Lump sum UK

[frugledoc]

Hi All,

I'd like to canvas for opinions please.

My wife and I own our home outright with no mortgage.

I have an investment property which I am on the cusp of selling which will give me 300k cash by July.

My current investments are as follows:
1) 95.000 in tax sheltered stocks and shares accounts.
2) 40,000 in a low interest government bond (tax free)
3) 200,000 in a defined benefit public sector pension scheme - cannot start drawing pension until 55 years old - current estimated income from age 60 = 9.000/year
4) 280,000 equity in a flat in London which is being sold by July.

I don't think I need any bonds as my pension is kind of like an ultra safe bond.

I don't mind passive index trackers but my investment style is mostly high yield blue chips, reinvesting dividends, holding forever.

I also like to punt on emerging markets or other sectors when they are down by > 30% from recent peaks and selling if they turnaround a quick profit.

So a mixture of boring and a little bit of excitement.

I'm 36 and will probably be FI by 40.  I might already be FI, not sure but doesn't matter too much because I have a great job.

Anyway,  I could now buy a couple of rental properties with no mortgage as I live in a much lower cost area than the one where my flat which is being sold is.

Yield on property in the UK is not that good unless you want to rent to high hassle tenants, which I don't.

I don't want to be holding significant amounts of cash for any longer than 6 months until I decide where to invest.

So:
1) All into equities
2) A bit into bonds even though I have a good safe pension?
3) 50:50 split buying one high end rental property and investing the rest in equities?
4) Re-invest the entire amount into a mortgage free, ultra up market property and rent it out. Lower yield but should be better tennats.

[Sacadoh]

Your public sector pension is effectively performing as a bond already. I'd be considering equities and real estate etc and give consideration to market timing.

Are you a 40% or above taxpayer? Is it time to consider using the capital to cut down on your marginal rate of tax?.

[frugledoc]

Hi Sacadoh,

How do I use capital to cut down my marginal rate of tax?  Do you mean buy paying into a private pension or VCT?

Kind Regards,
frugdoc

[Sacadoh]

Thats what I was thinking. If you have not used your limit in previous years you can get your marginal rate down for a couple of years or more.

I have done this in 2009 to 2012 and this, combined with some very welcome real returns from the stock market, have made a big difference to my pension pot.

I am good bit older than you so will get access to the cash in Feb 2023 at 55. You may fear the risks of making the money inaccessible for a long time too great.