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.

Everyone saying pay off the mortgage. That's great, but if you pay into a pension/investments instead of off the mortgage you get compounded interest/etc. For example my pension has grown 20% on average each year for the last 3 years. Granted I have an incredible financial adviser but what I'm trying to say is if the OP can get a better return saving/investing they can always use the interest from savings to overpay and keep the capital or draw down the 25% commutation from the pension at the right age and repay the remaining balance of the mortgage.

Being a landlord is a pain. The law is not on your side. In your position I would put it in invested ISA s for the next few years or SIPPs

ISAs and then pay down the mortgage

honestly id prob buy a bigger house as that’s always given us the best returns

£20k into S&S ISA, £30k into Premium Bonds

20k pension (max is 60k pa) - long term
20k.isa - med term
10k prem bonds - easy access and tax free.

Don't buy second property while Labour are dicking around with tax and giving councils free rein on 200% increases on council tax on second homes. Plus the tax on income and maintenance and heart ache if you get a difficult tenant isn't worth it (talking from bitter experience)

We’re not dealing with an average mortgage rate, we’re dealing with a 2% mortgage rate, which changes the situation entirely from your scenario. Yes, investments will go up as well as down, but the OP suggesting they might buy an investment property indicates she’s in it for the long haul, in which case the investment is almost certain to rise.

Side note: if you do put money into a stocks & shares index tracker ISA, as many are suggesting, consider choosing one that is ESG screened. ESG stands for "environmental and social governance", which is a mouthful, but it basically means that the tracker doesn't invest in companies that are the worst offenders - arms dealers, rainforest clear-cutters, that kind of thing.

Your returns might be a little lower, but given the state of the world today, you could actually be making things better for yourself in future.

at their age why would they want to hold it in cash for retirement?

Premium Bonds! My full £50k holding brings me in £100 to £250 a month, and there is always the frisson of excitement that you could win a lot more!
Everyone will jump on me now I am sure ... but hey ho, it suits me!

I think PB's are a great option for higher rate tax payers who have maxed out their ISA allowance. The chances are, the returns won't beat inflation though- so I'd combine it with 20K in an S&S ISA/ 30K in PB with 20K (+winnings) going in next April.

So why would one not start a pension or savings from whatever age one could manage?

If you’re married and have not utilised this years ISA allowances yet, I’d be putting £20k each into a stocks and shares ISA. The rest could be added in April. I split what I usually invest between a growth 500 option and a dividend paying stock with a reasonable quarterly/half yearly pay out. Remains tax free and you can reinvest what you earn to grow the funds

Doesn't all need to go in 1 place, try splitting it to benefit from all the tax breaks and actually spending on yourself, for example:

£20k into stocks and shares ISA (not cash, unless you need it soon)
Overpay mortgage to reduce term every month by £1000 for a year or so
£1k to go out and by clothes
£2k for a treat/holiday
Remainder invested into pension

They do, but not in CASH, as you were suggesting.

Thanks everyone for your advice.

i don’t want to pay it in to my pension, whilst I don’t need it now, who knows what the next 20+ years might bring.

I think I’ll max out ISA’s for the time being.

we’re in a comfortable financial position, over pay the mortgage every month anyway so I don’t want to overpay that at th moment. When the rates chance, that might change but we’re a few years away from that yet

Er, investing in a pension is kinda what people do

Sounds good OP but just checking that when you say 'overpay the mortgage every month' that you're putting the money in the savings account rather than actually overpaying the mortgage? Which in your position would be like winning the lottery and burning the ticket.

But even so, you've had the predictable avalanche of 'over pay the mortgage' suggestions but surprisingly for once, no-one has told you to pay an IFA, who will charge you for advising you to put the money in an ISA.

Sounds like a good plan. I'm assuming you mean a stocks and shares ISA rather than a cash ISA. If not, just bear in mind that a cash ISA will likely lose money in real terms over time due to the effect of inflation. As many have said, I do hope that you can enjoy a bit of it as a treat for yourself. Enjoy :)

You said to put it in a savings account with a bank or building society. Thats not investing that is having cash savings.

The latest rumour swirling is that the government wants people to pay NI on rental income.

That'll change the landscape even more for landlords.

Also. A flat is a bad idea. Service charges, building repairs, neighbour issues just to start with.
Unless you have boat fulls of future money to pay for full refits and rent arrears then don't do it.

Go register on some landlord forums for more information.

Yes and so they should! It’s income after all

Rental income isn't usually not gross income though. Quite difficult to assess how much of it is gross.

You could set up a limited company to invest in property and run it as short term holiday let, eg in Bradford you can get a flat for 60k and charge over £100 a night

Being a landlord is a pain. The law is not on your side. In your position I would put it in invested ISA s for the next few years or SIPPs