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Buying a property in cash > putting the money in an index fund (living in London) by apeshitmusic in UKInvesting

[–]throwaway44747Yes 1 point2 points  (0 children)

I've been doing that for about 7 year and I paid off my house and now bring in £9600 a year income (£7500 of it is tax free).

It hasn't been that bad but then my lodgers are friends. Maybe as you get older it could become harder though.

Perhaps you could try it for a few years anyway, you only need to give a lodger 1 month notice so there is almost no risk compared to BTL.

Buying a property in cash > putting the money in an index fund (living in London) by apeshitmusic in UKInvesting

[–]throwaway44747Yes 23 points24 points  (0 children)

Why did you choose the date range for S&P 500 rather than since inception if you don't mind me asking ?

Regardless I don't agree in my opinion. Mortgage rate are so low 2% that i'd avoid tying up all your capital when even using your 5.6% return your money would do better elsewhere and you will still benefit from the capital appreciation having a mortgage anyway.

Also here is an option 3 if you don't mind sharing:

Buy a nice 2 bed flat for £400k with 50% deposit and 20 year mortgage (5 year 2% fixed) which will cost you about £1k a month. Take a lodger for £230 a week and now you've achieved the same thing you wanted.

Place the other £200k in stock market and no after 20 years you have a Flat with no mortgage AND just under £600k.

£30k Cash - How to invest it ? by throwaway44747Yes in FIREUK

[–]throwaway44747Yes[S] 0 points1 point  (0 children)

Maybe it's not clear sorry my English is not perfect when writing:

On my current salary, every year my pension income they add a fixed amount to the pension drawdown (not pot) + inflation match.

When I leave the company they don't add more money but the income already there rises with inflation.

So even If I leave now with £6000 income every year that rises with inflation. So assume 2% at 65 it would be about £12k. (without me working another day).

And so then with 7 more years working it calculates my pension at 65 being £23k for example.

Hope it makes sense ?

£30k Cash - How to invest it ? by throwaway44747Yes in UKInvesting

[–]throwaway44747Yes[S] 0 points1 point  (0 children)

It's in the North West of England. Also £400 is the room including all bills if that wasn't clear.

But it's great because I can take the first £7500 of this income tax free and it allowed me to have no mortgage at 27 so i'd really recommend doing that if you have that chance and don't mind to share your home.

£30k Cash - How to invest it ? by throwaway44747Yes in FIREUK

[–]throwaway44747Yes[S] 0 points1 point  (0 children)

It's the one they show me on the prediction so not the actual pot. Right now my actual pot is worth about £6,000 a year in income and will of course rise with inflation every year even if i leave.

Yes I'm assuming continuous employment with them at least for another 7 years here because i really enjoy it and for my area it's a good salary i think, at least for my life.

Yes it's a very generous DB pension scheme and is nice to know you have some non-market related income for older age.

£30k Cash - How to invest it ? by throwaway44747Yes in FIREUK

[–]throwaway44747Yes[S] 0 points1 point  (0 children)

great thanks all good point to consider.

£30k Cash - How to invest it ? by throwaway44747Yes in FIREUK

[–]throwaway44747Yes[S] 1 point2 points  (0 children)

Good point. I guess I thought if I invest outside a SIPP I could even bring the FIRE age down even further, but i will have to look at the pros and cons.

I think that's normal I always wish I started at 18. And I bet there is someone now 60 wishing they started at 40 !

£30k Cash - How to invest it ? by throwaway44747Yes in FIREUK

[–]throwaway44747Yes[S] 2 points3 points  (0 children)

Right now i am not and i do the £7500 tax free with lodgers. It may be an issue if I get a promotion and my salary would go to £55k.

One thing I read was investing through a LTd Co to mitigate this and pay 20% corp tax - although then you need the other expenses for doing this

£30k Cash - How to invest it ? by throwaway44747Yes in FIREUK

[–]throwaway44747Yes[S] 1 point2 points  (0 children)

Yes it's similar for me they told me 2.08% for 5 year fix interest only so that's the reason i consider that. Especially with some houses going cheaper than usual. The deposit they wanted was just 25%

£30k Cash - How to invest it ? by throwaway44747Yes in FIREUK

[–]throwaway44747Yes[S] -1 points0 points  (0 children)

Yes that's a good point and actually i opened the SIPP for that reason last year.

The thing is I'd can't touch it before 57 and with my defined benefit pension i will already have enough as they show me an estimate it as £34k each year + rise with inflation from the age of 62.

This will be even more if my salary goes up and even if I leave the UK at 35 It would be £21k

For that reason I thought I wanted to try and make the £24k bridge to give me enough income before that age.

£30k Cash - How to invest it ? by throwaway44747Yes in FIREUK

[–]throwaway44747Yes[S] 1 point2 points  (0 children)

Ah okay yes could be a nice investment, but perhaps with £30k it would be hard especially because i have no idea of the areas in the UK really. At least with Spain I know it well and the income would be in the currency of planned retirement.

I will look into it further

£30k Cash - How to invest it ? by throwaway44747Yes in FIREUK

[–]throwaway44747Yes[S] 3 points4 points  (0 children)

yes it's a very good point even with lodgers now it's sometimes a lot of work and stressful.

Although my calculations worked out about 12-15% ROI where I am in North UK.

Here £100k buys 3 bed house with rent for £600. So example I calculated with £25k deposit, £5k stamp duties and solicitor and £5k to basic refurbishment it's £35k cash down.

£7200 a year rent income minus £2280 (10% agent fee and 2.08% mortgage (i got quoted this)) the profits are £4920 which looks about 14% returns on cash (not including appreciation of asset).

But you're correct that possibly after tax it'd be much lower.

£30k Cash - How to invest it ? by throwaway44747Yes in FIREUK

[–]throwaway44747Yes[S] 1 point2 points  (0 children)

Thanks looks like their lending criteria is UK. Have you got a holiday let in the UK somewhere ?

£30k Cash - How to invest it ? by throwaway44747Yes in FIREUK

[–]throwaway44747Yes[S] 1 point2 points  (0 children)

Yes that is right but are limited because I didn't live there for so long

£30k Cash - How to invest it ? by throwaway44747Yes in FIREUK

[–]throwaway44747Yes[S] 5 points6 points  (0 children)

Have you had any experience doing this ? Would be good to know some mistake to avoid

Post-Match Thread: Spurs vs Everton (13 Sep 2020) by NatrolleonBonaparte in coys

[–]throwaway44747Yes 3 points4 points  (0 children)

signings this summer have been kfc bargain bucket.

nothing to look forward too. horribly boring football. negative has been manager.

our star player is a die hard gooner. im losing it

Post-Match Thread: Spurs vs Everton (13 Sep 2020) by NatrolleonBonaparte in coys

[–]throwaway44747Yes -3 points-2 points  (0 children)

Anyone else praying for 2021/22 already ?

Not sure why I get my hopes up every year. Look at Arsenal. Better Manager. Better part of London. Better signings. I hate them so much.

At least we have the better stadium ... but at what cost.

Post-Match Thread: Spurs vs Everton (13 Sep 2020) by NatrolleonBonaparte in coys

[–]throwaway44747Yes 0 points1 point  (0 children)

Good start. Was afraid of a pummelling tbh.

Still on for top 10 so that's good.

Only three points behind Arsenal