What to do with 15 000 pounds

Hello,
I'm about to inherit 15 000 pounds, and i'm wondering what to do with it.
I'm in my 20s, and have neither significant savings (3000 in a cash mini ISA) or debts (just my student loan), so it seems to me that the best thing to do is to save or invest the money for the long term, as an emergency reserve, and as the core of a deposit for a house one day. Therefore, i'd like to find somewhere pretty secure to put the money; i'm planning to put it away for several years (i almost certainly won't be buying a house in the next five years), so i'm happy with something i can't get at immediately (like a bond) or something that's only reliable over time (like the stock market).
Any advice on what i should do?
My idea at the moment is to put it all in ISAs (over the course of a three years, keeping it in a normal savings account in the meantime) - half in a cash mini ISA and half in a stocks-and-shares mini ISA wrapping a FTSE all-share tracker. How does that sound?
Also, what's the tax position on stocks and shares ISAs? I'd assumed they were tax-free, like cash ISAs, but i read references to tax on them - is that just on the income, rather than interest? I'm not after any income, so that shouldn't bother me, right?
Thanks, tom

On Wed, 27 Apr 2005 09:59:27 +0100, Tom Anderson
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Property. There are plenty of properties available from around £25,000 upwards, so your 15 grand could go a long way towards securing one. Put in a tenant and you could be quids in over several years. Use RightMove to do searches and you'll be amazed.
MM

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I'm surprised. What's your experience of doing this ?
How much would it cost to bring them up to lettable condition ? What is the estimated capital appreciation over the 5 year term ? What is the current estimated yield ? What is the estimated occupancy rate ?
Daytona

On Wed, 27 Apr 2005, MM wrote:
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Interesting. Two questions:
(a) Where on earth (or at least, in the UK) are there houses worth owning for 25 grand?
(b) Once you've factored in the monetary value of the time it would take me to buy the place, do it up and let it, how does the return compare to the stock market?
(c) How does this compare to a property-based investment product?
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I am amazed by the number of beach huts in Southend, not to mention the garages in Hove and the holiday chalets in Camber!
tom

On Wed, 27 Apr 2005 18:20:59 +0100, Tom Anderson
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Check out Rotherham, Bradford, etc. I found 26 properties in about ten seconds. You might also try Wales. Even here in the Fens, properties are half or third the price they are down south. Can't go wrong with property.
MM

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Of course you can. There's a reason property in certain areas is cheap and it's usually much more apparent why this is when the market is slow than when it is booming.
tim

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Jeremy below doesn't seem to agree with you. Neither do I.
MM

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Even Jeremy accepts there is a risk. Saying "can't go wrong with property" is, quite frankly, complete bollox.

wrote:
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Aye, poor grade property, at the peak of the market, why the hell didn't I think of that as a long term money maker?!

I think the property idea is a good one for the long term. It gets you on the property ladder NOW, rather than in 5-10 years time when prices will almost certainly have gone up substantially, even if we are "at the peak" now. There's no special need to go for a £25k property either. £15k could net you anything up to a £100k property on a buy to let basis, although unless you have a safety net (parents?) I would recommend buying with a bit more equity (ie. 25% rather than 15%) in the property, so that you aren't so stretched if the property is vacant of rent-paying tenants for a while. Do some research on property investment now, given you have a real opportunity to do something about it. At your age, this knowledge will stand you in very good stead indeed to make serious money from the property market over the next 40 years or so. If only the rest of us were in that position now!!
Here's a book that will help you get the basics, to minimise your chances of making an expensive mistake. It's very readable.
(Amazon.com product link shortened) encoding=UTF8
Go for it my friend, but do it with your eyes open. Talk to your parents about it, if you can, their experience will be invaluable.
Best wishes Jeremy

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What's you definition of substantially.
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Why do you assume we're not ?
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Just because someone's amassed a substantial property portfolio doesn't mean to say their % gain in net wealth is any better than anyone else participating in this property boom.
Daytona

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A few weeks ago I was watching a TV program about property investing (can't remember where or what it was)
They interviewed some young lady who had amassed a portfolio of IIRC 30 properties, all on near 100% loans. Something had obviously gone wrong with this plan and she had to sell up. She indicated that she had lost 300K, implication was that this was the seed money that she started with and was now broke.
So, you can go wrong with property.
tim

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Bl**dy hell, I'm actually quite shocked that someone who can use a computer is suggesting property as an investment. Out of interest where were you and what were you doing at the peak of the tech boom? Were you, per chance, browsing bulleting boards and suggesting people buy last minute.com shares?
I suggest you read a few of the porperty reports, eg Nationwide, Halifax etc, and try and filter into your brain the fact that property has been going down for the last 8 or 9 months....and that's ignoring inflation. Personally I can barley wait to snap up all the properties from the banktrupts in a few years time...... but I will (wait).

On Fri, 29 Apr 2005 21:16:56 GMT, "Robin Peters"
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Prices fluctuate, but they always end up in an increase. I dug out a local paper from 15 years ago. Every property since then has increased its market value by several orders of magnitude. My father paid around £5,000 for a 3 acre smallholding in 1957. What do you think it could be worth today?
MM

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MM,
Quite, the FTSE-100 also increases over time, as does cash in a building society account. I believe the rather techincal term for this is "inflation".
The fact of the matter though is that both guilts and shares have increased more in value over the last 20 years than property has. Check out this graph.
http://www.nationwide.co.uk/hpi/historical/MPR0502.pdf
Over a long period of time property will provide a return, but it certainly won't out perform equities, and buying at the top of the cycle is finanical suicide....of course the top of the cycle would appear to have been last July, we've been going down ever since.
this book would probably be a good read....
(Amazon.com product link shortened)14874227/sr=8-1/ref=sr_8_xs_ap_i1_xgl/026-3734744-6217257
I don't know why I'm wasting my time here though, it's practically impossible to talk someone out of a religion/fashion with mere logic.

"Robin Peters" wrote
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Where are the graphs for *leveraged* property - say 75% LTV, and 90% LTV??
"Robin Peters" wrote
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Can you buy equities with a mortgage??

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The graphs would be exactly the same because borrowing is not relevant to the price of the house.
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If we read that question literally, then the answer is no because you generally cant use a legal document evidence a first legal charge over a property as way of paying for things, although a sub-mortgage might be used in some business transactions.
If you are asking if you can borrow money on your house by giving a mortgage over it to a lender and then use the borrowed money to invest in shares, then of course you can. (That, basically, is what endowment mortgages were.)

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LTV??
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"john boyle" wrote
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No they won't (or at least they're very unlikely to be) -- investing 25,000 in property A (price 100,000 & using a 75% mortgage), is most likely to give a different return to investing 25,000 (ie the same amount) in property B (price 250,000 & using a 90% mortgage).
"john boyle" wrote
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... but it *is* relevant to the amount actually being *invested* in the house (see above).
The leveraging will increase the return if it is positive, and make it more negative if the return is negative.
BUT - the point being made was that, over a sufficiently long period of time, property prices tend to go upwards. So if you invest in property with a LTV 90%, OK you may sometimes lose out badly when prices fall, but **over the longer term** (when prices are much more likely to have risen - eg 15 years plus), your leveraging will most likely be in your favour - and might give a return better than that on equities over the same term??
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"john boyle" wrote
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No, I'm asking if you can borrow money to buy shares by using the shares as security -- like you can borrow money to buy a house by using the house as security...?

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I take your point, those graphs dont exist from the likes of Nationwide or Halifax who provide the house price indices. You should be able to deduce it yourself. I use a spreadsheet myself.
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Right! I apologies for my previous reply where I thought you were talking about domestic mortgages.
Yes you can. It used to be relatively common for a bank to take a charge over share certificates, the charge being either an equitable one or a legal charge which, as you say, would be by giving a mortgage over them. It would be more restricting than it appears because for a legal mortgage the bank would ask the borrower to sign a memorandum of deposit and would transfer the shares into the name of its nominee company, thereby restricting your ability to trade.
Of course, the amount the bank would lend against a share portfolio would be very low. I am not sure what they would go to these days but generally no more than 50% was a rule of thumb unless the client was undoubted.
I have advanced 80% of the purchase price of new issues when the cheque had to be presented and paid in advance of the declaration of allotment but we made sure the bank could sell the actual shares on day of issue if necessary.
These days you wont get this kind of service in the High Street where it was once commonplace. Now that people expect credit interest and free banking etc., banks cant afford to have qualified and trained staff in branches. You would need to go the 'private banking' section of your bank or a 'Private Bank'. These banks will lend to high net worth customers against their total assets.
Stockbrokers will also lend against a deposit of shares.

On Sat, 30 Apr 2005 19:48:06 +0100, john boyle
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They never said. I wish they'd told us they were doing this.
It would explain a lot. It means that the banks *really* don't do the core business of banking any more.
I.E. Borrowing money, and lending it out into the local community at a rate that gives them a reasonable real margin.
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So, F**k Mr Jones the Butcher. F**ked from about 1972 -ish by my observations.
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As if *shares* represented any security.
DG