What savings/investment product do I want?
Discussion
Having recently turned 30, I have decided to sort my finances out.
Summary of current circumstances:
35k salary
DB pension (currently estimated at £30k pa)
Own house with mortgage (£100k mortgage, £120k house value, fixed for 2 more years at 2%)
No savings
No debts
Mrs works part time (£10k pa - With the rest of her personal allowance transferred to me under marriage allowance). She has just set up a workplace pension, but contributions are minimal. We have a child and are not planning on having any more
I'm looking to put £100-200 a month into something long term - 15/20 years or so. Given the security (famous last words) of my pension, I am open to higher risk options.
Is a stocks and shares ISA my best option? I don't want to actively do anything, bar set up a direct debit and receive a letter once a year telling me how much is there, or has been lost, as the case may be.
I can pay more into either of our pensions, with additional voluntary contributions, but I would like the option to give my child the money should he need it when buying a house etc.
We are looking to move house in the next few years, but this won't be to anything extravagant. However, would a regular payment leaving my account affect what mortgage I could get? Ideally it needs to be something I can stop paying onto for 6 months or so to pass any affordability tests if so.
Thanks in advance for any thoughts, and no, I would not like any magic beans, unless they grow petrol.
Summary of current circumstances:
35k salary
DB pension (currently estimated at £30k pa)
Own house with mortgage (£100k mortgage, £120k house value, fixed for 2 more years at 2%)
No savings
No debts
Mrs works part time (£10k pa - With the rest of her personal allowance transferred to me under marriage allowance). She has just set up a workplace pension, but contributions are minimal. We have a child and are not planning on having any more
I'm looking to put £100-200 a month into something long term - 15/20 years or so. Given the security (famous last words) of my pension, I am open to higher risk options.
Is a stocks and shares ISA my best option? I don't want to actively do anything, bar set up a direct debit and receive a letter once a year telling me how much is there, or has been lost, as the case may be.
I can pay more into either of our pensions, with additional voluntary contributions, but I would like the option to give my child the money should he need it when buying a house etc.
We are looking to move house in the next few years, but this won't be to anything extravagant. However, would a regular payment leaving my account affect what mortgage I could get? Ideally it needs to be something I can stop paying onto for 6 months or so to pass any affordability tests if so.
Thanks in advance for any thoughts, and no, I would not like any magic beans, unless they grow petrol.
Drip feeding £100-200 into a S&S isa over 10-20 years should provide you with a nice nest egg providing you choose a few diversified funds and the fund managers don't make a complete balls up. It's what I do and I think over the past few years between them they have managed to average 10% or so some go up more than others some have better years than others but I'm ok with a steady 10% a year.
Simpo Two said:
BoRED S2upid said:
I'm ok with a steady 10% a year.
As indeed we all would be! Industry received wisdom dictates you must be running high risk to turn in 10%...Longer tern 10%pa would be fantastic!
Please note the MAX defined pension you can get is 2/3rds of your final salary so if you had done 40years service now and we're retiring your pension would be £23,333pa. If you take the 25% tax free lump sum your pension would decrease.
For you to get £30k now after 40 years service you'd have to earn £45k.
The main question though is what is your goal?
Is this your forever home?
If you paid it all into the mortgage in 10 years youd have paid off an additional £25k which along with your usual mortgage payments might mean you'd only owe £50k at the age of 40 and therefore mortgage free well before 45years old is a real opportunity.
That is an emotional threshold - "f
k you money" position so to speak ie you could walk out of work
For you to get £30k now after 40 years service you'd have to earn £45k.
The main question though is what is your goal?
Is this your forever home?
If you paid it all into the mortgage in 10 years youd have paid off an additional £25k which along with your usual mortgage payments might mean you'd only owe £50k at the age of 40 and therefore mortgage free well before 45years old is a real opportunity.
That is an emotional threshold - "f
k you money" position so to speak ie you could walk out of workWelshbeef said:
Please note the MAX defined pension you can get is 2/3rds of your final salary so if you had done 40years service now and we're retiring your pension would be £23,333pa. If you take the 25% tax free lump sum your pension would decrease.
For you to get £30k now after 40 years service you'd have to earn £45k.
The main question though is what is your goal?
Is this your forever home?
If you paid it all into the mortgage in 10 years youd have paid off an additional £25k which along with your usual mortgage payments might mean you'd only owe £50k at the age of 40 and therefore mortgage free well before 45years old is a real opportunity.
That is an emotional threshold - "fk you money" position so to speak ie you could walk out of work
It's a CARE scheme, not a final salary. The latest letter I had from them says I have 2 options - 1 is a yearly pension of 33k, 2 is a lump sum of 143000 and a yearly pension of 21000. Unless there are some other rules I'm unaware of? It certainly doesn't imply that in their letters thoughFor you to get £30k now after 40 years service you'd have to earn £45k.
The main question though is what is your goal?
Is this your forever home?
If you paid it all into the mortgage in 10 years youd have paid off an additional £25k which along with your usual mortgage payments might mean you'd only owe £50k at the age of 40 and therefore mortgage free well before 45years old is a real opportunity.
That is an emotional threshold - "f
k you money" position so to speak ie you could walk out of workI don't know what my goal is to be honest, I just think I should do something productive that will benefit us in the future. My current house is definately not a forever home, the next one may well be though. I had connsidered just overpaying my mortgage, but being mortgage free X years earlier didn't really appeal to me as much as having a decent amount of cash in X years instead. If for example I wanted to give my son a deposit for a house, if I'd paid off my own mortgage I'd have to remortgage to give him some, which seems silly.
Defcon5 said:
It's a CARE scheme, not a final salary. The latest letter I had from them says I have 2 options - 1 is a yearly pension of 33k, 2 is a lump sum of 143000 and a yearly pension of 21000. Unless there are some other rules I'm unaware of? It certainly doesn't imply that in their letters though
I don't know what my goal is to be honest, I just think I should do something productive that will benefit us in the future. My current house is definately not a forever home, the next one may well be though. I had connsidered just overpaying my mortgage, but being mortgage free X years earlier didn't really appeal to me as much as having a decent amount of cash in X years instead. If for example I wanted to give my son a deposit for a house, if I'd paid off my own mortgage I'd have to remortgage to give him some, which seems silly.
cAREI don't know what my goal is to be honest, I just think I should do something productive that will benefit us in the future. My current house is definately not a forever home, the next one may well be though. I had connsidered just overpaying my mortgage, but being mortgage free X years earlier didn't really appeal to me as much as having a decent amount of cash in X years instead. If for example I wanted to give my son a deposit for a house, if I'd paid off my own mortgage I'd have to remortgage to give him some, which seems silly.
Is a career average. They calculate it on 1/60th for each years service or 1/80th 1/100th. Only MPs have 1/40th. So as you can see you'd need to be working 60years to get full salary you will not as you'd be 80!
Not sure why they are quoting you £32k now when that's near full salary for pension.
Sharted said:
"PH finance experts were all promoting P2P lending as a 'safe as houses' investment."
Hmmm. As they say, an Ex is a has-been and a Spurt is a drip under pressure.See also BTL. Now taxed within an inch of its life but people still swear it's the best thing since sliced bread.
Defcon5 said:
I'm looking to put £100-200 a month into something long term - 15/20 years or so. Given the security (famous last words) of my pension, I am open to higher risk options.
Is a stocks and shares ISA my best option? I don't want to actively do anything, bar set up a direct debit and receive a letter once a year telling me how much is there, or has been lost, as the case may be.
I'm not qualified to say if it is the best investment for you, but when I finished paying off my student loan a few years ago, I set up a S&S ISA and have been putting the equivalent to what I was paying back into a Vanguard Lifestrategy fund. It was pretty easy to set up, and the money gets taken by direct debit each month. I can check how well it is doing on an app. It is easy to change/stop the monthly payment. It sounds like what you want.Is a stocks and shares ISA my best option? I don't want to actively do anything, bar set up a direct debit and receive a letter once a year telling me how much is there, or has been lost, as the case may be.
If I was doing it again I'd also look at fiveraday, which is run by a PHer.
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