Inheritance, Savings, IFA, House, Help.

[mattfx]

Fellow contractors,

My grandad sadly passed last weekend and as a result, I have been left a fairly significant amount of money (circa 300k) and I am looking at ways to make the most of it. I am currently in rented accommodation, don't really have much in the way of savings, £10k's worth of debt which is being effectively serviced.

With the state of the housing market at the moment, ploughing everything into a house with a small mortgage doesn't seem all that sensible; I don't want to end up in negative equity. With interest rates on the increase I was thinking a stocks and shares ISA and a couple of longer term bonds, then using the rest as a deposit for a house would make sense. Leaving a little bit over to give myself a war chest so I can afford to be a bit more ballsy with my next contract. My alternative thought to savings accounts were a couple of BTL properties but the tax rules coming in for landlords with privately owned properties cannot be fair off being implemented for SPV LTD's.

This may, however, all be a terrible idea. Does anyone have any suggestions or can recommend any good IFA's?

Any help welcome.

[SueEllen]

When you buy a house you find one where you will happy live for many years and in a popular location that way you won't have to worry about negative equity. If you are single the trick is, is instead of buying a one bedroom flat is to buy at least one more bedroom than you need.

[MarillionFan]

Stop renting it’s dead money
Buy your own house it’s more tax effective and a better use of the money. Rent one or two rooms so you make a profit
Start a pension. Use this years allowance and back date it if you didn’t use your allowance for a great tax break
Pay off other debts
Zopa what’s left fo a decent income

[SueEllen]

Stop renting it’s dead money
Buy your own house it’s more tax effective and a better use of the money. Rent one or two rooms so you make a profit
Start a pension. Use this years allowance and back date it if you didn’t use your allowance for a great tax break
Pay off other debts
Zopa what’s left fo a decent income

Make sure you have at least one bedroom with an ensuite bathroom. You can then either keep it for yourself or rent it out for more money.

[SeededLoaf]

If you bought a £400K house and paid off 50% equity, leaving £100K in investments/war chest, then you won't go into negative equity unless houses prices fall by 50.1%.

In my opinion I don't think house prices are going to crash, if anything, the values will stall for a few years but rising population and tight planning laws are keeping them from them afloat. We're better with this than another bubble on top of a bubble.

[mudskipper]

Sorry to hear about your grandad.

Agree with others that buying a house as a long term investment is unlikely to see you lose. Renting is paying someone else's mortgage. I suspect that bricks and mortar are an investment that grandad would have approved of.

Alternatively, I'm sure tarbera will be along with some equine based financial advice in a bit.

[Lance]

If you buy a house with a very small mortgage then negative equity is not possible.
I’d buy a house. You never go wrong with bricks and mortar. The price may dip a little as brexit marches on but will recover unless a government actually builds houses (which they won’t. And if the did it would be affordable housing not £400k ones).

[mattfx]

Thanks for the input everyone. I should add, I am 27... So I have a looooong way to go in terms of years spent working. I had always thought about wanting to invest in property when I was older, just never thought i'd have the opportunity to do it at this age.

Agree renting is dead money, however the situation I was in a couple years ago re: family home was extremely complicated (mum pre-deceased grandad 5 years ago, which is how this has all come about at a relatively young age) and I just wanted / need to be somewhere different for my own wellbeing.

Have applied to be a saver in the Zopa scheme - seems a great idea!

[ladymuck]

If you do decide to buy, primarily you should buy based on what you think could work for you for a good few years - location, layout, etc. However, also keep an eye out for areas that are known to rent well too. This then gives you the option in the future to rent the whole place out if a gig comes up that means you'll spend a lot of time away (or you just decide to become a beach bum in Thailand for six months). You can get someone else to pay your mortgage so you don't have the bind of paying two lots of accommodation.

[v6g]

Avoid real estate as an asset for now, it's massively overpriced. Go for a globally balanced and diversified portfolio. 60% in growth stocks, 40% in safe stuff is a good balance.

For the stocks, get global exposure, go light on the US market for now (but get some exposure), the cheapest stock markets globally are currently Russia, Vietnam, Brazil, China and Turkey. Resources also.

For the safe stuff, Government bonds (but not too much considering the rising interest rate environment, and keep them short term), investment grade corporate bonds, some high-yields, and REITs, preferreds if available. Avoid individual stocks, but opt for low cost ETFs.

Leave the BTLs for the innumerate hoi-polloi.