What to do with c£1k/month

[Dave.]

I was going to put this in the Intelligent Money thread, but that seems to be for, well, intelligent people.

My Premium Bonds are full, we have minimal outgoings per month and need somewhere to stash my cash rather than leaving it in my current account.

My original plan was to open a Marcus account, but 1.5% isn't a great deal, even in the 5th year of putting a grand a month in will only earn £900 interest. On £60k that's pretty wk.

I don't currently have an ISA but again, returns are minimal, unless I go for a S&S ISA.

I'm upping my pension contribution to the maximum my company will match so hopefully that will give me something later on in life.

Approaching 40 if that helps, no kids, bit of mortgage left, about £100k, would be nice to get rid of that ASAP, although we're overpaying as much as we can each year as it is.

What to do? Vanguard S&S ISA?

[Mazinbrum]

Why just pay in the amount to your pension that your employer will match ? I would have thought it makes sense to pay in as much as you can up to your allowance to make the most of the tax relief available (and possibly NI depending on how your employer deducts it).

[davek_964]

This is a site about cars. If you have £1k a month spare, you don't own enough / the right cars.

[mikeiow]

Mazinbrum said:

Why just pay in the amount to your pension that your employer will match ? I would have thought it makes sense to pay in as much as you can up to your allowance to make the most of the tax relief available (and possibly NI depending on how your employer deducts it).

This is decent advice.

Good old MSE generally suggests paying half your age in % terms to your pension....so if 40, pay in 20% (incl company match).
Ours only matches to 6% each, so I would need to put in an extra 8% at your age. If you haven’t been popping that % in to date, you may want to ramp up a bit, esp. if you are a high rate tax payer....that government extra tax relief is valuable free money not to be sniffed at.

Of course your pension is only accessible at 57 (I think?)....

....so if you still have disposable £££, and can’t thing of a ludicrous car to splash it on (this is PH, after all!), then I would have a S&S ISA as well. Vanguard is a low cost option, or go with an Intelligent Money option one (read that sticky thread!). IMHO, of course (#NotFinancialAdvice!)

That can be drawn on at any time: for example, to help provide income before any main pensions or State pension kick in.

(wish someone had told me that when I was 40!!)

[Dave.]

davek_964 said:

This is a site about cars. If you have £1k a month spare, you don't own enough / the right cars.

4 at the minute, just finished having the usual done on the MX5, the others have fresh MoTs and recent services.... Even my bank account let out a sigh of relief....

[Dave.]

Cheers chaps.

Still a low rate tax payer, and I can dip into the current work pension at 55 (25% lump). I have another pension from a previous employer, latest statement says they'll be giving me £250 a month. (Not bad to say I've not paid I to it for 15-20yrs and left shortly after it started.)

I'll do some sums tonight and work out what I'll have in the pot in 15yrs to see what that 25% would/could be.

Thank again.

[Gulf7]

Getting the maximum ER contribution is a no-brainer, but you also need to make sure you're paying enough in.

There's a rule of thumb I've read which says:

Take the age you start your pension and halve it. Then put this % of your pre-tax salary into your pension each year until you retire.

This is a useful calculator to work out what you might get when you retire:

https://www.moneyadviceservice.org.uk/en/tools/pen...

[mikeiow]

Gulf7 said:

Getting the maximum ER contribution is a no-brainer, but you also need to make sure you're paying enough in.

There's a rule of thumb I've read which says:

Take the age you start your pension and halve it. Then put this % of your pre-tax salary into your pension each year until you retire.

This is a useful calculator to work out what you might get when you retire:

https://www.moneyadviceservice.org.uk/en/tools/pen...

Yup....that was what I said - from MSE https://www.moneysavingexpert.com/savings/discount...

Have to say that I did NOT do that, but thanks (I suspect) to some good years recently, I'm not doing too badly. But do formulate a plan (via S&S ISA, I would suggest....or build a business you know you can sell!) to gain the FU money for potential use before the pensions kick in!!

[JulianPH]

Dave. said:

I was going to put this in the Intelligent Money thread, but that seems to be for, well, intelligent people.

You would have been more than welcome to post on the IM thread!

At first glance I would say at your age a S&S ISA or mortgage overpayments (assuming there was no penalty).

Or a combination of the two!

[KTF]

I had a similar situation. What I did was:

1. Up the contributions to the company pension to the max matched amount.
2. Overpay the mortgage (I had unlimited overpayments) to get rid of it.
3. Make use of the various interest paying current accounts.
4. Open various regular savers paying 5%+ (not so few of them now).
5. Put 'some' cash in an instant access account once the options for 3 and 4 have been exhausted as an emergency fund.
6. Put the rest in a S&S ISA (or cash ISA if you are not comfortable with the 'risk' aspect).
7. AVC to the pension if you are happy to not see the money again until you retire.

[NickCQ]

Dave. said:

Vanguard S&S ISA

Hard to beat.
Figure out how long you won't need the money for (5 years, 30 years?) and choose a LifeStrategy fund with an appropriate equity weighting to your risk tolerance.

[caziques]

Sometimes investing in capital projects can provide very favourable tax free returns.

ie Photovoltaics, an EV, or perhaps a hot water heat pump.

If a capital project returns say 10%, then it must be worth considering.

[Jasey_]

You say "We" when talking about some things and "I" when talking about others.

If the "We" is a wife then you should consider maxing out pension facilities for her.

She will almost certainly outlive you and you will want to ensure she is catered for once you've blown all your pension cash on cars etc .

[Dave.]

Her PBs are full too, self-employed all her life, zero pension, but she's an only child and her folks have enough to see her through. So she's sorted in that respect. Plus I have life insurance through work, and I'm her biggest expense so she'll be better off when I'm dead....

[tighnamara]

Dave. said:

Her PBs are full too, self-employed all her life, zero pension, but she's an only child and her folks have enough to see her through. So she's sorted in that respect. Plus I have life insurance through work, and I'm her biggest expense so she'll be better off when I'm dead....

S&S ISA based on what risk profile you need, granted there is a risk but if you are looking for long term it would be worth looking at.
Money would still be available to access at short term if required.

Maybe worth a chat to the IM guys to help you make the decision.

[Dave.]

Current thinking after all the replies here is as much as I can comfortably into my pension, and anything leftover into a low to medium risk ISA.

Thanks for the insight chaps, very much appreciated.

[NickCQ]

Dave. said:

her folks have enough to see her through. So she's sorted in that respect:

Hate to be a downer but has she done the maths on what might get eaten up by care home costs and IHT as well as what age she will be inheriting at?

If your FIL is Bernie Ecclestone then ignore the above and I apologise

[greygoose]

NickCQ said:

Dave. said:

her folks have enough to see her through. So she's sorted in that respect:

Hate to be a downer but has she done the maths on what might get eaten up by care home costs and IHT as well as what age she will be inheriting at?

If your FIL is Bernie Ecclestone then ignore the above and I apologise

Indeed, my dad was well into retirement before he saw any inheritance.

[Dave.]

Good point, obviously that's a complete unknown & neither of them are business tycoons, but i have no real idea of their worth.

[princeperch]

I'd recommend having a kid - you can have a right laugh with them and they also are more than happy to soak up any excess liquidity you might have.