wish they were!)

I am not that savvy which is why I lurk on these boards but am pleasantly surprised by that much interest. It’s more than I’m earning.

Would you mind telling me where you’d put the money and whether I definitely need a financial advisor?

So I usually keep a very close eye on

www.moneysavingexpert.com/savings/savings-accounts-best-interest/

And use that to decide where to put my money.

You are protected by the fscs guarantee up to 85k per bank.

Being a LL isn’t for everyone. We were glad to get out after nearly 10 years. It’s not as easy as people think. Or we didn’t find it easy anyway.

What’s your pension like? Consider putting some into that.

I think I’d find it difficult too @Versailles2025.

Non existing pension really. £24,000 with Prudential. I’m 62.

Thank you @Octavia64 . I shall have a look at that.

I wouln'tt keep that amount in bank accounts, unless you think you might need it all soon.

If for some of it you have a longer time horizon, I would consider:

1. pension contributions to maximise tax relief (if you are not already paying in the max) or are worried about pension provision;
2. equity ISA (can pay in £25k per tax year) in something like a low cost tracker ETF. Obviously equities can go down but in the long run they will grow - which a bank account won't in the same way)
3. lock in some in a term deposit account (as interest rates are more likely to go down than up in the next year or two)
4. keep what you might need to spend in the best interest paying instant access or 30 day notice account.

Renting out a property, as others have said, can be hard work, and you need to know what you are doing to avoid losing money with difficult tenants.

Thanks so much @macshoto. That’s so generous of you to take the time to give me that information. I can’t imagine needing much of it unless I move house but that won’t be for a while yet (easy access I mean.)

I’m so disappointed about the house. I just wish one of my dc’s were in a position to live in it but they’re not yet. As you say, being LL can be hard.

equity ISA (can pay in £25k per tax year)

£20k. And the pension you can put in the lower of £60k or your annual earnings. But from that you have to deduct paymemts to any other pensions you have (including employer contrbutions, if relevant) and tax relief.

With that amount of money - whether earning interest as cash or generating income via investments, remember you'll need to fill in a tax return for everything not in an ISA or pension. So don't split it up too much or it gets hard to keep track of.

You haven’t really got enough of a pension pot at £24k, so I would definitely be looking at the best way to address that.

There would be high interest (for now) in cash savings accounts but if you are earning over the personal tax allowance all but &1k of the interest would be taxed.

Which is why pension and ISAs are good bets.

Some of us like Premium Bonds for easier access, a good return isn’t guaranteed but what you do win, whether it be £25k or £1m, is tax-free.

Thanks for your replies. Really helpful. @TempleOfBloom given my lack on knowledge about pensions (I work part time on about £8000 pa), would you advise I see a financial advisor? I like the sound of premium bonds. I had £1000 in there 20 odd years ago and won £500 within months. Is the maximum £50k?

Sorry - lack of knowledge

£20k ISA limit I knew that, just tired - apologies.

To OP:

Given your earnings are so low, the benefit of paying into a pension is lower, as there's little / no tax relief to reclaim. It may still be worth doing as any growth in the pension will be tax free / like in an ISA.

Your provider may be able to help you work out what you could contribute in terms of back pension contributions, but if not you may need a financial advisor to help.

I would recommend paying for an hour or two of advice rather than going to someone remunerated by commissions.

@macshoto Doesn’t the Gvt top up pension contributions by 20% of whatever you pay in even if you are on a low salary? I was paying in to mine and getting the top up in a year when Gvt didn’t know I was earning at all (until I did self assessment a year later).

OP, sorry to ask but if your salary is £8k, are you on any means tested benefits? That will be affected by this money?

Anyway, I think it would be good to talk to an advisor, and do what best benefits your retirement. Don’t be giving houses to your Dc: you can’t afford it!

I was going to charge them rent honestly!

No, I’m not on any benefits. I have been in the past but not for a while. If I could get £900 a month interest, I could live on that.

As posted by Octavia earlier.

Sorry that sounded as if I’m dismissing all other advice. It’s obvious I need some financial help so if I can have an hour or two with someone, I’ll do that as the ongoing charges seem steep to me.

Also OP if you rented the house you get that rent payment and the house increases in value (usually) over time. Then you could let one of your children have it. I think get your calculator out and do the sums. One time when I went to see a financial advisor they sold me products I didn't need that I had to cancel later that were all giving a percentage payment back to the advisor.