Tips For Investment Plan united2000

#1
Hello all,



I'm 28 years old and would like advice on a plan for future investments.



I still live at home and have around £50k in cash reserves at the moment.

Being from Yorkshire and being half Scottish, i am genetically tight and i find this is stopping me investing by looking at getting 'value' in the things i invest in.



I have been thinking house prices would drop for about 5/6 years so have been holding off on that, hoping the tax changes in April and Brexit will cause a sharp decline in prices.

Others have said this will not happen. Not 100% sure but i think most MP's have BTL so it is in their interest for house prices to keep rising? So instead of landlords selling houses, they will just increase the rents. I am looking at houses in the South Yorkshire area.



I have looked at the markets and they all seem very high and that is also putting me off. Thinking i should wait till the FTSE is back down to about 5500 or 6000.

But waiting and waiting, is why i have not invested in anything yet.

Finally, i earn around £30k a year and paying into a pubic sector pension already. With about £1.5k a month for myself after bills and tax.



My questions:

1. I have an help to buy ISA and put in £200 a month. I am correct in saying that even though this is from Feb 2016, this DOES count towards every years ISA as i am investing each month?

So if i got an Stocks ISA, i would have to deduct £200 X 12 from my total allowance each year?



2. I want to invest in passive funds, probably Vanguard. Can i have more than one fund in an ISA? If i want to drip feed, i think Charles Stanley and Cavendish to be the best platforms?

I think Vanguard life 100% and then maybe an Asian fund as the 100% has no Asia/Japan coverage.



3. My parents have a holiday home so are away a lot, they suggested using my help to buy isa to buy a house, then let it out. I have looked into this and this is not allowed? Once i pay off the mortage, can i rent it out?



4. Finally with fund diversity. Is it a good idea to pick opposite funds. Example Vanguard 20% and Vanguard 100%? Are they opposities, in that if one tanks, the other will rise sharply?

#2
Landlords that are going to sell up have already started. Going forward it's more likely that fewer BTL will be bought. Nobody knows which way house prices will go ever and everybody is only guessing, some with more insight than others.



It is currently predicted that house sales will slump this year but that doesn't mean necessarily lower prices. It depends if house sales are falling due to lack of supply or lack of demand. I bought my current house in 2007 just before the crash but it is now worth more than I paid for it so if you are going to be staying a while you can probably ride out a downturn anyway.



People often worry about future property prices whilst ignoring two significant facts.

1) The value of your property is largely irrelevant if you aren't planning to sell

2) When properties fall in value then so does the differential price i.e. in a slump it is cheaper to move up the ladder if you can afford it.

#3
The vanguard lifestrategy fund has just over 10% Japan and Pacific.

It's a world tracker skewed 25% to the uk. So no need for separate funds.



No you would not get 2 lifestrategy funds so that one goes up when the other goes down. Unless you wanted needed funds for 2 different things/timeframes. Having both lifestrategy 100 & 20 in equal measure is just a convoluted way of buying lifestrategy 60.



Regarding platforms, cavendish and Charles Stanley are both percentage brokers. It seems that you may be saving quite a lot going forward and percentage brokers start to become quite expensive after about £20k of investments. Take a look at Halifax sharedealing, they only charge £12.50 per year and £2 per month to save into funds, etf's etc.



If you want a 'true' tracker that doesn't skew to the uk, look at vanguard ftse global all cap. It has 4500 large, medium and small cap companies. Fee of .24%. From what I can see it's the only all cap global tracker available in the U.K.

#4
If l were your age i'd be investing some of that cash into FTSE 100 stocks and only those that pay a dividend. Plenty of stocks paying good yield.



I've increased my wealth substantially over the years thanks to the stock market.



Yes the markets are reaching new highs but i've never known anyone time time the markets well.

#5



I have looked at the markets and they all seem very high and that is also putting me off. Thinking i should wait till the FTSE is back down to about 5500 or 6000.

But waiting and waiting, is why i have not invested in anything yet.
Originally posted by united2000


The FTSE was at that level about a year ago, how come you didnt invest then? But basing investment decisions purely on the level of the FTSE100 isn't a very good idea. If you invest monthly then it's good if markets drop as you get more for your money. Conversely you've got probably 0.5% on your cash in the last 12 months compared to 25% or so if you'd been invested. So that's £12500 you missed out on because you thought things were too high and tried timing it. Same with delaying house purchase but probably a higher amount.

#6
For me, the big advantage of BTL over stocks is leverage - a mortgage effectively allows you to use other people's money to invest. For a small cost this multiplies your returns many times over, something only professional traders can do with stocks.



There are other advantages such as the ability to buy a house below market value - you can't negotiate on the price of shares. And also the fact that inflation is actually on your side - over time the relative 'value' of a mortgage decreases even without paying any of it off.



The disadvantage being that you can never been as hands off with BTL as you could with a simple passive vanguard fund which automatically rebalances itself. Even with an agent handling the tenants and insurance covering voids and damage, there will always be something which requires your attention.



With the tax changes to BTL being phased in over the next few years it is likely a number of landlords will sell up and call it a day, but for a smart buyer that means the potential for some good deals. You will definitely need to do your research before getting into property.



If you are worried about house prices crashing you might find the '18 year property cycle' theory interesting. Obviously no one knows the future but the historical accuracy of this theory is impressive. There is a good podcast available on 'the property hub' website if you're interested: http://thepropertyhub.net/tpp069-18-year-property-cycle



To answer your questions:



1) Sorry can't help with this one, I'm not sure how the help to buy isa is calculated.



2) Yes you can have many funds in 1 ISA. I have used Cavendish for many years without issue. If you have your eyes on particular funds you might want to check that they are sold under your particular platform as I overlooked this when I first started.



3) You are correct in that it cannot be used for BTL.



4) Generally as equities go down bonds go up and vice versa. Over the long term equities vary a lot more but historically have performed better. I don't see the point in getting a vanguard 100 and a vanguard 0, you may aswell just get a vanguard 50 if you want to be balanced? A good article on vanguard life strategy available on the Monevator website here: http://monevator.com/using-vanguard-lifestrategy-funds-life

#7



There are other advantages such as the ability to buy a house below market value - you can't negotiate on the price of shares.
Originally posted by reaprr


Maybe you need to look at investment trusts. Back in 2009 I was buying some at well over 30-40% below market value (discount)

#8



My questions:

1. I have an help to buy ISA and put in £200 a month. I am correct in saying that even though this is from Feb 2016, this DOES count towards every years ISA as i am investing each month?

So if i got an Stocks ISA, i would have to deduct £200 X 12 from my total allowance each year?
Originally posted by united2000


Yes, it doesn't really matter when you started it, it's the fact that you have put £200 x 12 into it during the 2016/17 tax year which will restrict you from also putting much more than about £12,800 into an S&S ISA this tax year because you'd otherwise breach your £15240 annual subscription allowance.



The overall ISA subscription allowance is going up to £20k a year for 2017/18 so the same logic applies but if you are still only putting in £200pm you will have more 'space' left over for S&S ISA investments from 6 April. So if you haven't used any S&S ISA allowance this year you could get over £30k into it by 6 April using a mix of this year and next year ISA limits and still be contributing £200pm to the help to buy ISA.



If you're not going to buy your first property with the HTB bonus before April 2018 but you are expecting to get one eventually and qualify for the bonus, it would probably be worth transferring your HTB into a 'Lifetime ISA' during the 2017/18 tax year. That new product allows £4k of new money to be added per tax year rather than only £200pm with the HTB. So more can be deposited creating more free money available for property purchase - assuming you'll be buying a property to live in rather than a BTL, which you can't get a bonus on.






3. My parents have a holiday home so are away a lot, they suggested using my help to buy isa to buy a house, then let it out. I have looked into this and this is not allowed? Once i pay off the mortage, can i rent it out?


It needs to be something you'll occupy as your main residence. Eventually, however, yes you could let it out.



The government FAQ says


The Government recognises that your personal or professional circumstances may change at some point in the future, in which case you may need to rent out your property.



The Government is clear that it will not claim Help to Buy: ISA bonuses back from people whose personal or professional circumstances have changed and who need to make different arrangements for their property, for example if their employment status or family circumstance changed.



However, in accordance with the rules of the Help to Buy: ISA scheme, if a person claims a Help to Buy: ISA bonus and has no intention to make the property their sole residence, then the Government will seek a return of the bonus.

- See more at: https://www.helptobuy.gov.uk/help-to-buy-isa/faq/#sthash.yQfQOD3l.dpuf


#9
Hello,



Thanks for your advice.

I have been trying the x-ray tool and trying to get enough into USA, UK and Asia.



If i get the Vanguard 100% and the Scottish Mortgage at 50% each for my total funds, that works out at

47% Americas

33% Greater Europe

20% Greater Asia



But then when i looked into the funds, they both already have USA and Europe.

Been trying adding Vanguard Japan etc and i question.

Would i be better just getting the Vanguard 100% and this or maybe just one for now?



Keep thinking i need an ISA for P2P as well and funds in India, Tech, Mining and other small markets, just incase ther rise. Looking at Mining 5 years, its been poor.



Another question i have, if i am putting in £200 a month, but the buy price is more than this, do i have to put more in, or do i get like 1/2 a share?



I forget to mention i also have 3000 Morrisons supermarket shares. I could sell them, i got them for £1.98 and sold 1600 of them at £3.

Would rather put that money into an index rather than one company for less risk. Saying that probably too late as the results are due this week.



Thinking Cavendish for my fund provider as i am drip feeding.

Moneyevator says for funds less than £25k that these are better as long as the fund dealing fee is 0%.

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