How much disposable income are you comfortable investing?

[orangesrule]

Interesting thread. I'm in a similar position at 28. Current salary is 35k, but I quite often earn over 50k. I spread my earnings as follows:

£300 VLS60 isa
£150 Company share scheme
£280ish (9.5%) of salary in pension (employer contribution 8%)
£200 regular savings
I then try to save £500 in a standard savings account, and occasionally bleed some savings off to premium bonds - I do often wonder i should put more into my ISA! In fact I might start putting 500 into VLS and 300 into standard savings.

I own my house mortgage free, but in the coming 18months hoping to upsize, so trying to no lock away lots of cash.

[mx stu]

OP - You sound very similar to where I was when I was 24 (about 14 years ago).... I brought my first house when I was 21/22 and by 23/24 was at the point where I was 'comfortable' saving about £1k a month. I was also saving for a pension with a relatively healthy 13% per annum employer contribution.

With hindsight I can say the best thing I did was save in to cash (ISA then a regular saver) and share save schemes (Halifax share builder comes to mind... if that still exists) as fast forward to 26 we had our first child, then a second one came along when I was 28. Having the cash buffer mean't that we didn't have to worry too much when my wife (we married between children) decided to give up work and stay at home with the kids and also mean't that we were able to upgrade when the house became too small for the four of us.

Priorities change when kids come along and my view on saving has changed quite a bit. My wife is back at work and the kids are at school but whilst we do save month to month, it regularly gets depleted through holidays, weekends away, days out, over-indulgent Christmases & birthdays etc. At the end of the day they're only young once and give it 8-10 years and we'll have a boring quiet, house and plenty of savings.

[supercommuter]

95JO said:

Simpo Two said:

Excellent, carry on I always headed for high-mileage prestige... fun to drive a 3-year old XJ6 that cost less than your client's new Vauxhall!

Good taste! I’m primarily eyeing up a manual M2 however I can’t seem to shake the want for a manual 997 CS...

Just get it... stay savvy, pay your mortgage off, save for the future by loading up your pension and make sure you have plenty of disposable still - but enjoy yourself.

I am late twenties and like you was a higher rate tax payer very early in my 20's and saved, tucked loads away. I have only just started spending and wish i had purchased what i wanted earlier on. Dont look so cool in a convertible now with the remaining strands of my hair blowing out

[95JO]

supercommuter said:

95JO said:

Simpo Two said:

Excellent, carry on I always headed for high-mileage prestige... fun to drive a 3-year old XJ6 that cost less than your client's new Vauxhall!

Good taste! I’m primarily eyeing up a manual M2 however I can’t seem to shake the want for a manual 997 CS...

Just get it... stay savvy, pay your mortgage off, save for the future by loading up your pension and make sure you have plenty of disposable still - but enjoy yourself.

I am late twenties and like you was a higher rate tax payer very early in my 20's and saved, tucked loads away. I have only just started spending and wish i had purchased what i wanted earlier on. Dont look so cool in a convertible now with the remaining strands of my hair blowing out

Thanks for the push in the right direction

But don’t worry, I won’t hesitate to do a buy once I can get in to one without any finance whilst maintaining the rainy day fund, I suspect it’ll be this time next year!

Plus I’m still not bored of my M235i, yet

[95JO]

orangesrule said:

Interesting thread. I'm in a similar position at 28. Current salary is 35k, but I quite often earn over 50k. I spread my earnings as follows:

£300 VLS60 isa
£150 Company share scheme
£280ish (9.5%) of salary in pension (employer contribution 8%)
£200 regular savings
I then try to save £500 in a standard savings account, and occasionally bleed some savings off to premium bonds - I do often wonder i should put more into my ISA! In fact I might start putting 500 into VLS and 300 into standard savings.

I own my house mortgage free, but in the coming 18months hoping to upsize, so trying to no lock away lots of cash.

Sounds like a need to step my game up! Nice work paying off your mortgage so quickly, impressive

[VR99]

I am mainly in cash right now as saving for a property deposit. Hence why I continue to drive a shed.
Due to saving for a deposit am quite conservative in the amount I invest ..around 5% of my monthly take-home pay into a VLS 100...last time I checked it was 30% up but you have to accept that the 100 could swing down a long way if there was a significant market correction. However in it for the long game so , happy to take on some risk.
Rest of my cash is languishing in low int accounts

[red_slr]

95JO said:

Sounds like a need to step my game up! Nice work paying off your mortgage so quickly, impressive

Could have been gifted or inherited or maybe had a huge deposit. I would say its unusual for someone at 28 to be mortgage free via straight overpayments using "traditional" type LTVs. Bravo though either way.

[pb8g09]

I’m 28 and have been a high rate tax payer for the last 4 and a half years.

I can’t manage to put away more than £500 a month. Scratching my head why. Missus isn’t exactly a career focussed individual which combined with a big mortgage means I can only dream of having these dilemmas!

[95JO]

pb8g09 said:

I’m 28 and have been a high rate tax payer for the last 4 and a half years.

I can’t manage to put away more than £500 a month. Scratching my head why. Missus isn’t exactly a career focussed individual which combined with a big mortgage means I can only dream of having these dilemmas!

I suppose I'm luckily in that my OH is even more frugal/career focussed than me - She earns a decent wage ~£31k and we split bills on a percentage basis (63% / 37%)... She did say when she gets promoted she may drop to 4 days a week! She's only 21! I was looking forward to a mini pay rise as the percentages would've changed dramatically - Oh well, guess I'll have to go part-time myself

Edited by 95JO on Wednesday 22 January 10:10

[95JO]

red_slr said:

Could have been gifted or inherited or maybe had a huge deposit. I would say its unusual for someone at 28 to be mortgage free via straight overpayments using "traditional" type LTVs. Bravo though either way.

True, I just didn't want to assume!

A former colleague took out a 10 year mortgage, albeit on a £140k property but he was only earning £28k at the time and had no partner, so it's definitely do-able, especially if HRT.

[pb8g09]

95JO said:

I suppose I'm luckily in that my OH is even more frugal/career focussed than me - She earns a decent wage ~£31k and we split bills on a percentage basis (63% / 37%)... She did say when she gets promoted she may drop to 4 days a week! She's only 21! I was looking forward to a mini pay rise as the percentages would've changed dramatically - Oh well, guess I'll have to go part-time myself

Edited by 95JO on Wednesday 22 January 10:10

Yup ours is 67:33 so sounds like we are on relatively similar money. You’re obviously in a much more sensibly priced part of the country to me! Trying to convince the other half to move north....!

[VR99]

pb8g09 said:

I’m 28 and have been a high rate tax payer for the last 4 and a half years.

I can’t manage to put away more than £500 a month. Scratching my head why. Missus isn’t exactly a career focussed individual which combined with a big mortgage means I can only dream of having these dilemmas!

Be grateful you have a mortgage! Actually not sure if grateful is the right word lol but you are on the ladder at 28 which is great.
I splurged a lot of my earnings during my 20's on holidays, cars, clothes and nights out.. generally poor money management and I'm the polar opposite now and boring but sometimes you have to do what you gotta do!

[95JO]

pb8g09 said:

Yup ours is 67:33 so sounds like we are on relatively similar money. You’re obviously in a much more sensibly priced part of the country to me! Trying to convince the other half to move north....!

Such a PH approach, I like it. I had to talk her round to it at first, but once she realised she benefits from it the most she was sold

Yeah, we live on the border of Widnes/Warrington (NW) where new build 4 bedroom detached houses are sub £300k - Best of luck with the convincing!

[orangesrule]

red_slr said:

95JO said:

Sounds like a need to step my game up! Nice work paying off your mortgage so quickly, impressive

Could have been gifted or inherited or maybe had a huge deposit. I would say its unusual for someone at 28 to be mortgage free via straight overpayments using "traditional" type LTVs. Bravo though either way.

Thanks gents, it was a combination of some gifts and hard work. I had 90k mortgage on a 168k 3 bed semi. Work happened to be super busy over the 4 year term, i worked away a lot too which massively reduced monthly expenditure. So maxed my overpayments and managed to clear the balance when I was out of contract.

[95JO]

anonymous said:

[redacted]

It is something I'm considering, even if it's just £300 a month or so, it would knock 8 years off our term.

But, I'd have to convince the OH to get on board though...

[roger.mellie]

95JO said:

... But on the flip side, I know that I can easily sell my funds and withdraw from the S&S ISA wrapper whenever I want to, of course it may be subject to market volatility but still... It's definitely a psychological thing. Not to mention all of my money is sat in a Santander 123 account paying a measly 1.5%, soon to be 1% when I know from experience funds can provide multiples of that.

Market volatility is the reason this is usually not recommended. Investments are usually fine for long term savings with planned withdrawal dates where you can de-risk as the date gets closer. Using them to cover potential emergency or other unplanned spending risks cashing out on a downturn. e.g. especially likely if the emergency is a job loss due to a recession.

95JO said:

Basically, how much of your disposable income are you comfortable investing?

Any money I don't plan to touch for at least 5 years goes into either my pension, ISA or a mortgage overpayment. With interest rates so low I see no reason to keep cash for anything other than my emergency fund and savings for larger expenses that I can't pay out of one month's disposable like a car or holiday. Typically that means paying a lump sum every few months into either my S&S ISA or mortgage rather than setting up regular contributions. The pension is through my employer and I also overpay into it.

I agree with the comment above too on mortgage overpayments. If you're in your "for life" home, have a low interest rate and a good LTV then investments arguably make more sense than overpayments. But if you plan to move to a more expensive house at some point then it may tilt the goal posts more favourably towards building up equity. It's why I do a bit of both.

[JulianPH]

roger.mellie said:

95JO said:

... But on the flip side, I know that I can easily sell my funds and withdraw from the S&S ISA wrapper whenever I want to, of course it may be subject to market volatility but still... It's definitely a psychological thing. Not to mention all of my money is sat in a Santander 123 account paying a measly 1.5%, soon to be 1% when I know from experience funds can provide multiples of that.

Market volatility is the reason this is usually not recommended. Investments are usually fine for long term savings with planned withdrawal dates where you can de-risk as the date gets closer. Using them to cover potential emergency or other unplanned spending risks cashing out on a downturn. e.g. especially likely if the emergency is a job loss due to a recession.

95JO said:

Basically, how much of your disposable income are you comfortable investing?

Any money I don't plan to touch for at least 5 years goes into either my pension, ISA or a mortgage overpayment. With interest rates so low I see no reason to keep cash for anything other than my emergency fund and savings for larger expenses that I can't pay out of one month's disposable like a car or holiday. Typically that means paying a lump sum every few months into either my S&S ISA or mortgage rather than setting up regular contributions. The pension is through my employer and I also overpay into it.

I agree with the comment above too on mortgage overpayments. If you're in your "for life" home, have a low interest rate and a good LTV then investments arguably make more sense than overpayments. But if you plan to move to a more expensive house at some point then it may tilt the goal posts more favourably towards building up equity. It's why I do a bit of both.

Good post. Have I seen you on the telly?

[95JO]

roger.mellie said:

Market volatility is the reason this is usually not recommended. Investments are usually fine for long term savings with planned withdrawal dates where you can de-risk as the date gets closer. Using them to cover potential emergency or other unplanned spending risks cashing out on a downturn. e.g. especially likely if the emergency is a job loss due to a recession.

Indeed. As mentioned in my OP I have an emergency fund and my job is secure.

The revised plan is to go ahead with £500pm in LS100 and the remaining disposable income will go into my Santander 123 to save for regular "events" (annual car insurance/tax/service, holidays and savings for a new car).

roger.mellie said:

Any money I don't plan to touch for at least 5 years goes into either my pension, ISA or a mortgage overpayment. With interest rates so low I see no reason to keep cash for anything other than my emergency fund and savings for larger expenses that I can't pay out of one month's disposable like a car or holiday. Typically that means paying a lump sum every few months into either my S&S ISA or mortgage rather than setting up regular contributions. The pension is through my employer and I also overpay into it.

I agree with the comment above too on mortgage overpayments. If you're in your "for life" home, have a low interest rate and a good LTV then investments arguably make more sense than overpayments. But if you plan to move to a more expensive house at some point then it may tilt the goal posts more favourably towards building up equity. It's why I do a bit of both.

It's not my "for life" home, but I can't see any reason why we'd look to move for 10-20 years. No plans for kids, and even if we did we've got the space... The only thing I'd look for in a potential new home is more land! So, yeah I'm in no real rush to overpay. I think the best thing to do is to wait until our remortgage date (4.5 years) and keep the payments roughly the same/up them slightly to reduce the term.

[roger.mellie]

JulianPH said:

Good post. Have I seen you on the telly?

Thanks. My pseudonym is probably the last person on Earth I’d ask for financial advice