We're at that time of year when we're sent reminders to make the most of the current financial year by topping up our ISA's with their remaining allocation. For 2013-2014, we're given £11,520 to invest in a stocks and shares ISA or £5,760 in a cash ISA and £5,760 in a stocks and shares ISA.
I knew that I hadn't used all of my annual subscription, but I wanted to find out how far I was off it. I have a couple of ISA accounts, so I added my contributions up, and I was £4,745 short.
I now had a decision to make. I'm expecting very little extra income to come in between now on 5th April 2014, so I looked into the possibility of increasing the amount I have in my shares account by taking it from another account. I had just over £11,500 in a cash ISA, which I've been slowly building up to eventually buy a property to rent out. This is one of my Mid-term goals.
Do I take the money?
I thought long and hard about it. My initial aim was to invest in both the cash ISA and the shares ISA, so I could try both forms of investing and balance the risk. I wanted to get closer to £20,000 before investing in property, and I think it would take me 18-24 months before I could get to that point. If I were to continue saving at my current level.
So, I've made the decision that my money is more likely to make me more money, whilst being invested in a dividend growing stock.
I've now transferred £4,745 from my cash ISA into my shares ISA, and I'll be looking to buy shares in 3-4 companies with that extra cash. I will update you on the purchases over the next few days.
I still plan on buying a property to let. I like the diversification, the possibility to earn between 5-10% yield on a large loan, and I like the fact that I can add value to it by decoration/maintenance/upgrading.
There are a couple of things that concern me about the form of investment. The amount of work I'll have to put in being a landlord, which moves away from my desire of 'passive income'. I'm also concerned about paying for the inevitable void periods, especially prolonged void periods.
I've really enjoyed my experience of dividend investing so far. I like the researching element of it, and the fact it's truly passive! Dividend reinvestment will now be my main investment strategy, and in the meantime, I'll gradually build up my pot of cash and eventually buy a property to let. This will become more of a side project for me.
I can't really put my finger on why, but I just feel like I should 'try' property investment. I know it's not an easy thing to 'try', but I want to see what it's like, it has always interested me. Even if I end up buying one property and leaving it at that, that might be enough for me.
How are you getting on with filling your cash ISA allocation? What do you do once you've reached the limit?
Are you investing in shares and property currently? How do you compare the two investment options?
Thanks again for Reading!