How Should I Invest My Money After a House Sale?

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How Should I Invest My Money After a House Sale?
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Selling your property can provide a number of financial opportunities for you (and your family) due to the significant profit that can be made when you handle things correctly. If you sell during the right market conditions, after an extended period where your property has increased in value, there is no doubt that this can provide you with a healthy sum of cash.

But what should you be doing with the money you make from a house sale? Well, if you are keen to invest it in other ways, then there are countless options available for you to do this. Keep in mind that it is highly recommended that you speak to a qualified, independent financial advisor or life planner who can guide you on the best ways to invest – including whether you need to sell your house fast to cash in.

Nevertheless, in the blog below, we’ve outlined some of the most common ways that people choose to invest their money after a house sale in 2023.

Pay off any debts

Debt is one of the unfortunate realities of life in the 21st century – most people accrue debt throughout their life, and this can provide an uncomfortable headache as you struggle to pay it off. Whether is a mortgage on another house; credit card debt; student loans; loans on your car or even personal loans that you’ve taken out – it could be hugely satisfying to pay off some of these debts.

When you pay off your debts with the money you’ve made from a house sale, it prevents you having to continue paying it off on a regular basis for months or years to come. Not only does this ‘free you up’ financially, but it will likely give you a peace of mind that all your affairs are in order.

Continue investing in property

Just because you have made a reasonable sum of money from your last property sale, for some people, this does not mean that the investment needs to stop there. The property market is always an interesting place to invest your money and lots of people make a full-time career out of developing houses and selling them.

Depending on how much money you made from your most recent property sale, after Capital Gains Tax, you may choose to use these funds to ‘do up’ another property you already own which needs some refurbishments or renovations. Alternatively, the money you’ve made could act as a deposit on a new house.

If you do choose to invest in property once again, just be sure that it is the right time to do so. Speak with financial and property experts if you have any questions.

Improve the quality of your retirement

If you have sold your property for a significant profit, the likelihood is that you are in a strong financial position. In this circumstance, some people choose to take advantage of the situation by preparing for an early retirement.

You may choose to dedicate your money towards a holiday for you and your family, or to buy your dream car which you’ve always wanted. Alternatively, the money could go towards health-related considerations, such as taking out life insurance or paying for long-term care.

If your parents are alive and in their later years, then you may wish to use the money to improve their quality of life, too.

How likely am I to make a profit on my house?

Throughout the past five decades, house prices have continued to increase exponentially. This means that most people who has owned a property for a lengthy period of time has seen its value increase – and therefore, when the time comes to sell, it will likely be for a higher amount than it was first bought for.

With that being said, you should always pay attention to market conditions when selecting the right time to sell. If there are lots of buyers on the market, then you will likely receive a higher offer on your house, and are therefore going to make money from it compared with a ‘cold’ market.

You should factor in Capital Gains Tax to any calculations on the profit you might make from your property if the circumstances require you to pay it. However, even in this situation, the right financial advisors may be able to guide you on how to reduce the tax you pay. Some methods of doing this might include offsetting your losses against your profits; making use of the £12,570 tax-free allowance; or delaying the sale of a property.

You should also remember that the profit you make from your property sale may vary according to the type of property it is. For example, there may be varying levels of demand for a modulus home, compared with a post-and-beam constructed home, compared with a ‘regular’ home, and so on.

Whatever the amount of profit you make from your house sale, and however you then choose to invest your money – you should also seek independent, qualified advice before making any major decisions. The right advisors can guide you on where your money is best invested to help you achieve your short and long-term goals.

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