Where should I put £50,000 once I've invested in an Isa?

18 February 2014

Q

I will be receiving £50,000 in four months' time and i want to invest some and put the balance into Isas. I already have £80,000 in stocks and shares, so I would like to invest into Isas over five years to meet the annual allowance rules. So I'll still need somewhere to put the money I can't pay in each year. Should I use my Isa allowance up and put the rest in a one-year bond or do you have a better suggestion?
From
BC/Littlehampton

A

The best course of action for you will depend on your circumstances, objectives and attitude to risk. Before you look to invest, you should assess whether you have any debts to pay off, including mortgage debts, and also whether you have enough money available in cash savings.

Everybody should have cash savings, so if money is needed at short notice they can avoid the necessity of going into debt or cashing in investments at what might be the wrong time.

If the right decision is for you to invest the money, then you are being very sensible in looking to use stocks and shares Isas because they are tax efficient. I'm not sure whether your existing stocks and shares are in Isas. If they aren't, then you should also look to use your annual Isa allowance every year until this money is also moved into these tax-efficient wrappers.

For most people, the right investment approach is a combination of shares, fixed interest and property. You should make sure you have a good balance of investments. You can put the new money in cash and wait to invest in stocks and shares Isas when you have available allowances.

However, if you already have enough money in cash, then you can still invest the money, outside an Isa wrapper, and then each year sell and reinvest money into an Isa.The right decision should be based on what is the best investment strategy for you, to invest everything now or keep some money in cash, with tax efficiency being a secondary consideration.

If you will have total investments of more than £100,000, then you should take independent financial advice before making any decisions.

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