Investment options

[Diestl]

Hi,
Now that I'm contracting I want to invest the extra income. I looking at a 10 year plan, these are what I see as my options.

1) Get a large mortgage and overpay it as much as possible.
2) Get an interest only mortgage, open a couple of maxi-share(linked to ftse) ISA's (me and other half) and pay the limit into them (7K pa).
3) Repayment mortgage and one isa.

[HankWangford]

Hi,
Now that I'm contracting I want to invest the extra income. I looking at a 10 year plan, these are what I see as my options.

1) Get a large mortgage and overpay it as much as possible.
2) Get an interest only mortgage, open a couple of maxi-share(linked to ftse) ISA's (me and other half) and pay the limit into them (7K pa).
3) Repayment mortgage and one isa.

4) shares?

[Diestl]

Id prefer to link to the whole market or a sector, and I need to move to a bigger house so a mortgage needs to be included.

[Buffoon]

Repayment mortgage that allows both over and under payment. When in work pay as much extra as posible, but it give breating space for when times get hard (and they will).

[mcquiggd]

Also consider a SIPP... can include a house/mortgage, and I believe a pension.

However, look at the ability to access your money / what happens if you die (can if be left to a nominated person) which sometimes differs between each scheme.

Depends if you are looking for tax free / tax efficient medium term investments, or a tax-wrapped pension.

[thunderlizard]

If you've got debts like a mortgage, pay them off before you start investing in other ways. Mortgage interest is likely to be higher than any dependable return. As long as you keep a few grand fairly close to hand for contingency.

[DimPrawn]

If you've got debts like a mortgage, pay them off before you start investing in other ways. Mortgage interest is likely to be higher than any dependable return. As long as you keep a few grand fairly close to hand for contingency.

Agreed. You can be much braver when negotiating contract rates when you know your mortgage is £0.00 per month rather than £2,500.00, believe me!

Mortgage interest is dead money.

[Swiss Tony]

Firstly you need to have 2-3 months of salary (1-2 if you are a contractor earning good money) in a savings account or an ISA for the dry periods that may come by.

Then you need to structure what you are putting away. Getting your mortgage paid off is certainly a big part of this, but will you be living where you are forever?

I would recommend that you get your pension looking healthy, as you may as well get your tax relief while the gvt still pay it!

Then simply save until you have a large enough sum to do anything with. No point in buying anything if it may bite you in the ar*e later as you are low on funds.

SIPP’s are great but remember you can only put 10% of a property into it at the moment. The rules are still not clear, as it stands you can put land into a SIPP but not property in large amounts.

My advice is to see a good financial advisor / consultant and don’t jump at the first things you see. Take your time and see how you feel towards different ideas.

[lukemg]

Max out your ISA allowance, put it in shares via unit trusts. Have a look at Hargreaves Lansdowne for discounts on purchase (usually require lump sum investments though).
Consider a low cost tracker also (out perform many managed funds apparently and with low costs, due to low overheads, can be good).
Have to be looking at 5 years for any shares investments, buy and try not to worry about them.
You never have to put them on a tax return and all gains are tax free. Get one of these a year for 10 years and let them ride.
Been doing this since 97 - through the lean 2000/01 years although had 3 years off due to income meltdown and no spare cash (back in this year).
Avg annual return for these funds has been 12% per year (range is 2%-26%). I am very happy with this with no grief etc that a buy-to-let might cause. I am considering these as part of my retirement planning so they were always going to be long term.
Got a modest mortgage as well that I am paying off over 16years (expecting to increase this shortly).

[ChimpMaster]

The idea of ISA funds is good, as many have stated here already.

The one thing I will add is to try and invest globally, not just in the UK or Europe. I have put some cash to work in China and India via Fidelity ISA funds (only 1.5% charge), and so far they have done very well - almost doubled in under 2 years. These 2 countries are expected to grow quicker than any other over the medium term.

I'll be putting this year's ISA into East Asian funds too.

Apart from ISAs I am aiming for the following :
-to pay off my mortgage
-have a couple of BTL properties around
-a large cash sum in the bank
-I also trade high risk derivatives via LSE