Investment & Investing

C+P from the owning your own home thread incase anyone here might know. Cheers...

Realise these are 2x questions for a mortgage broker but would really appreciate any bank holiday weekend advice please as can't chat to one...

Is a having a guarantor on your mortgage purely to help if you lack deposit or are struggling to get approved, or can you use them to borrow more than a multiple you have been offered (say 4.5x instead of 4x) offered to you?

If you get a further advance say 2 years into a 5 year fix, would you current lender offer you a similar rate and you'd have like a second mini monthly mortgage you'd renconile as one at the end of the 5 years? Or do they shaft you? Guessing can't go elsewhere for it by definition of a 'further advance'

Just skim read all of the overpaying mortgage vs investing and there isn't one answer. Highly circumstantial. Best chatting to an IFA with your set of circumstances.
-risk appetite and the psychological side
-what your mortgage rate is
-have you used your ISA allowance for the year / how likely you are to hit annual CGT limit in the future
-how balanced your overall assets are inc house (this was a good point someone made)
-stage of life (if young, probably invest, if nearer retirement, maybe pay off to clear it)
-how disciplined you are (to actually invest it)
-goals & ambitions
-if you plan to move in the future

I think we're in an anticipating-higher-inflation situation, which isn't quite the same thing.

For example, from last month: https://www.morganstanley.com/ideas/rising-rates

and, possibly paywalled:
https://www.economist.com/britain/2021/03/31/british-firms-are-adapting-to-lockdowns-and-confounding-forecasters

yes, agree with that, some people definitely think that there may be a higher inflationary environment coming at some stage ;-)

some people think that we may also be at a late stage in an asset bubble; could make for interesting times ahead.

(apologies, i have old school views on the fallibility of market timing and perceive that the current enthusiasm for certain investments may be based on the inevitability that a rising tide float all boats)

and, possibly paywalled:

https://www.economist.com/britain/2021/0­3/31/british-firms-are-adapting-to-lockd­owns-and-confounding-forecasters

https://webcache.googleusercontent.com/search?q=cache:K2mP35RXL3AJ:https://www.economist.com/britain/2021/03/31/british-firms-are-adapting-to-lockdowns-and-confounding-forecasters+&cd=1&hl=en&ct=clnk&gl=uk

Oh, absolutely. You won't catch me trying to time the markets.

It's hard to imagine a much lower inflation environment is coming, but of course we've had low wage inflation compared to asset inflation for a while. This could be an asset bubble driven by low interest rates, or partly by diverting wage growth into asset appreciation, or there could be other factors.

How the gig economy lawsuits and regulatory activity, possible productivity effects, government stimuli and let's - optimistically - call it "creative destruction" in the wider economy all work out is totally unpredictable. At least I'm not going to try predicting it.

Even if some of the current, low rate of inflation just moved back into wages where it arguably belonged, it's not clear what that means for monetary policy. People seem much happier to interpret rising share prices as economic success, and rising wages as overheating.

Cheers!

That link doesn't work for me, but the gist was:

1. Effect of first lockdown, accurately forecast
   
2. Effects of later lockdowns, not accurately forecast because firms adapted
   
3. Public finances better than predicted, and unemployment lower
   
4. Therefore (maybe) such growth, very success once vaccination complete and everything reopened.
   

what level of protection do premium bonds offer ? do they have the £75k ? govt protection like bank accounts or are they a 100% guaranteed fully backed by the hmrc / govt ?

how quickly can you put money in there and how long does it take to withdraw ? any minimum holding period ? and are there limits to the amount you can deposit ?

after reading all the cryptic messages on reddit i've gone all in on $HODL and $YOLO they seem to be pumping those two investments to the max, anyone know the backstory ? thought about buying $FOMO too but didn't have any cash left

to the moon

You can only hold 50k at a time, iirc. And they are issued by a quasi govt. body, so if they defualt, the govt. has probably defaulted, and the protection would be uselesss anyway.

thanks

If i'm working overseas can i chuck my savings into premium bonds until I want to transfer them in the future? or is there an issue with me not paying tax in the UK and earning some sort of return / interest?

Premium Bond winnings are tax free, but I'm not sure of the NS&I eligibility criteria if you are working/living outside the UK?

https://www.nsandi.com/help/join-nsandi/using-nsandi-outside-uk

You can, but you need a UK bank account.
You might not depending on where you live.
You may have to pay tax in that country.

Also depends on where "overseas" is. Some countries charge tax on foreign earnings.

how quickly can you put money in there and how long does it take to withdraw ? any minimum holding period ? and are there limits to the amount you can deposit ?

Money is quick to get in but the bonds you buy take a while to be entered into a draw, at least a month I think.

More info here: https://www.moneysavingexpert.com/savings/premium-bonds/

Key statement: "If you won't earn interest over the personal savings allowance and have average luck, Premium Bonds are only likely to beat top savings, if you've £5,000+ to save"

Yeah i believe this is the case - NZ and the UK have this semi linked system, so i'd have to declare any overseas earnings here and likely pay tax on them.

Just thinking if there's anything i can do with the cash i left in the UK rather than it just sitting in my current account (and the exchange rate isn't favorable)

I wonder how linked they are? Do they only follow up certain issues or are these countries literally pumping everyone's tax details back and forth?

Take out a freetrade account and stick it in an ETF? Zero cost, likely decent returns (obviously subject to usual disclaimers).

Most countries with home taxation requirements rely on the same principle:-

You get credit for tax paid in a foreign country but if the tax you would have paid back home was more that that then you pay the difference back to your home country.

(If the tax you would have paid back home was less then there's no rebate from your home country.)

How does that work with income banding? Like, does the foreign country take your whole income and then band it in their own way or do they compare it with the other countries bandings?

Also, that still doesn't answer how they share this tax info? Like, does the UK know about my savings in Oz? They've never mentioned it anywhere.

I think you're supposed to be declaring unearned income. I know the form as Self Employed Declaration but it contains lots of sections on income from investments at home and abroad.

I've never done a tax return (contractor so accountants and then permie) so I have no idea. Taxing income in another country is a bit rich though, when you have multinationals using this to actively avoid paying tax and I'm just sat on some savings from my birth country. One of my accounts was losing me money until I put enough in it to avoid the bank fees!

The amount of tax that multinationals are paying to reduce the overall bill is still eye watering. If you have oversea earnings that require you to think about avoiding tax then you have good problems. Generally small amounts are not going to be pursued.

How does that work with income banding? Like, does the foreign country take your whole income and then band it in their own way or do they compare it with the other countries bandings?

I believe they band it in their own way, as if the money was earned in the home country.

Also, that still doesn't answer how they share this tax info? Like, does the UK know about my savings in Oz? They've never mentioned it anywhere.

Depends on the countries involved.

US Citizens, I believe, have to complete a tax return in the US even if they live overseas and earn money in a foreign country. If they would have paid more in tax earning that amount in the US then they pay the difference to the IRS.

I'm sure there's some tax information sharing between the US and the UK for example.

I doubt the UK and Aus have any similar arrangement, and if they did it'd only be for the £££££ type of people, not the lowly average person that's not in the golf club thread paying less than £100k in tax a year.