Needing an IFA or just a good Google?

[romeogolf]

My partner and I recently bought a house and in the next few months I'm moving to a new job. We're both in our mid-late 20s (he's 25, I'm 28) and it's starting to raise the prospect of "are we planning correctly?"

I can easily give a brief summary of our financial situation here, but I'm not sure if this is the kind of thing that a good Google search or a post on a forum like this can answer for us, or if we really need to sit down with a professional. We don't know what our goals would be or should be, or if we need to make changes from our current situation.

How did you decide on your current financial plans? If you're of our parent's generation (born in the 60s) what advice would you give to us now?

Can post details here if relevant, but don't want this to come across as willy-waving for the sake of it.

[Craikeybaby]

I'm a few years older than you (mid thirties), once I had bought my house my next priority was getting a pension set up. It is better to start is earlier. I also started a rainy day fund, to cope with any work that needed done to the house.

[romeogolf]

Craikeybaby said:

I'm a few years older than you (mid thirties), once I had bought my house my next priority was getting a pension set up. It is better to start is earlier. I also started a rainy day fund, to cope with any work that needed done to the house.

Thanks. Yeah, we both have pensions with 5% of salary being contributed monthly and matched by our respective employers. He started his earlier this year, but mine's been open for 3 years now.

[Craikeybaby]

The rule of thumb I used for pension contributions was that total contributions should be 1/2 of your age when you started the pension. I started mine at 28, so contribute 6% to my employers 8%.

[PhilboSE]

It does depend on how much spare income you have available for investment. ISA and pension contribution allowances are very generous (£20k p.a. for ISAs now) so most people don't need to look beyond those vehicles. ISAs give you the tax-free benefit when you take the money out, pensions give you the tax-free benefit on the way in. A professional IFA should be able to help you judge how to use them to your best advantage depending on your circumstances but tbh it's really not that hard to self-educate and form your own conclusion.

Beyond these wrappers there are more esoteric things like offshore bonds which can give you significant tax advantages particularly if you have young children, due to some special events you can use to bring the growth back on shore.

Deciding on a balanced portfolio and where/how much to invest is also another area where an IFA can advise, but again it is possible to self-educate on these things and there are lots of online resources that can completely replace an IFA. For example, the Hargreaves Lansdown list of their Wealth 150 funds is a reasonable place to starting looking.

IFAs can hold your hand and shortcut the process of getting you set up. However, my advice would be to be very careful of entering into an arrangement with an IFA where they get paid a % of your investment funds every year - find some you can "pay as you go". And don't go NEAR a B2B platform that insists on having an intermediary IFA.

[jonny70]

romeogolf said:

My partner and I recently bought a house and in the next few months I'm moving to a new job. We're both in our mid-late 20s (he's 25, I'm 28) and it's starting to raise the prospect of "are we planning correctly?"

I can easily give a brief summary of our financial situation here, but I'm not sure if this is the kind of thing that a good Google search or a post on a forum like this can answer for us, or if we really need to sit down with a professional. We don't know what our goals would be or should be, or if we need to make changes from our current situation.

How did you decide on your current financial plans? If you're of our parent's generation (born in the 60s) what advice would you give to us now?

Can post details here if relevant, but don't want this to come across as willy-waving for the sake of it.

I would post the details here ( and you will get advice from financial advisors / financially astute members ( it's not willy waving other members have their financials when asking for advice and it's forum where there's plenty of people with 100k + cars )

Plenty members on here are knowledgable in all aspects of personal finance from BTL's (IFA's don't tend to give advice in btl ) to pensions etc
Ask away ...

[mikeiow]

Peruse moneysavingexpert - handy forum for many things financial
Basics: ensure you are living within your income.
Craikey is right on the pension rule of thumb advice (another echoed by Martin Lewis on MSE!)
Don't necessarily over-insure.....we all came into this world with nothing, we probably leave with it.....
Try to start one or two little savings plans somewhere (stock-based, given your age) - those can be 'treat funds' for a bit later in life ;-)
DO make sure you live for today as well as plan for tomorrow.....don't waste cash on expensive coffee & cake, etc - that is where the money fritters away.
Take up cheap fun things you can both enjoy eg, camping, baking, walking, cycling etc....so far as we know*, we only pass through this place once, don't waste it ;-)

Choose life. As Trainspotting put it

• your belief system may disagree with that, but proving it is impossible!

[romeogolf]

jonny70 said:

I would post the details here ( and you will get advice from financial advisors / financially astute members ( it's not willy waving other members have their financials when asking for advice and it's forum where there's plenty of people with 100k + cars )

Plenty members on here are knowledgable in all aspects of personal finance from BTL's (IFA's don't tend to give advice in btl ) to pensions etc
Ask away ...

Cheers... We do alright for our ages but you're right that there's obviously a broad spectrum here so hopefully this is seen as factual rather than boastful.

So we've got a combined income of £71,500 which is just under £4000/month after tax, student loans and pension contributions. We also rent out a room in the house and get £450/month from that.

The mortgage is £1150/month and then with various other bits and pieces like 2 x phone contracts (£77/month combined), a joint gym membership (£64), and the payment on the car (£410) and all other bills we've got just over £2100 disposable. We cleared out our savings to buy our home and currently have £250 in the savings account after having it redecorated.

I own two BTL flats with my brother on an agreed 50-50 basis - although they are both in my name entirely the initial deposit was an inheritance we both received. Approx LTV of 65% across the two. The smaller one was a 50% mortgage on a 14-year repayment, the bigger one is a 75% mortgage on interest-only. I had stty advice in the past (and perhaps a lack of advice, too) and fixed this larger one for 5 years at a stupid rate of 3.94%. Ideally, I'd like to reduce the LTV across them both to 50% when the 5 years are up in December 2020 through an increase in values and a moderate mortgage increase on the smaller flat. At the same time, would like to have both on repayment mortgages. At the moment, total mortgage payments are about £940 with rental income of £1650. The £700 seems to get eaten quickly by repairs, but they're not currently making a loss so I'm not too worried. At some point in the next 3-5 years I expect my brother might want to sell one of these to release a deposit for him to buy his own home as he currently rents, but he's a little nomadic and moves around a lot which is part of the reason we bought the second flat rather than him 'settling'.

The "what do we want" and "what we need to plan for" list is, in rough priority order...

> New living room furniture [by December this year] - £5k?
> New Kitchen [In 2018] - £10k?
> 2 x new bathrooms [By end of 2019] - £xx?
> PCP on car ends in September 2019. Will need a replacement whether new or used.
...
> Have a 3-month slush fund saved in case of emergencies. Other half is tempted to go freelance and this would help. He is currently the main earner but I'm slowly closing the gap.
...
> Get married and not have to scrimp on the costs / One of us will actually need to ask first, but it's gonna happen!
...
> Retire in our 60s without worrying about cash flow

So, yeah, any pointers or words of wisdom for two apparent adults who still feel like 16-year-olds would be great.

[Teebs]

With those committed outgoings, I would start to build up a good savings/emergency pot asap. £250 won't get you very far.

[romeogolf]

Teebs said:

With those committed outgoings, I would start to build up a good savings/emergency pot asap. £250 won't get you very far.

Yes, this is definitely something we're heading for. Before we bought the house we'd saved around £20k so we know it's feasible, it just takes time.

[jonny70]

romeogolf said:

Cheers... We do alright for our ages but you're right that there's obviously a broad spectrum here so hopefully this is seen as factual rather than boastful.

So we've got a combined income of £71,500 which is just under £4000/month after tax, student loans and pension contributions. We also rent out a room in the house and get £450/month from that.

The mortgage is £1150/month and then with various other bits and pieces like 2 x phone contracts (£77/month combined), a joint gym membership (£64), and the payment on the car (£410) and all other bills we've got just over £2100 disposable. We cleared out our savings to buy our home and currently have £250 in the savings account after having it redecorated.

I own two BTL flats with my brother on an agreed 50-50 basis - although they are both in my name entirely the initial deposit was an inheritance we both received. Approx LTV of 65% across the two. The smaller one was a 50% mortgage on a 14-year repayment, the bigger one is a 75% mortgage on interest-only. I had stty advice in the past (and perhaps a lack of advice, too) and fixed this larger one for 5 years at a stupid rate of 3.94%. Ideally, I'd like to reduce the LTV across them both to 50% when the 5 years are up in December 2020 through an increase in values and a moderate mortgage increase on the smaller flat. At the same time, would like to have both on repayment mortgages. At the moment, total mortgage payments are about £940 with rental income of £1650. The £700 seems to get eaten quickly by repairs, but they're not currently making a loss so I'm not too worried. At some point in the next 3-5 years I expect my brother might want to sell one of these to release a deposit for him to buy his own home as he currently rents, but he's a little nomadic and moves around a lot which is part of the reason we bought the second flat rather than him 'settling'.

The "what do we want" and "what we need to plan for" list is, in rough priority order...

> New living room furniture [by December this year] - £5k?
> New Kitchen [In 2018] - £10k?
> 2 x new bathrooms [By end of 2019] - £xx?
> PCP on car ends in September 2019. Will need a replacement whether new or used.
...
> Have a 3-month slush fund saved in case of emergencies. Other half is tempted to go freelance and this would help. He is currently the main earner but I'm slowly closing the gap.
...
> Get married and not have to scrimp on the costs / One of us will actually need to ask first, but it's gonna happen!
...
> Retire in our 60s without worrying about cash flow

So, yeah, any pointers or words of wisdom for two apparent adults who still feel like 16-year-olds would be great.

You never mentioned your pension contributions, make sure you match/take maximum benefit from your work pension .

Think I recall you mentioned on another thread that you bought your house with a 5% deposit , personally I would pay this down to 10 % maybe even 20% by the time you remortgage (if possible , will massively reduce your outgoings )

Your outgoings are just over 2k a month get 3-6 months (ideally the latter)outgoings saved up as an emergency fund for the unexpected (esp if ur partner wants to go freelance )

I would also look to save some money each month into a stocks ands shares isa as a long term investment (start small £50 a month till u get the hang of it and then increase to what u can afford ) . One can build a nice tax free nest egg and if you pick decent funds they can average 8-10% over the long term ( exNeil Woodford over his career has averaged 11% a year over 30 years ) have a look on Hargreaves lansdown website

Have you looked at how the new BTL taxes will affect your profabilty ( rental income added to your salary and if you fall in the 40% bracket it may no longer be profitable )

[Teebs]

jonny70 said:

You never mentioned your pension contributions, make sure you match/take maximum benefit from your work pension .

Think I recall you mentioned on another thread that you bought your house with a 5% deposit , personally I would pay this down to 10 % maybe even 20% by the time you remortgage (if possible , will massively reduce your outgoings )

Your outgoings are just over 2k a month get 3-6 months (ideally the latter)outgoings saved up as an emergency fund for the unexpected (esp if ur partner wants to go freelance )

I would also look to save some money each month into a stocks ands shares isa as a long term investment (start small £50 a month till u get the hang of it and then increase to what u can afford ) . One can build a nice tax free nest egg and if you pick decent funds they can average 8-10% over the long term ( exNeil Woodford over his career has averaged 11% a year over 30 years ) have a look on Hargreaves lansdown website

Have you looked at how the new BTL taxes will affect your profabilty ( rental income added to your salary and if you fall in the 40% bracket it may no longer be profitable )

Good advice, I use the Santander S&S ISA platform and it's pretty good.

[romeogolf]

Thanks for the advice so far guys. Other half and I sat down at the weekend to look at replies and options available to us.

We've increased our mortgage payment by £100/month to start paying it down. This will reduce it to 90% LTV by the end of year 2 assuming a 3% increase in the property value.

I'm looking at putting £50/month into an S&S ISA although the sheer scope of options is baffling. I am concerned about the fact that with this option you could lose everything. How "real" is this risk? As in, if I'm cautious with my options, is it particularly likely? Or would that be hugely unlucky?

We round our salaries down to the nearest £100 each month and put this sum into our joint account (holding back the balance for our own treats). We've set up a standing order to another bank account for 10% of the joint fund contributions (£425/month) to build a slush fund over the next two years.

The PCP on my car is 4.9% APR. Is it worth making some overpayments here, or just leaving it to run to the end of the term? Final payment is about £10,500 in Sept 2019 and I only put a £1500 deposit down to start with so the payments are higher than they "need" to be, but I'm not sure if the overpayment would save enough to balance out not having as much of a slush fund.