How would you invest £50k?

[springruns]

Just that really, I’ve come in to some money just over £50k which id like to invest.
we have a £240k left on our mortgage with affordable monthly payments so not looking at paying a chunk off. we have adequate savings and a large amount of disposable income each month so no holidays, home renovations or new cars needed.
We live North Yorkshire so investment property in the north east is an option but we are both higher earners (£70k each) so would 40% tax on an income from that unless we paid it in to our pensions.

How old are you? Over what time period are you wanting to invest? You've mentioned property, is that because you want the investment to pay you an income or because you have expertise in property or another reason?

I suspect most people will come on to advise you to put into a pension. Have you considered this?

I've got various ISAs, just cos am lazy and they're easy to set up.

What are your pensions like? Could they do with a boost?

What interest rate is your mortgage on?

I’m late 30’s.

I thought If I invested in a property, I could pay any profits in to a pension and in time the value would go up.

my pension is okay, OH has a very good one and I overpay my pension at work anyway so I don’t want to put it all in my pension really but wouldn’t mind putting the income in,

mortgage is fixed for another 3 years at 2%

This is a difficult one to answer particularly with the current government who are rumoured to me planning all sorts to d1ck all over pensions, savings and aspiration of any kind...

But given your age I'd say whack it into a pension.

£50k invested at 37 with cumulative interest of 7% (I'm 42 with 4 diff private pensions that have all outperformed that rate of return over past 15yrs) at age 60 it would be worth £237k. Which assuming pension rules aren't changed, or if they are they're reversed by the next government, you could take interest free as a lump sum.

£50k isn't really big enough to invest in property, or provide a sizeable income but could accumulate to a decent pension pot and you'll get taxed on pretty much everything else apart from ISAs.

Refreshing to see you're not interested in paying against the mortgage which seems to be the emotional decision from most while almost always not making financial sense.

I think you need to consider what might happen to your mortgage repayments in 3 years time!

I’d pay the lot off my mortgage as when you look at the interest you’ll pay on £240k over full term it will knock you sick!

You don't get tax on National Savings, and max you can hold is £50k. I think it gives a better return in winnings than most savings accounts - remembering savings rates are not set in stone and frequently drop as soon as you invest, even in supposed 'fixed' long term ones.

Technically is that also paying it off for her partner and investing her cash into his? I'd get a legal document to make sure it was highlighted I had put in a chunk just in case.

We can't afford a mortgage so probably a holiday! 😀

i know that the interest rates will to up, but if invested wisely we can pay more off when mortgage is renewed. Also, we’re in a pretty fortunate positions and have several thousand pound disposable income a month so can afford an increase.

we can buy a rental flat and use some savings for around £70k and generate £650 a month rent (minus around £150 a month service charges and found rent) which would generate £500 profit a month to either pay in to pensions. Due to our incomes this would be taxed at 40% unless we paid in to pensions

@springruns I thought If I invested in a property, I could pay any profits in to a pension and in time the value would go up.

What income do you think you'll get on a BTL property? It's a lot less attractive now, especially with a single property and as a higher rate taxpayer. By all means, go ahead, but you'll need to do a significant amount of research and I suspect most similar sized landlords would be urging you to avoid.

Edit: Cross-posted - I see you've now included figures and you're planning to buy a flat outright.

@ItsFineReallywe can buy a rental and use some savings and generate £650 a month minus £150 service charges so £500 profit which I’d pay in to a pension

@ItsFineReally I’m not set on anything, that’s why I asked for advice. I know I need to see a financial advisor really.

My calculations were at £500 a month for say 20 years, even at 6% id have over £200k+ in my pension plus the property value or rental income.

Two things:

I don't think you need to necessarily see a financial advisor.

Your calculations are very basic and missing some key things - e.g. purchase costs, ongoing letting management (or are you planning to do this yourself), compliance costs (gas safety etc), maintenance, void allowance etc. So you need to review this in more detail along with stress testing. And then compare to other options if you are primarily about maximising returns.

And if you put the £70k directly into a pension net, grossed it up and then assumed a 6% growth rate the total would come to £373k. By my back of the fag packet calculations.

I wouldn't "invest" in a rental, especially now Reeves is looking to fill the tax funding gaps with homeowners, 2nd homes and anything left in IHT. I've rented before and it isn't as it used to be - tenants literally wreck things these days and expect you to just replace and repair the very next day. If you've had to do any work at all on your own house you know how expensive this is at the moment - trades are not cheap!

Just put it in a savings account with bank or building society. It's 50k towards the at least 150k you will need for future old age care

Pay the chunk off your mortgage. The amount of interest you’ll save and the amount of years you’ll knock off especially when you’ve got such a low rate. Once your mortgage is due for renewal, you’ll end up on a higher rate. You’ll be much better off. I was always bought up with “there’s no point in having savings if your in debt”.

Rental property just doesn’t have the returns it once did, and is taxed very penally.
I’d stick what you can (£20k each) into S&S ISAs. You can invest in UK property funds to get some of the returns with much less of the risk and work (although personally I would - and do - invest in world index funds)

But it would be nowhere around £500 profit. There are so many (fixed) outgoings when you are a landlord such as gas safety certs, electrical certs, insurance, repairs, one off service charge payments, boiler replacements. etc

And then there is the hassle of dealing with tenants who won't pay their rent etc. You cannot put a price on your free time.

Investment property/ rental property - no no no! That ship sailed long ago. Just a millstone plus you’re already exposed to real estate (plus that’s the sort of investment that’ll get taxed to shot by this government. Boring and not even good returns, plus a pain in the ar5e to manage

I would buy ARK Invest ETFs on the stock market (like a share representing a basket of stocks). They have c4 different funds, one robotics, one AI/tech, a medical tech one - look it up. Very strong growth record. Will give you exposure to what is a huge growth area.

My share ISA has grown c30% in 2 yrs - you’ll never get that with a little property now. Yes they go up and down…. Property in the UK is definitely more stagnant/ down

I would much rather have £50k in S&S ISAs than a rental property with all its associated hassle, tax, potential for big spends.
You are still young enough for a LISA each too.

My brother reckons he gets £33k pa gross on his rental property, and nets c£3k pa.

He says the tax is near to 75%. It's not taxed in the same way as "income".

With £50k, I'd put it in a tracker ISA (obviously £20k now, another £20k in April) and see how it looks when your mortgage needs renewing and then pay off the mortgage. For the money not in an ISA, while waiting for the new tax year, I'd pop it in premium bonds (any returns aree tax free). And I'd leave the £10k there til the mortgage renewal time.