Where should we put our "spare" cash?

[mumblechum]

We'll be finishing paying off our mortgage in a few weeks. At the moment we're massively overpaying (paid around £90k off this year), so even if we let our belts out a bit we'll have around £50k per annum "spare" cash.

We want to ringfence around £70k for ds's uni education (7 yr course). Is there any advantage in putting money in his name (he's almost 16)?

Assuming we don't both lose our jobs imminently, then potentially we'll have that level of spare cash every year for probably 7 or 8 years, till dh is likely to take early retirement. He's lost tons of money through his pensions so we don't particularly want to put the spare cash into a pension fund.

Does anyone have any bright ideas?

Thanks

[compo]

I think I'd buy property and rent it out with some of that

[cjlb]

Hi. As the possibility of DS going to uni is only 2 or 3 years away, you need to look at deposit based savings rather than anyhing that is equity based (which should be for no less than 5 years by the way).

Look at plans that are tax free to star with such as cash ISAs (which DS can also have one of) and National Savings.

If you put money in DS's name, it should be in some form of trust. The reason for this is that when he reaches 18, technically the money becomes his to do what he wants with. So instead of going off to uni, he could blow it all on wine women and song !

Buying property is also too risky in the short term. If you bought somewhere now, there is no guarantee you could sell it again when you need the cash.

Having said that, once you know where DS will be going to study, you could buy a property in that location for DS to live in and rent out spare rooms to others on his course to cover mortgage costs etc and/or give him money for living expenses.

You say you don't want to put money in to a pension, but from what you have said I take it that DH at least is a higher rate tax payer. Depending on his income, he may only have until April 2011 to take advantage of pension tax relief at 40%. 40% tax relief on pension contributions is a massive boost to a pension fund and I would not be quite so quick to dismiss it.

Why has he lost money ? If it is just down to fund performance from 2007 to 2009, then he is not alone and the markets have been recovering. If he has been mis-advised, such as transferring a pension from that of a previous employer, then he should complain to the adviser.

Hope that is of help.

PS. My DD is off to drama school in London in September and looking for sponsors

[Lizcat]

As people to hedge our bets massively we have spread our savings around a lot of pots. Firstly the immediate emergency fund instant access s
avings account with enough money in to live for around three months.
Secondly slightly harder to access ISA money around another three months money in there and is building currently.
So should the excreta hit the air conditioning in any form we can live for 6 months. Two buy to let properties in different markets one in commuter town let on long term lease yield is around 6% and likelihood of value to rise high. Second flat in very popular holiday town let as holiday property very high yield around 20% after costs, but likelihood to rise in value fairly low. Both of these could be sold in around 6 months for truly dire situation.
Finally my business sale price would be high, but ability to sell is possible, but would probably take around 9 months to a year to complete sale.
I am horribly into planning and we have scenarios so that should one of us die the other one would only need to work part-time and everything would be easily covered including DDs school fees.

[BlingLoving]

Firstly, I would not be using Mumsnet (no matter how fab it is) as your definitive investment advice solution. .

But broadly, I'd agree with cjlb. You want to be investing in some kind of guaranteed investment for the money you need in the relatively short term for DS's education. If it was me, I'd split the remainder - I'd put half in low risk, reliable, low return, capital/income guaranteed investments and the other half I'd be a little more adventurous with. I'd probably split the "adventure" half again though into more and less risky options. eg some equity tracker funds - say FTSE, Euronext and S&P - and then either invest in a more actively managed fund or do it myself with the rest.

[BlingLoving]

Oh, and well done on paying off the mortgage! I dream of that day.

[jbond]

there are loads of options available - depends on the risk you want. zero risk, go for government bonds, stocks are quite risky at the moment cos all the stock brokers are quite jumpy about the markets at the moment (my husbands one!). ISA's are a good option but you can only put in 10,200 but it's tax free (yay!).

best option... talk to a financial advisor. mines a guy called Clive Harries from north yorkshire. excellent man. very friendly and has about 25yrs experience! 01609781563