Where I’m Investing My House Sale Money

Hello friend,

It’s been a while hasn’t it. I hope you’re keeping well. 

Lou and I have finally settled in to our new home in Cambridge. We still have work to do, but the tasks are becoming less relevant and most people wouldn’t notice them. 

It feels like ‘home’ already, which I am quite surprised by, and most importantly, we’re happy with our lives down here. 

I’ve received some emails from people asking me how I am, and what I’m up to nowadays (Thank you to those that have checked in – it’s lovely to see that people care). I thought I would write a post on where I’m investing my money as I love this stuff, and thought a few of you might be interested too. But first of all…. 


Are we REALLY FI?

Financial Independence is the point in which your income from passive streams (not having to work) surpasses your living expenses. 

My Kindle income dilutes this definition for me because it’s semi-passive. I haven’t worked on Kindle for about 6 weeks now, and yet I still earned over £8,000 in Oct and I stand to receive over £6,000 in Nov – Not bad for not working! My eBooks require re-promoting and attention, whilst my paperbacks and audiobooks are 100% passive once set up. Between my paperbacks and audiobooks you could say I’ve ‘technically’ been FI for over a year now but my original aim was to cover my expenses with income from stocks and shares alone. As of today, my forward dividends do not cover this. However, the recent house sale has freed up the capital that would allow me to become ‘officially‘ FI if I were to invest it all now, which I’m not going to do. 


How I plan on investing my money

1) ISA – My first priority is to fill my stocks and shares ISA every year. I don’t have a cash ISA, I use my full allocation on Shares. I’ve already paid a chunk into this years allocation, and I plan on continuing to drip money into this each month to ride the market wave. 

2) Personal Development – I’ve set aside money to invest in myself – arguably the most important investment you can make. I’m currently in the process of hiring a coach to help me implement my business plans for Kindle Publishing, my own coaching program, my Self Publishing course, my new business idea, Blogging, and general Self Development. I’ve also set aside money for attending a Personal Development course, which I’m yet to do this year, as well as money for books and online courses. Self Investment has changed my life, and I’ll never cut myself short in this area. Each time I’ve invested in me the ROI has always made it worthwhile.

3) Property – I had a goal at the start of the year to invest in my first buy-to-let property. Off the back of my declaration, I received advice from multiple people suggesting that I don’t as it requires a lot of time and effort. I still want to diversify my money into property, so I’ve invested a chunk of money into a P2P lending platform, secured against UK property called Saving Stream. They offer a fixed 12% return for investors, which they pay out monthly @ 1%. Even after tax is a fine income for me. 

I plan on putting enough money into P2P to cover my living expenses, as well doing the same in Stocks and Shares. The P2P will grow a lot quicker than my ISA due to it not having a funding restriction and a guaranteed high yield. The following formulas excite the hell out of me…

72 divided by x (interest rate) =  Time (in years) to double your account
114 divided by x (interest rate) =  Time to triple your account
144 divided by x (interest rate) =  Time to quad your account


If I take Saving Stream’s 12% yield, I can forecast the following:

72 divided by 12 = 6 years to double my account
114 divided by 12 = 9.5 years to triple my account
144 divided by 12 = 12 years to quadruple my account


If I invest £20,000, it’ll return £2,400 a year or £200 per month. 

If I choose not to contribute additional capital, and reinvest all of my income, I’ll have the following capital and income in my account: 

In 6 years = £40,000 capital. £4,800 pa / £400 pm income
In 9.5 years = £60,000 capital. £7,200 pa / £600 pm income
In 12 years = £80,000 capital. £9,600 pa / £800 pm income


I’ve currently invested a lump sum of money into Saving Stream but I plan on contributing to it on a monthly basis after my ISA and Personal Development investments (and other expenses) have been funded. I currently forecast that I can cover my living expenses in under 2 years, and get to £100,000 in less than 5. I’m using this Blog post for accountability. 

I like the fact you can sell parts or all of your loans to get money back out of the company if needed. As a trial, I sold part of a loan to see what the process was like. I put over £1,000 on sale and it was purchased within 15 minutes. That’s not to suggest that every sale will be that quick, but I was reassured. 

Saving Stream is not protected by the FSCS, like most UK banks, so if they were to fold, my money would be lost. I’m prepared to take on that risk after spending time researching the company, and being fortunate to know someone that has used the company for 3 years and has a considerable amount of money in them. Saving Stream will not be a safety net for me. It’s just another finger in another pie. 

If you’re interested in joining Saving Stream, I do have an affiliate link. As a thank you for using the link, I’d be happy to answer any questions you have about them, just drop me a note in the contact box on the right hand side and I’ll email you direct. 

I’ve chosen not to include the link in this post, as I want this to be informative, rather than a sales pitch. I’d prefer you look into the company and benefit from them, than earn a few quid. 

4) Easy Access Cash – I have a lump sum of money in a savings account. It’s a much smaller amount than 1 and 3, but I want to have some cash around in case I plan on setting up a new business or find a new investment opportunity. I don’t like cash sitting around doing nothing, and at less than 1% it’s doing nothing! Cash does give you options, but I’d prefer to receive cash in income from investments than have it sitting around. 

…..and that’s it!


I don’t plan on investing any money into my SIPP. The only reason I have one is due to me transferring my work pension into one after I left my 9-5. I’m 34 now, and I’m not comfortable with my money being tied up for 21 years (at least) before I can get to it. I can access money from my ISA, Cash Savings, and Saving Stream if I need to, although I don’t plan on touching them for a while yet. 

It’s also worth pointing out that I’ve allocated a chunk of money to guilt-free spending. I’ve bought a new smart phone, watch, clothes and other crap that I don’t need to make me happy for 2 weeks. 


How about you? 

If you had a 5 figure lump sum, how would you invest it? 

0 Comments

  • EarlyRetirementGuy

    Reply Reply 25th November 2016

    Great to hear you've settled into the new place so quickly and things are still going amazingly with Kindle.

    That's alot of money to be putting into saving stream; a relatively new concept with no external financial protections. I saw Thefirestarter is doing similar and wonder if perhaps I should dive in however the lack of protection really worries me. Your test sale went through very smoothly but that was at a time of extremely low inflation, low interest and stable economy… What happens if any or all of those change and it perhaps becomes far more difficult to get your investment back to cash?

    Out of interest, what sort of % of wealth do you have locked away in the SIPP? I currently contribute 20% of gross earnings into my pension plan but do wonder if that is going to result in it becoming too top heavy and locked away for another 40 years.

  • Huw Davies

    Reply Reply 25th November 2016

    Thanks for the comment Guy. I'm sure you're not alone. You probably know me better than most of the readers, and my thoughts on risk, but I'll explain where I'm coming from for you and everyone else.

    For me, the lump sum is riskable. If I lost it all tomorrow, I would be gutted, but not down and out. My life isn't dependent on it. I see it as a great opportunity to expand my wealth and diversify income streams. The positive and more likely outcome is that I can create an income stream that pays me £1,000 a month in 5 years. That's not guaranteed but more likely than it going bust IMO.

    There aren't that many amazing opportunities that don't carry some level of risk, otherwise everyone would be doing it, and everyone would be rich. I'm young enough to earn everything I earn back again and then some if required. I took a massive risk by leaving my job, but it's been the best thing I've done so I'm likely to be far more risk tolerable than most.

    Some might think (not me might I add) that the amount of money you've put into gambling accounts is too risky. You've experienced great success from it. Your tolerance to the associated risks has probably increased over the last 12 months too. Should you still be doing it? I say your risk has been totally worth it. I'm sure you'd agree.

    I have the fortune of knowing someone that has put a lot of money into the company – over 6 figures. The confidence from speaking to him has increased my confidence in the service. I'm hoping that I can do the same in time.

    Similarly, to people that speak to you about Matched Betting. Once they see how much you've invested into it, and how much you 'place' on bets each month, they feel assured to give it a go as well.

    I would only recommend investing what you're happy to lose. £100, £1000, or even £10,000. The number's irrelevant really. The comfort level is the most important thing. People freak out when I say that I've invested over £15,000 into creating eBooks on Amazon. They understand when I tell them that it earned me over £8,000 last month. I don't recommend others put £15,000 into Kindle now, but I recommend them putting an amount to get started that they're prepared to lose and go from there.

    Personally, it scares the crap out of me to keep my money in cash doing nothing, whilst banks make all the money loaning it out. SIPP's scare me even more.

    My SIPP wealth is very small. I have 5 figures in there, but I largely ignore it and I don't plan on adding it it for another 10 years currently. That scares me more than Saving Stream. Far more!!! I can't access it for 21 years. I might be dead by then. Granted, Saving Stream might fold, or it might take days, week or months to sell loan parts, but I'd take that over having ZERO control over my lump sum for 21 years. I could put the SIPP money into SS and cash out in 5-10 years, not ever needing a tax free pension pot. I'm just more comfortable with flexibility, freedom and control – but that's me!

    I will continue to invest in my SIPP closer to the age I'm able to take it out. For now, it's just too far away. Cashflow is king, and at my age, a SIPP is a cashflow killer.

    To clarify, this is just my opinion and I'm not having a go at you or anyone else that invests in a SIPP in their 20/30's. We all have to be comfortable with where we're putting our money. Who gives a shit what I or anyone else thinks. Do what's right for you!

    The way you're going with Matched Betting, Kindle and Affiliate Sales – and investing the money into paying off your mortgage etc. I don't think you have that much to worry about long term. 🙂

    Let's catch up again soon!
    Huw

  • weenie

    Reply Reply 25th November 2016

    Hey Huw

    Great to see that you and Lou are well and settled into your new life in Cambridge and that you enjoyed (briefly) some guilt free spending!

    Thanks for the comprehensive update – I've missed your blogs!

    I would love to be able to fill my ISA, but I don't get anywhere close! Although the bulk of my portfolio sits in my SIPP, I'm aiming to ultimately have more in my ISA. Although you say that you don't want all that money sitting in your SIPP for 21 years, I'd have thought there's still some tax benefit to topping up your SIPP once you've maxed out your ISA?

    I hear what Guy is saying about £20k being a lot to put into Savings Stream but with your income/wealth, I guess it's relative to me chucking say £2k into P2P. Good luck with it anyway, the numbers look impressive.

    I will have a 5 figure lump sum when I receive my severance pay but until I secure another permanent job, I won't be investing any of it. If I were to invest it, then I'd likely spread it across various ETFs and ITs which I already hold to increase my dividend income.

    Do you still have time for matched betting and have you plans to do any travelling now that you are FI and can leave the passive income just trickling in?

  • Huw Davies

    Reply Reply 25th November 2016

    Hey Weenie,

    Thanks for stopping by. I hope all is well with you!

    I can't deny the tax benefit to a SIPP, and I understand why people choose to use it. It's just not for me.

    I just prefer the flexibility to withdraw capital and income now if I need to. If I just focused on filling my ISA for 21 years, conservatively assuming it remained at £15,000 a year, I'd contribute £315,000. At 4.5% income, which is less than my current dividend income that would earn me £14,175 a year, which is far more than I need to live on. That's not taking into account dividend or capital growth, which for 21 years is very likely to be significant.

    For me these numbers alone provide enough stability to focus on putting my capital in other areas. More risky areas with greater potential of returns.

    A lot of people invest in SIPP's to ultimately live on that income in retirement. The tax advantages are a big part of that. I'm fortunate to be in a position where I don't need that. My income far surpasses my expenses now and I prefer to have access to it.

    I will continue to fund my SIPP as I mentioned above. It'll increase each year the older I get. For now, and the next 10 years, it's likely to be very little.

    For the record, I don't have £20k in SS, but it's in the ball park. I just used that number as a whole example. You're spot on though – the numbers are relevant to each individual and their own circumstances. To help you and other readers understand my decision making, I have a questions for you…

    Would you or anyone reading this invest £20k into P2P if you had maxed out your ISA and were earning £6,000-£8,000 a month on Kindle, earning £300+ per month in dividends, capable (although not doing) £1,000 per month Matched Betting, and charging over £100 per hour for private coaching? All whilst not having to pay a mortgage each month? And whilst receiving a 5 figure lump sum from a house sale?

    The crazy thing is I'm able to live on £4,000 a year (£333 per month) if I needed to. I don't, but I'm able to. I earned more than double that last month so I've very fortunate to be in the position I am. Hence, why I'm less concerned about losing £20,000 than most people would be. I don't say that to brag, but to further illustrate my position.

    You're in a very different position to where I am, and facing more uncertainty than most. It makes total sense not to invest a 5-figure payout when you're out of work. With that said, I don't worry about you – you'll be fine! You're smart, conscientious and by this time next year, I'm sure you'll be writing about how much better your life is that it was in your old/current job.

    I have time for Matched Betting, but I choose not to do much of it nowadays. It has a high opportunity cost to it. I'm better off earning money doing other things and perhaps more importantly, they tend to be less time intensive. Don't get me wrong, MB is the easiest way to earn money online I've come across. I've strongly recommended it to my family, friends, readers, and Lou. I'll continue to do so. The downside to it is the time it takes to do, and the ceiling to working on one set of accounts. It's 100% active, and I'm looking for passive sources of income. I actually recommend everyone do it initially, until they find alternative income streams that earn them more.

    Travelling – We plan on doing some eventually. We'll buy an RV and travel through Europe, but not now. I still feel like I have to much to do. Thankfully Lou feels the same way. I want to develop what I'm currently doing, help more people quit their jobs, build a charity/fund, and then I might be ready. 🙂

  • vicarage

    Reply Reply 26th November 2016

    I'm aiming to put 5% of my money in P2P, and have been in it for 6 months with Funding Circle, 1 month Saving Stream, and moving money to the latter as I prefer it. Its quite hard work getting money into SS, as its popular, so the Secondary Market has slim pickings, and the pipeline of new loans is a bit slim, so you'd struggle to get more than 1000 invested a month, and old loan will keep being repaid. I think I can get to £20k diversified across 50 loans, but its quite hard.

    If your ebook revenue continues at that rate, you'll be a Higher Rate Taxpayer, and you really do need to take advantage of pension tax relief.

  • Huw Davies

    Reply Reply 26th November 2016

    Hi Vicarage,

    Thanks for your comment. Likewise, I use Funding Circle, Saving Stream and MoneyThing. I prefer Saving Stream over the others as well. Perhaps because I look at loans during the day, I haven't struggled too much. I might have been a bit lucky, but I've managed to invest the majority of my deposit already. My friend who uses the service did warn me that it is competitive and it may take time to drip the money in. I'm keeping each investment to 3-5% max of my total fund, but I've also picked up loans for sale at £30-100 if they're going.

    I will be classed as a higher rate taxpayer, and perhaps the highest rate tax payer in a few years time, which does raise my eyebrow. However the thought of locking my money away until 55 is too much for me right now.

    I also plan on working all my life because I love what I do. So I'm unlikely to be a basic rate tax payer when I get to 55 (or above if they change it). When you withdraw money from a SIPP you're taxed at the appropriate rate, so I'm likely to have to pay tax on it at 40-45% eventually , which would minimise the gains compared to most people who retire who go from a high tax payer to a basic tax payer (or even zero).

    I still can't ignore the benefits of having the relief (up to 45% perhaps) to be able to invest with for 21 years, and I'll continue to consider a SIPP as an option based on my spare capital. For now, the FOMO (Fear Of Missing Out) is greater on not having access to my money, than it is for not benefiting from a tax advantage. I appreciate my view is probably very differnt to most.

    Thanks for sharing your experience, and I wish you the best of luck with your finances!

    Huw

  • The rhino

    Reply Reply 26th November 2016

    Careful! Alarm bells should be ringing! Theres definitely a message, albeit expressed very politely, in these comments.

    On a tangent, how does one purchase your ebooks? Is there a link from this site?

  • Huw Davies

    Reply Reply 26th November 2016

    Hi Rhino,

    No alarm bells for me I'm afraid. I choose not to panic or stress about such matters. I understand the benefits to a SIPP, and I also understand the disadvantages to them. I don't blame or judge anyone for paying into a SIPP, it's their own prerogative. I'm comfortable with my decision and that's all that matters really.

    My books are all on Amazon. I have just over a dozen pen names. I don't publish under my own name as I don't write the books. I don't share links to my books because some people emulate the book topics and benefit from mu own research and work. It's nothing personal, it's just less complicated for me to withhold that information.

  • weenie

    Reply Reply 26th November 2016

    Cheers for the explanation, Huw.

    As well as being in a very different position from where you are, I'm also a lot closer to getting my mitts on my SIPP, hence I don't mind investing in one, as well as my ISA.

    I can see why you choose not to do the Matched Betting, it is very time intensive and you have a lot of other projects to be getting on with.

    Having passive income trickle in without having to lift a finger is the way to go but until then and while I still have the spare time, I'll continue to hustle on the MB.

    I would love to read about your adventures in the RV in the future! 🙂

    Hope you have a great weekend.

  • alans

    Reply Reply 27th November 2016

    Hi Huw,

    Do you mind if I ask how long it took to get circa 20k into saving stream and earning money? How many loans is it spread across? I used to keep 20k in santander at 3% but they have dropped the rate. I'm happy to risk 6 or 7k to get a similar return from saving stream.

    As for the buy to let it can be as involved or as passive as you want. As with most things the passive approach costs more. I have two managed and one I look after myself. There is more work involved with the self managed one. It costs me 10% (+VAT) to have the others managed. If you pick the right parts of the country 10% return is possible after fees.

    I think you are taking the right approach as you seem to have a high income and know you can make the money up if it goes wrong.

    As Del Boy says – He who dares…..

  • Huw Davies

    Reply Reply 28th November 2016

    Hi Alan,

    I don't mind at all. You can open an account in minutes. If you fund your account before 5pm, you'll be able to use that money the following day.
    Once I had credited the account, there were a few 'pre-funding' opportunities within 2-3 days. If you're unfamiliar, you basically state how much you're comfortable funding a particular project. You can make a blanket rule like £500 on all, or go into each upcoming project and state £200 for one or £1,000 for another. Once the loan goes live, which they inform you of the day before, they allocate the funding bottom up. Meaning, if you stated £50 for a loan, you're likely to have the full funding given. If you stated £10,000 you might only be given £5,000.
    If you rely solely on pre-funding, then it might take several weeks to use up £20k. Especially if you only want to allocate £250-£500 per loan.
    However, they also have a facility to buy and sell loans. If investors want to extract their capital sum and sell off their loan, they can simply put it up for sale. As an investor, you can buy parts of the loan that are for sale. These can range from £10 to £20,000+. You don't receive less yield, or have to pay an extra fee or anything. It's very simple.

    I've adopted both methods above, and I'm nearly 70% of the way through my funds in 2 weeks. If you're at your computer most of the day, you're at an advantage to pick up the loans for sale. They come and go relatively quickly. I must confess that I haven't been looking at it religiously, so I could have used up my allocation within a week with more dedication.

    I invest in loans as low as £50 if they're available, and up to £500 to ensure there's a good spread.

    I made a goal in 2016 to buy a property, but two people contacted me and gave strong arguments to why it might not work for me. Both of which had several properties. One of them put me towards Saving stream, so I committed to investing in it once I had filled my £15,240 ISA allocation. I like the idea of leveraging money from the bank, but I don't like the work element of it. Like you say, you're still likely to earn a slightly better yield owning property, not to mention the potential for capital gains over time, which you don't get with SS. But there are a few things that I prefer with SS:

    1. I like that I can invest £100-£400 rather than a lump sum for a deposit. I believe this makes it easier for me to spread the risk out.
    2. The ease of investing at home, and not having to be concerned about the condition/welfare of the property.
    3. The passive nature combined with the excellent yield. Like you mention above, you can pay to make it more passive, but SS will still involve less work overall, whilst maintaining a competitive %.

    As I mentioned in the post above. I had a friend that I trust tell me about his experiences owning multiple properties, and his experience of investing in SS for nearly 3 years. He said he would move all of his money into SS and out of the housing market if he could due to the reasons above. I was strongly influenced by his opinion.
    I had another friend who owns a bunch of properties bring the same concerns to the table, so that's why I've given it a go.

    There's no right answer, I think you're likely to earn more money in property itself, and you're likely to spend a lot less time doing something like Saving Stream. Money vs Less Faff.

    If you do end up giving SS a go, feel free to contact me direct and I'll happily answer any other questions you have on it.

    🙂 He who dares…

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