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18 Feb 15
02:32
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04 Dec 06
...in cash, how would you use it? Safety of funds is your paramount concern, so you'd happily take a much lower return on your money for more security e.g. rather have £50k in Natwest and £50k in Barclays getting a relatively lousy interest rate than invest the whole lot into a Moldovan property scheme that promises amazing returns.
Have a friend in this position who, alarmingly, asked me for advice. Says he will use the cash to pay for private education for his children, but that it won't be needed for about 7 years, as he'll send them to non fee paying primary schools. I said that if safety of funds was the primary concern, I couldn't see any reason to do anything other than stick it in ISAs or some sort of bond, but didn't have any groundbreaking advice for him, as my money generally gets squandered pronto. He's keen on buying a house, but I can't see the benefit, as it may depreciate and he might not be able to sell as quickly as he'd like when the time comes.
Just wondered what you lot thought.
Have a friend in this position who, alarmingly, asked me for advice. Says he will use the cash to pay for private education for his children, but that it won't be needed for about 7 years, as he'll send them to non fee paying primary schools. I said that if safety of funds was the primary concern, I couldn't see any reason to do anything other than stick it in ISAs or some sort of bond, but didn't have any groundbreaking advice for him, as my money generally gets squandered pronto. He's keen on buying a house, but I can't see the benefit, as it may depreciate and he might not be able to sell as quickly as he'd like when the time comes.
Just wondered what you lot thought.
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Been to Moldova 3 times, don't invest every official is corrupt.
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I have a friend in Moldova. She's got a great pair.
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If he has £100k cash, then I assume he is mortgage free.Buy to-let is the way to go...
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Is £100,000 enough to pay for private education? One child, maybe, but OP says children, plural. Say £5,000 a term as a day pupil (ie not boarding school) = £15,000 a year for 7 years = £105,000.
Maybe spend the money on moving to a nice, upper middle-class area with first class state schools. |
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As I understand it, he'll make more money over the coming years that will provide the extra cash for the remainder of the cost of the education. Yes to mortgage free.
Why is buy to let the way to go? What if the house depreciates? What if he can't sell it when he needs to? What if the rental income is less than the mortgage repayments? |
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sounds like he is bragging how much money he has rather than wants advice
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if he is 'worried' about the education of his children, then he is £'s short
Uni for one is now 50k alone [3 year term] -- and he has more than one and years of an increase on that too... |
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heres what i did whilst working
found ways to put all 40% taxable income into pension later - drawing pension at base rate tax no brainer- after taking 25% lump sum (and getting employer to pay in the saving on employers reduction in nat ins - i got an 11% + long term return on these extra pension payments  p.s some very nice otego wines being sampled down here at the mo  - zopa paying 6% and funding circle 8%betfair subsidising extended holiday and life is rosy |
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pensions are not my thing
my rule of thumb is never ever put your money in anything whereby it is no longer under your control the government can decide to fk your pension at the stroke of a pen (eg Gordon Brown shortly after getting into power in the late 90s) |
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11%+ return on an investment - p.a. - yer on year- is very much 'my thing' ....
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sounds like he is bragging how much money he has rather than wants advice
I don't think that he is. £100k isn't full on gloating material, is it? He'll burn through it in no time just sending one child to school. if he is 'worried' about the education of his children, then he is £'s short I assume that he'll earn enough over the coming years to finance the rest. I wouldn't have a clue how much schools/university costs at the moment, but guessing that's the plan. ...put all 40% taxable income into pension...later - drawing pension at base rate tax...no brainer If he wants the cash within the next, say, seven years, is this an option? He's not hitting retirement age for a long while yet. |
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Here you go..
. http://www.moneywise.co.uk/investing/stocks-and-shares/10-shares-to-give-you-10000-annual-income?utm_source=Newsletter2015-02-13&utm_medium=Email&utm_campaign=ContentPromotion |
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If safety first is the paramount concern then he hasn't got any options.
Shares are out and that includes Corporate Bonds which are a safer but not guaranteed. Buy to let is more of job than an investment, he doesn't want that if he's already working. And if he doesn't know what he is doing which is likely, he could wind up well out of pocket. And stuck with a lemon costing him money that he can't get rid of. Anything that yields more than the best rate of interest available from the building societies carries risk. If it didn't the building societies and banks would soon run out of depositors. |
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Have it on Sprinter Sacre at Cheltenham.
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OP's mate should think about paying for a couple of hours of professional advice imo. @Dr Crippen has identified the main question which is the investor's risk appetite, and that in turn depends on the OP's mate's income: how quickly can the original £100,000 be augmented and if necessary, replaced?
Of course, how you find a decent investment advisor is another question. Maybe ask the richest people you know to recommend their accountant. |
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Find a good state school and make sure you fit the criteria to get in. Possibly move house to do so.
I paid for my eldest son to go to private school for 7 years from age 9 to 16. He had specific learning difficulties so needed the small class sizes, otherwise it would have been a massive waste of money for us imo. Spending money on specific subject tutors is a much better value way of doing things. He did his A levels at the same state school as his siblings, (Ofsted rated it outstanding) and in many ways it was a better school than the private school. |
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@Clydebank29 is right. To be deeply cynical, the key to success is to live in a nice area with good schools and low crime rates.
Or @Clydebank29 is wrong, given recent reports that most of our Olympic athletes, cricketers and even pop stars were schooled privately. |
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this..
"Or @Clydebank29 is wrong, given recent reports that most of our Olympic athletes, cricketers and even pop stars were schooled privately". Is due to children having more opportunities because the parents have more money and different attitudes rather than private schooling imo |
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private schools get the best out of average kids. Are your mates' kids average? Private school the worst way to use £100k.
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As mentioned earlier, if safety of funds is paramount then all investments are out as by their very nature they all carry some risk.
By putting his money on deposit/ISA he will at best preserve his money in real (ie inflation adjusted) terms. If he is prepared to take on some sort of risk then maybe an absolute return fund like this one might be suitable: https://uk.standardlifeinvestments.com/O_M_Gars/getLatest.pdf I am not normally a big fan of absolute return funds but this one seems better than most. Of course it goes without saying that he should do his own homework and make sure he is fully aware of the risks. |
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I thought everone had 100k
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If anybody needs to ask where to put it they'd better to stick to savings accounts.
A financial adviser will be after his commission so he'll tell you to put it where he can get something out of it. Beware. |
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I'm sure he could buy a fairly nice house in some parts of the country for that money. I wouldn't worry about prices dropping if he's got seven years to play with.
Possibly.....£450 a month x 84 months = £37,800 rental income. |
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^That's nearly as good a return as Gin's unit trust.
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Well you've got maintenance to pay, at a benchmark of 1% a year, council tax, water rates, buying costs and selling costs to factor in too. You'll also got the possibility of bad tenants who default or damage the property and the possibility it lies vacant for periods. It will half that rental income.
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has this been lifted from the telegraph money page
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I reckoned he'd make £24,000 after tax at the basic rate on that rent.
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That's as long as he didn't have to spend much money on it.
It rarely works like that though. |
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Which he could make in a decent saving account over seven years. ^^^
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Uni for one is now 50k alone [3 year term]
not really - all paid for through loans which are paid back once you are earning £25k+ (?) and paid as an additional % like income tax and written off after 30 years I don't intend to pay one penny of my kids university fees especially as there is always the chance that they could be written off by a future govt - how gutted would you be to pay out £50k and then see others have them written off |
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Look how much he would make in Gin's unit trust if that were to carry on the same
He could avoid capital gains tax by switching into ISAs every year as well. |
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Thanks for the replies, everyone. I'll pass some of the information on. I don't even know what an absolute return fund is, so asking me was clearly ill advised. Suspect it'll just end up spread across ISAs and the like, but I appreciate folk taking the time to reply.
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Re the (imo illegally named) absolute return fund - I can't be bothered to look this one up but by the time they have gambled with your money and taken their massive salary out of your money, check what bonuses they propose to take out of your money if they do in fact make a decent profit.
Don't expect a refund if they lose your money btw. |
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Rob
Generally, an absolute return fund aims to make a return on your money whatever the prevailing market conditions. Because they are aiming to protect your capital there is usually less volatility leading to less upside but also less downside. Whilst Jack is right to be wary of charges, in this case that is not warranted. If investing through a platform such as Hargreaves Lansdown there is no initial fee for buying the fund and ongoing annual fees are reduced to 0.89% with no performance fee. See here: http://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/s/standard-life-inv-global-abs-return-strategies-accumulation-inclusive |
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I don't even know what an absolute return fund is
As far as you need be concerned it's simply another unit trust. |
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You could tell him to put it on SIRIUS MINERALS (SXX)@ 7P (AIM listed) but then have the problem what to do with £1.5 million
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Thanks, Gin. Good to see no performance fee and steady performance.
The asset allocation is full of derivatives that I don't fully (or sometimes even partially!) understand. It looks pretty much like a hedge fund. Alfee, You might have less confidence in Sirius if you had been in for a couple of years at say, ahem, 15p! |
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It's not a hedge fund, but they do use derivatives.
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Re original question if the person isn't using up their allowance and is going to invest in something that can be, he should probably be putting 15k of it every year into an ISA as by the time you get to as 7 years down the line I'd guess you could easily be hitting the tax thresholds for any profit you might make.
Which raises another question which is if there are specific tax efficient ways to invest the money for his children now, if that's 100% what it is for. Were there not kids isas or something? |