Financial direction/advice
Discussion
Morning All,
Avid reader of the forums, but not really posted anything before, but there seems to be plenty of knowledgeable folk here, so I thought this a good place to ask my questions (and I have a love of cars!).
I'll describe my situation and see if anyone has any advice on ways to make my money work better for me.
I'm 27 and a full time employee. My salary is around the 40k mark. Single, no dependants etc.
I pay the max that my employer will match into my pension (6%), currently sat at circa £16k.
I also pay the maximum I can into the company share scheme, I currently have £12k in there, but obviously I can't do anything with this for 5 years from paying in, so 2 years essentially until I start getting access to this money. My plan was to every 6 months or so take a chunk of the available shares out, sell them and diversify by re-investing them in my ISA elsewhere (more on this later).
I own my own house, the house is worth circa 170k, I have 23 years left on the mortgage, owing just over £102k. My re-payment is £550 a month, but I tend to overpay by a smidgen, my current payment is £600 a month.
Other than the mortgage, I have no other debt.
I have £7000 tied up in a 2 year fixed rate cash ISA, this will become available in the next couple of months.
I have £5000 in a generic savings account not really doing anything.
I hold a stocks and shares ISA with The Share Centre. Not really convinced this is the best value for money for my situation (thoughts?). I pay £4.80 a month for the ISA, and then a 1% I think it is transaction fee, minumum of £7.50.
In my S&S ISA I have about £6000 invested. I have some in their own "cautious" fund and a chunk in GE shares. The rest is amounts of about £600 in Aviva, Tesla, Taylor Wimpey, and NVidia. I did essentially triple my money on NVidia and have since sold half my share, but I'm not sure thats the way I want to trade going forward, I think I just got lucky. I'd rather regularly invest amounts for income/growth.
I don't want to build up a massive pension/retirement pot, I'd rather have some money to enjoy life, but with a pot there at the end in case I need it. It may sound wrong, but I believe inheritance later on in life should mean that I'm not struggling to live in my older years if that makes sense.
I have thought of trying to save up another deposit for a buy-to-let or re-mortgaging and releasing some money from my current house, but I'm not sure the returns really make it all worthwhile, I may be wrong though and that was just back of a fag packet man maths.
As for motoring, I currently have a cheap old diesel estate I run about in everyday. I have a Defender as the pride and joy and an older classic hidden away awaiting restoration (I'd like the funds to be able to start doing that in a couple of years).
What do people think, how do I make my money work better for me? I'm aware that when my £7k pot becomes available in a couple of months, I won't know what to do with it and it'll sit in a savings account losing money essentially, nor do I really feel I'm in a position to pile that into my restoration project.
Avid reader of the forums, but not really posted anything before, but there seems to be plenty of knowledgeable folk here, so I thought this a good place to ask my questions (and I have a love of cars!).
I'll describe my situation and see if anyone has any advice on ways to make my money work better for me.
I'm 27 and a full time employee. My salary is around the 40k mark. Single, no dependants etc.
I pay the max that my employer will match into my pension (6%), currently sat at circa £16k.
I also pay the maximum I can into the company share scheme, I currently have £12k in there, but obviously I can't do anything with this for 5 years from paying in, so 2 years essentially until I start getting access to this money. My plan was to every 6 months or so take a chunk of the available shares out, sell them and diversify by re-investing them in my ISA elsewhere (more on this later).
I own my own house, the house is worth circa 170k, I have 23 years left on the mortgage, owing just over £102k. My re-payment is £550 a month, but I tend to overpay by a smidgen, my current payment is £600 a month.
Other than the mortgage, I have no other debt.
I have £7000 tied up in a 2 year fixed rate cash ISA, this will become available in the next couple of months.
I have £5000 in a generic savings account not really doing anything.
I hold a stocks and shares ISA with The Share Centre. Not really convinced this is the best value for money for my situation (thoughts?). I pay £4.80 a month for the ISA, and then a 1% I think it is transaction fee, minumum of £7.50.
In my S&S ISA I have about £6000 invested. I have some in their own "cautious" fund and a chunk in GE shares. The rest is amounts of about £600 in Aviva, Tesla, Taylor Wimpey, and NVidia. I did essentially triple my money on NVidia and have since sold half my share, but I'm not sure thats the way I want to trade going forward, I think I just got lucky. I'd rather regularly invest amounts for income/growth.
I don't want to build up a massive pension/retirement pot, I'd rather have some money to enjoy life, but with a pot there at the end in case I need it. It may sound wrong, but I believe inheritance later on in life should mean that I'm not struggling to live in my older years if that makes sense.
I have thought of trying to save up another deposit for a buy-to-let or re-mortgaging and releasing some money from my current house, but I'm not sure the returns really make it all worthwhile, I may be wrong though and that was just back of a fag packet man maths.
As for motoring, I currently have a cheap old diesel estate I run about in everyday. I have a Defender as the pride and joy and an older classic hidden away awaiting restoration (I'd like the funds to be able to start doing that in a couple of years).
What do people think, how do I make my money work better for me? I'm aware that when my £7k pot becomes available in a couple of months, I won't know what to do with it and it'll sit in a savings account losing money essentially, nor do I really feel I'm in a position to pile that into my restoration project.
Edited by ajr23 on Sunday 12th March 10:25
Edited by ajr23 on Sunday 12th March 10:27
Sounds to me like you are doing a great job of managing your money as it is - that's a pretty balanced approach for someone in their 20's.
I'm not sure how qualified I am to give advice seeing as you appear to be much more organised than I am, but perhaps try to look at the relative risks your approach and develop a strategy of what percentage to have in low/med/high risk investment and keep tuning your approach to this.
I'm not sure how qualified I am to give advice seeing as you appear to be much more organised than I am, but perhaps try to look at the relative risks your approach and develop a strategy of what percentage to have in low/med/high risk investment and keep tuning your approach to this.
My only thought would be that you could make the money do a bit more work. £5k is a good amount to have in cash (get it to three months' net salary IMO but don't let it get much higher than that) but I'd be thinking two things - firstly, once you've got cash reserves to a level you're happy with start overpaying a bit more into the mortgage; and secondly, increase your investment risk a little bit. What you're in at the moment are good and sturdy companies but returns will be unspectacular.
It's probably worth trying to find an IFA in your area to discuss what your objectives are and work out the best way to get to them.
In terms of a new car there's nothing "wrong" with finance so long as you take everything into account. People have a go at me for running a manky old car but even the extra costs of maintaining it (about £1k over servicing in the last 12 months) are way below what I'd have to pay to finance something equivalent. Your sums may differ, and there is of course the whole "I have a new car" thing.
It's probably worth trying to find an IFA in your area to discuss what your objectives are and work out the best way to get to them.
In terms of a new car there's nothing "wrong" with finance so long as you take everything into account. People have a go at me for running a manky old car but even the extra costs of maintaining it (about £1k over servicing in the last 12 months) are way below what I'd have to pay to finance something equivalent. Your sums may differ, and there is of course the whole "I have a new car" thing.
All sounds good. Maybe a bit of diversification may be prudent as it sounds like the bulk of your personal wealth is tied to the stock market. A BTL is probably best left until you have a sizeable deposit as you don't come across as a risk taker. Pension seems OK as a last resort, maybe I'd add a little more just to hedge against parents going doolally and spending your inheritance. If you like your parents then ultimately you are going to prefer that they spend their wealth on later life care than suffer so as you can have some.
Depending on what your classic is then there is rationale in a bit of man maths to invest in that to increase its value and to benefit from the pleasure of it?
Depending on what your classic is then there is rationale in a bit of man maths to invest in that to increase its value and to benefit from the pleasure of it?
It sounds miserable of me to say this, but you don't have £12k in your company share scheme. You have £0. Nothing. Nada.
Until it vests, it's utterly worthless.
I expected mine to pay off the mortgage and buying a Ferrari. By the time they started to vest and I could start cashing in, I got £7k total.
Don't work for promises. Take the cash every time.
Anyway, it sounds like you're fairly well set, but don't count your chickens...
Until it vests, it's utterly worthless.
I expected mine to pay off the mortgage and buying a Ferrari. By the time they started to vest and I could start cashing in, I got £7k total.
Don't work for promises. Take the cash every time.
Anyway, it sounds like you're fairly well set, but don't count your chickens...
TartanPaint said:
It sounds miserable of me to say this, but you don't have £12k in your company share scheme. You have £0. Nothing. Nada.
Until it vests, it's utterly worthless.
I expected mine to pay off the mortgage and buying a Ferrari. By the time they started to vest and I could start cashing in, I got £7k total.
Don't work for promises. Take the cash every time.
Anyway, it sounds like you're fairly well set, but don't count your chickens...
What an absolutely ridiculous post.Until it vests, it's utterly worthless.
I expected mine to pay off the mortgage and buying a Ferrari. By the time they started to vest and I could start cashing in, I got £7k total.
Don't work for promises. Take the cash every time.
Anyway, it sounds like you're fairly well set, but don't count your chickens...
So take cash and sit on it in a bank account whilst not beating inflation? Yeah great plan!
ajr23 said:
I have 23 years left on the mortgage, owing just over £102k. My re-payment is £550 a month
So about 3.8% interest?ajr23 said:
I have £7000 tied up in a 2 year fixed rate cash ISA, this will become available in the next couple of months.
What rate's it been paying? ajr23 said:
I have a Defender as the pride and joy and an older classic hidden away awaiting restoration (I'd like the funds to be able to start doing that in a couple of years).
...I'm aware that when my £7k pot becomes available in a couple of months, I won't know what to do with it and it'll sit in a savings account losing money essentially, nor do I really feel I'm in a position to pile that into my restoration project.
Why on earth not? <shrug>...I'm aware that when my £7k pot becomes available in a couple of months, I won't know what to do with it and it'll sit in a savings account losing money essentially, nor do I really feel I'm in a position to pile that into my restoration project.
If you really don't want to, then pay off some more of your mortgage. Paying that extra £50/mo takes about three years off your mortgage. Pay the £7k in, and continue paying that £600/mo in, and you'll clear that mortgage two more years sooner. Each year of mortgage payments you cut is £6,600 saved - and that's at current, very low rates. Switch your mortgage to one with better rates, but keep paying the same, and just watch that mortgage-free date rocket forward.
p1stonhead said:
What an absolutely ridiculous post.
So take cash and sit on it in a bank account whilst not beating inflation? Yeah great plan!
Why would you do that? Why not stick it on an index tracker, instead of betting on one horse. Just because you work for them, doesn't mean they can beat the market.So take cash and sit on it in a bank account whilst not beating inflation? Yeah great plan!
TartanPaint said:
p1stonhead said:
What an absolutely ridiculous post.
So take cash and sit on it in a bank account whilst not beating inflation? Yeah great plan!
Why would you do that? Why not stick it on an index tracker, instead of betting on one horse. Just because you work for them, doesn't mean they can beat the market.So take cash and sit on it in a bank account whilst not beating inflation? Yeah great plan!
But if the company is doing well, no harm to put a bit in there if you think its a good bet same as any company.
Edited by p1stonhead on Monday 13th March 08:55
p1stonhead said:
TartanPaint said:
It sounds miserable of me to say this, but you don't have £12k in your company share scheme. You have £0. Nothing. Nada.
Until it vests, it's utterly worthless.
I expected mine to pay off the mortgage and buying a Ferrari. By the time they started to vest and I could start cashing in, I got £7k total.
Don't work for promises. Take the cash every time.
Anyway, it sounds like you're fairly well set, but don't count your chickens...
What an absolutely ridiculous post.Until it vests, it's utterly worthless.
I expected mine to pay off the mortgage and buying a Ferrari. By the time they started to vest and I could start cashing in, I got £7k total.
Don't work for promises. Take the cash every time.
Anyway, it sounds like you're fairly well set, but don't count your chickens...
So take cash and sit on it in a bank account whilst not beating inflation? Yeah great plan!
Companies pay people in stock because it is free for them to do so. It's a cost paid by the dilution of the shareholders. The rewards are usually subject to a lock in period and it is usually best to cash in at every available opportunity and place those funds in a more diverse and secure investment plan. Doing so also removes leverage over you from the employer.
If it is a scheme where you have no access/control until you retire, leave or are disposed of then it would certainly be wise to not assume there will be sufficient at the end for your needs.
Your £5k cash not really doing anything can still earn a few percent if spread around it's worth doing rather than say earning nothing. The £7k needs some thought as that's probably earnt very little in a cash ISA some into the S&S ISA some into the classic car? And what's with cautious funds? How much do they make per year? Your young nows the time to take a little bit more risk be cautious when your old.
Sounds like your doing well though. I'm like you on the finance for cars I know far too many people in negative equity on their cars or tied into deals they don't want to be in.
Sounds like your doing well though. I'm like you on the finance for cars I know far too many people in negative equity on their cars or tied into deals they don't want to be in.
If the share scheme is anything like the one my at my sisters company then its a great option.
From memory, she puts in money tax free each month and after a few years has an option to buy at a 20% discount based on the price at the start. At this point she could also choose to withdraw the cash instead.
The upside is potentially great and the risk minimal, its a cracking opportunity (and has done very well for her)
From memory, she puts in money tax free each month and after a few years has an option to buy at a 20% discount based on the price at the start. At this point she could also choose to withdraw the cash instead.
The upside is potentially great and the risk minimal, its a cracking opportunity (and has done very well for her)
Thank you all, I wrote this before going off the week to America and have come back to some good things to think about!!
My classic is a 1978 Series 3 LWB Safari Land Rover; I am starting to lean the way of starting to invest in that… Although prices haven’t really risen much, especially like the early series 1’s, being a rarer LWB, it will inevitably see its value rise, especially being all complete and original. To be honest, I want it to be something for me to enjoy and trundle around the lake district in on weekends, rather than seeing it as an investment. I would plan on keeping it for a very very long time.
Pay in upto £150 a month (which I do), for every share that you buy, the company matches upto £75 a month.
The company also pays us an annual bonus of around £500 in shares.
The shares which I have bought (£150) are available at any time but will get taxed and will also forfeit the matching shares. However after 5 years, these bought and matching shares are free to withdraw free of tax. Dividends paid are available free of tax after 3 years.
I do not want to just sit on it for years and years as I feel that much invested in one company is a bit silly, especially as I can sell the shares tax free after 5 years and also take the free matched £75 each month.
So about 3.8% interest?3.5%. I took a 5 year fix 2 and a half years ago. I’ve done the maths and theres nothing in it for me to switch now. I could save a couple of hundred after fees etc. which just isn’t worth the hassle.
Actually, I’ve just before writing this raised my overpayment to £100 a month, so now paying £650 per month.
I have also been reading whilst on the plane etc. the last few days, a book someone mentioned on another thread “millionaire teacher”, and that has given me a great insight into investing in index funds etc. and something I am keen to go down the route of.
Again, thanks for all the input. Appreciate the kind words about being organised for my age!! I just feel like I’ve been very lucky to have support from parents and such to get on the property ladder and now in a relatively well paying job, I’d like to just get everything settled so I can start enjoying cars and things!
DonkeyApple said:
All sounds good. Maybe a bit of diversification may be prudent as it sounds like the bulk of your personal wealth is tied to the stock market. A BTL is probably best left until you have a sizeable deposit as you don't come across as a risk taker. Pension seems OK as a last resort, maybe I'd add a little more just to hedge against parents going doolally and spending your inheritance. If you like your parents then ultimately you are going to prefer that they spend their wealth on later life care than suffer so as you can have some.
Depending on what your classic is then there is rationale in a bit of man maths to invest in that to increase its value and to benefit from the pleasure of it?
Completely agree re the parents comment. I would never bank on anything like an inheritance, but realistically after knowing of their financial aims etc. I don’t want a pension pot to be where I’m putting all my money. Depending on what your classic is then there is rationale in a bit of man maths to invest in that to increase its value and to benefit from the pleasure of it?
My classic is a 1978 Series 3 LWB Safari Land Rover; I am starting to lean the way of starting to invest in that… Although prices haven’t really risen much, especially like the early series 1’s, being a rarer LWB, it will inevitably see its value rise, especially being all complete and original. To be honest, I want it to be something for me to enjoy and trundle around the lake district in on weekends, rather than seeing it as an investment. I would plan on keeping it for a very very long time.
DonkeyApple said:
If it is a scheme where you have no access/control until you retire, leave or are disposed of then it would certainly be wise to not assume there will be sufficient at the end for your needs.
The scheme works as such:Pay in upto £150 a month (which I do), for every share that you buy, the company matches upto £75 a month.
The company also pays us an annual bonus of around £500 in shares.
The shares which I have bought (£150) are available at any time but will get taxed and will also forfeit the matching shares. However after 5 years, these bought and matching shares are free to withdraw free of tax. Dividends paid are available free of tax after 3 years.
I do not want to just sit on it for years and years as I feel that much invested in one company is a bit silly, especially as I can sell the shares tax free after 5 years and also take the free matched £75 each month.
TooMany2cvs said:
So about 3.8% interest?
Actually, I’ve just before writing this raised my overpayment to £100 a month, so now paying £650 per month.
I have also been reading whilst on the plane etc. the last few days, a book someone mentioned on another thread “millionaire teacher”, and that has given me a great insight into investing in index funds etc. and something I am keen to go down the route of.
Again, thanks for all the input. Appreciate the kind words about being organised for my age!! I just feel like I’ve been very lucky to have support from parents and such to get on the property ladder and now in a relatively well paying job, I’d like to just get everything settled so I can start enjoying cars and things!
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