Surplus cash investment

[TheGreenBastard]

I'd say I operate on the riskier side of things, my company capital is split roughly:

- Corporate crypto account, 5% (pure gamble but I wanted some exposure, my accountant doesn't like me, especially now with "staking" income)
- 25% BTL properties (in a separate Ltd., financed by my primary business) - I'm a sucker property, and I enjoy this, so whilst probably not the most efficient use of capital I get enjoyment out of it
- 15% stocks - only respectable funds, but 99% spread across equities, i.e SMT, Vanguard

The remainder is liquid cash (spread across savings account, Aldermore, Newcastle, Investec, Recognise Bank etc) which isn't where I want it. I was chasing additional BTLs for at least a year, bidding over asking price at times, but the market here in London has been irrational.

People here seem desperate to get Ltd. funds into their personal name, I'm not convinced about that long term, there are IHT benefits to accumulating wealth in a Ltd.

[perftractor]

I'd say I operate on the riskier side of things, my company capital is split roughly:

- Corporate crypto account, 5% (pure gamble but I wanted some exposure, my accountant doesn't like me, especially now with "staking" income)
- 25% BTL properties (in a separate Ltd., financed by my primary business) - I'm a sucker property, and I enjoy this, so whilst probably not the most efficient use of capital I get enjoyment out of it
- 15% stocks - only respectable funds, but 99% spread across equities, i.e SMT, Vanguard

The remainder is liquid cash (spread across savings account, Aldermore, Newcastle, Investec, Recognise Bank etc) which isn't where I want it. I was chasing additional BTLs for at least a year, bidding over asking price at times, but the market here in London has been irrational.

People here seem desperate to get Ltd. funds into their personal name, I'm not convinced about that long term, there are IHT benefits to accumulating wealth in a Ltd.

How did you the fund the separate ltd? did you draw an agreement and what loan rate did you go for? Accountant of my primary ltd co is not keen on 0%. His suggestion was to go for BOE base rate + 2% which I am not keen on as it would draw 20% income tax on it.

I do have savings account in Aldermore, redwood, investec and virgin but interest rates are not great.

My plan is open a business investment account with InvestEngine and invest purely in non-ftse ETF's regularly to absorb any downturn in the stock market and add a chunck if it drops. II charges £40 per month plus trading charges so not keen on that. Also looked at IB and HL.

Can I ask what platform do you use for stocks investment vis ltd company.

[ChimpMaster]

Thanks for replying ChimpMaster. I did look at the link before starting this new post.

The new ltd company I opened has SIC codes for both property and shares investing. I have the dropped the idea of investing in real estate at this time due to a all time high housing market and increasing interest rates.

I was curious about the inter-company loan and good to know that it can be at 0%. Did you draw a formal loan agreement between the companies?

Yes

[ChimpMaster]

With the global drop in share prices with a looming recession I don't think one guy doing well is really a benchmark for this being a good idea. I'd be virtually everyone that has done this has suffered some very significant loses in the last year so personally I'd think it would be madness to be considering it at this point. Or is it the perfect time to be doing it, who knows, but if you are happy to suffer the 50%+ losses some people have probably made then it's an option.

Seems an obvious warning but we've examples where people haven't. When you say surplus this must exclude your warchest and a significant chunk more. Although your warchest is profit in the account it's there for what might happen as soon as tomorrow. You need enough to cover you for 6 months to a year ready in the bank in case the worst happens. Sickness, out of contract, global downturn etc. Only the money above that is for investment.

You put it in to shares now, lose your gig and have to withdraw the money at a significant short term loss is going to sting hard.

It's almost the right time. So it's a good time to prepare. Major markets are in their 3rd leg of 10%+ falls from all-time highs, which historically has signalled the end of downturn in stock markets. The current 3rd leg is at 10% now but could very well (likely) extend further - US markets fell 37% in their final 3rd leg in the early 70s. In the early 80s the 3 legs were -20%, -15% and -14% within 18 months and then the subsequent 18 months saw a 70% rise in values.

Markets always climb a wall of worry. I've failed A LOT of times in stock markets to have learned this. I might fail again, but in the past 3 months I'm up 6+ figures on spreadbets shorting the markets. I'm still short but not comfortably now. There will be a turning point within the next 6 months, before it's obvious and well before the rate hikes are done. Peak interest rates will occur in early/mid 2023, markets will turn before this.

[TheGreenBastard]

How did you the fund the separate ltd? did you draw an agreement and what loan rate did you go for? Accountant of my primary ltd co is not keen on 0%. His suggestion was to go for BOE base rate + 2% which I am not keen on as it would draw 20% income tax on it.

I do have savings account in Aldermore, redwood, investec and virgin but interest rates are not great.

My plan is open a business investment account with InvestEngine and invest purely in non-ftse ETF's regularly to absorb any downturn in the stock market and add a chunck if it drops. II charges £40 per month plus trading charges so not keen on that. Also looked at IB and HL.

Can I ask what platform do you use for stocks investment vis ltd company.

As other's have alluded to, 0% inter company loan.

InvestEngine looks OK, but I'm with II, their fund selection meets my requirements, IE doesn't. My pattern of trading on II is round robin a selection of funds each month with a % of surplus cash, this way the trade is free (you get a free trade per month).

[syrio]

https://forums.contractoruk.com/acco...d-company.html

This guy did it and appears to have been very successful. He's not on the forum much but you could drop a PM and he might get an alert.

Yes, that was me.

I don't know anything about using a separate limited company, but if it means you can get ER / BADR on the money held in your company and avoid any future tax pitfalls of being a CIHC then it sounds worthwhile. But I suppose it depends on how much money you can get the relief on, if you put all your cash in your investing company then the relief on the assets in your original company won't amount to much and you have the extra costs and hassle of running two companies.

It also depends how much you have and how long you want to have it invested for and when you are thinking of retiring. If the sum isn't huge and isn't likely to become huge before you retire then maybe you can keep your company running over a few years while you withdraw the money tax efficiently with salary, dividends and SIPPs. In that case I don't see a huge benefit in having the second company. At the other extreme when you end up with large amounts of money in the company, the separate investment company will seem like a more worthwhile option.

Originally I used Selftrade (now EQi) as a broker, then I switched to Hargreaves Lansdown. I think Interactive Investor will also do limited company accounts. HL have been pretty good, they are expensive for holding OEICs or Unit Trusts, so don't do that, but are fine for holding shares or ETFs.

[ChimpMaster]

It's almost the right time. So it's a good time to prepare. Major markets are in their 3rd leg of 10%+ falls from all-time highs, which historically has signalled the end of downturn in stock markets. The current 3rd leg is at 10% now but could very well (likely) extend further - US markets fell 37% in their final 3rd leg in the early 70s. In the early 80s the 3 legs were -20%, -15% and -14% within 18 months and then the subsequent 18 months saw a 70% rise in values.

Markets always climb a wall of worry. I've failed A LOT of times in stock markets to have learned this. I might fail again, but in the past 3 months I'm up 6+ figures on spreadbets shorting the markets. I'm still short but not comfortably now. There will be a turning point within the next 6 months, before it's obvious and well before the rate hikes are done. Peak interest rates will occur in early/mid 2023, markets will turn before this.

Likely turning point reached.