Best ROI for £730K?

[Truetoself]

Ideally I would like to spend it on a bolt hole in central London but am conscious that amount of money would not go very far. Unless someone knows of any hidden gems or areas that we can consider. Ideally need to have good transport links to central London as we love going to the theater.

Having listened to many financial podcasts, I understand investing in a fund can give a good return. However, the trick is never to sell the fund as then you pay capital gains on it. If you don't sell, do you just live off the dividends? How do you actually get cash out of the fund?

We have spoken to a couple of financial advisers and although they claim to be impartial and not affiliated with anyone, I feel their goal is to sell you a product and I didn't have entire faitj that they were advising us with our best interest in mind.

There are flats in Bloomsbury under £700k. No idea what the ROI on them is.

Thanks @zzplex at those prices not enough lease years left to make it a good investment

Depends on what you mean by bolt hole?
If you want a one bed flat in zone 1 then that's a perfectly good budget.
But you won't "earn" on the flat..it's an investment but it may not get you as good a return as stocks and shares where you'll get dividends and can re invest those, presuming you don't need an income from this money.

We have a two bed flat in notting hill...it's lovely place to live.
Bought it 9 yrs ago though.

@Theredjellybean hmm food for thought

Are you fundamentally looking for an investment, or something that enhances your life?

If an investment - when would you want to use the funds, and for what?

if a lifestyle thing - how far out of London do you live now and what would you class as an easy distance from theatres?

Would you also consider eg Airbnb when not using it to increase the return you get on it too?

If I am not looking to invest in a property to live in, I want an investment that will give me a steady income when I am pension age.

The tax on a second home is likely to be higher than on a fund investing in shares. Stamp duty on a £730k additional home is £60,500.

Then, any rent you get would then just be added to your other income and taxed as income tax. So, if you are paying 40% tax on your other income - that's what you would pay on rent (unless it pushes you into a higher tax band).

Gains on an investment in shares or similar would be 24%

Not to mention cost of running a rental with a property company / repairs etc

Are you investing a £730K lump sum in one go? Do you have a pension in place or is the £730K in place of it?

I'm trying to work out why you're not following the obvious route of SIPP + S&S ISA (as neither are subject to capital gains tax)...

£730K odd will come from the sale of an existing property.
@betttermoneyhabits so in your opinion a SIPP or Stocks and Shares ISA will give a better return?
Need to look into it.

It depends on your own financial situation, your age and your financial goals.

I mention it because you're looking for a steady income stream in retirement, and are concerned about capital gains tax. Both ISAs and pensions are investment wrappers that have considerable tax advantages. It's why 80% of the working population pays into a private pension. So it would seem worth investigating if it's right for you.

Over the longer term S&S investments have historically outperformed property in monetary terms.

https://moneyweek.com/investments/investment-strategy/605267/which-is-best-buy-to-let-or-shares

I don't know how you open a stocks and shares ISA with such an amount, but I would definitely try this. I started 18 months ago and have an average 14pc return today and the stock markets aren't seeing the best of times. This particular one doesn't invest in AI stocks as deemed too risky, so is falling behind some other isas. I agree with that strategy.

I am able to withdraw any time (paper work involved) but I haven't done that yet. Technically you can withdraw say 4pc a year and on average your pot would still be growing. I would put my money into something like that and let it grow for a few years. You should see significant rewards and can retire early in no time.

To add: I wouldn't have the hassle of a BTL property.

Once you understand financial markets you realise almost nothing can go wrong with stocks unless you happen to give your money to a charlatan. I mean that should the system get so fucked that you lose most of your money it will be a worldwide crisis affecting all banks, properties, businesses etc. that it won't matter where your money is. It will still be lost.

I'm not a FA.

If you are feeling adventurous I would also buy a bitcoin with that money, but thats just my belief.

"Ideally need to have good transport links to central London as we love going to the theater."

I'm struggling to understand the relevance of this if you are not going to be living in it.

If I were you, I would try a financial adviser again, as there's too much going on to get proper advice on here and you sound like you need to get a good grasp of the basics before doing anything.

A good financial adviser won't be pushing a product.

Thanks for all your input

I will look at S and S ISA for myself.

Thought about bitcoin but need to research best way of doing this

@devongirl12 'A good financial adviser won't be pushing a product'.

A financial adviser sells financial products - it's the basis of their profession. That's not a criticism of FAs if the products are well tailored to their clients needs - but it is the essence of what they do.

Not really.

I am aware that such individuals or firms exist, but that's not who I was meaning.

Maybe a financial planner or wealth manager then.

Somebody to help with longterm financial planning.

Generally they would charge a fee for their time and advice. Not by commission on selling a product.

You can only pay £20k per annum into an isa

You don’t. You can’t pay more than 20k per tax year into an isa. There are also limits on what you can put into your pension each year.

normal order for that sort of money;

max out pension annual sum
max out isa annual sum
maybe max out premium bonds if you don’t want to risk shares
shares/property

Yes you are right. You could transfer any kind of ISA to another ISA, but I suppose that's not where the money is right now.