What to do with £40K / general financial advice
Discussion
A while ago I posted up a similar thread asking for some input and guidance into my financial situation, and got some really sound feedback. And so hopefully I'm back looking for some more...
In short summary:
I'm 35 and single, no dependents and I can't see this changing in the interim
Salary of £56K
Mortgage of £76K on a property worth maybe £130-140K
Personal loan of £13K / £166 per month
No other debt, commitments, PCP/leases etc
Pension pot of just under £20K (crap, I know)
Outgoings are minimal - the picture shows the fixed outgoings, obviously there's some discretional stuff too
Currently overpaying mortgage by £150 a month as part of the £522. Payments otherwise would be £372
It's really only over the last six months or so I started to get my act together with my spending. Broadband has been cancelled in favour of tethering my phone etc. The spreadsheet is a small extract from one I keep where I log every penny in and out. Anal, I know, but it keeps me on the straight and narrow mostly.
I've a small boat which I was about to sell just before lockdown which scuppered things but hopefully as of July I'll be able to broker it. I should raise £25-27K on this after brokerage fees.
I've also £15K in a stocks and shares ISA spread across multiple index trackers (USA, FTSE, Emerging markets etc). I only put this in around six weeks ago and it's doing well enough.
Anyhow, once the boat goes and including the ISA, so hopefully by August or so I'll have £40K+ but not sure how's best to use it.
I'm thinking I should clear the loan leaving me with still the best part of £30K and put the rest into a pension given how crap my pot is at the moment.
Or pay another £30K off the house leaving me with only a £46K mortgage. There'll be a penalty for overpaying the 10% allowance of course.
Aside to this, I’m sticking £400-500 a month excluding tax relief into my SIPP, and the rest into the stocks and shares ISA (hence the £15K already in there).
Thoughts welcome and appreciated.
In short summary:
I'm 35 and single, no dependents and I can't see this changing in the interim
Salary of £56K
Mortgage of £76K on a property worth maybe £130-140K
Personal loan of £13K / £166 per month
No other debt, commitments, PCP/leases etc
Pension pot of just under £20K (crap, I know)
Outgoings are minimal - the picture shows the fixed outgoings, obviously there's some discretional stuff too
Currently overpaying mortgage by £150 a month as part of the £522. Payments otherwise would be £372
It's really only over the last six months or so I started to get my act together with my spending. Broadband has been cancelled in favour of tethering my phone etc. The spreadsheet is a small extract from one I keep where I log every penny in and out. Anal, I know, but it keeps me on the straight and narrow mostly.
I've a small boat which I was about to sell just before lockdown which scuppered things but hopefully as of July I'll be able to broker it. I should raise £25-27K on this after brokerage fees.
I've also £15K in a stocks and shares ISA spread across multiple index trackers (USA, FTSE, Emerging markets etc). I only put this in around six weeks ago and it's doing well enough.
Anyhow, once the boat goes and including the ISA, so hopefully by August or so I'll have £40K+ but not sure how's best to use it.
I'm thinking I should clear the loan leaving me with still the best part of £30K and put the rest into a pension given how crap my pot is at the moment.
Or pay another £30K off the house leaving me with only a £46K mortgage. There'll be a penalty for overpaying the 10% allowance of course.
Aside to this, I’m sticking £400-500 a month excluding tax relief into my SIPP, and the rest into the stocks and shares ISA (hence the £15K already in there).
Thoughts welcome and appreciated.
FilH said:
Saving / investing for what tho?
Me id spunk the lot on something like a Nissan GTR.
Probably not the advice you were after, but this site is called pistonheads .
I don't really have a purpose for the savings or investments. Other than not wanting to live off just the state pension.Me id spunk the lot on something like a Nissan GTR.
Probably not the advice you were after, but this site is called pistonheads .
As much as I'm tired of riding around in a 12 year old supermini I'm not going to blow £40K on a car.
I'd rather stick the money into a nicer property. Christ I must be getting old.
I’m the same age as you and had a similar salary until redundancy. Boooo
Anyway.
My pension is a bit less than yours. If I were you I would put a bit into that but, this is just my families experience, don’t put all your eggs into pensions. My dad had one and it lost 70% of what he put in. You may have a better one.
Loan would be first to me. Either pay it off or see if you can get some credit card deal. Eg Sainsburys were doing a 0% cash transfer 0% for 28 months. I maxed it out to the tune of £7k into my bank account then transferred it to my 2 year olds account making 4.5%. Once it gets to the end of the 0% I will pay off the debt and my son can keep the profit. You do have to make sure you make the minimum payments with this.
You could pay your loan this way and invest the cash you have somewhere else. Bit more risky plus juggling stuff around but it’s an option.
Not sure if you have done stocks and shares ISA this year but can put in £20k. Any profit you make is tax free.
Do you plan on kids?
If you do start saving now. Don’t be a Scrooge life is short don’t forget but use this time to bank something and make a bit of profit if you can.
We have one with another one coming. Expensive. Even with our 2 good incomes coming in the hit was bigger than we had planned for.
I looked at paying some of our mortgage off but it wasn’t massively worth it. We are overpaying a bit anyway and keeping a years worth of mortgage payments in the account just incase.
I’m in no ways a financial advisor these are just some ideas I had.
Anyway.
My pension is a bit less than yours. If I were you I would put a bit into that but, this is just my families experience, don’t put all your eggs into pensions. My dad had one and it lost 70% of what he put in. You may have a better one.
Loan would be first to me. Either pay it off or see if you can get some credit card deal. Eg Sainsburys were doing a 0% cash transfer 0% for 28 months. I maxed it out to the tune of £7k into my bank account then transferred it to my 2 year olds account making 4.5%. Once it gets to the end of the 0% I will pay off the debt and my son can keep the profit. You do have to make sure you make the minimum payments with this.
You could pay your loan this way and invest the cash you have somewhere else. Bit more risky plus juggling stuff around but it’s an option.
Not sure if you have done stocks and shares ISA this year but can put in £20k. Any profit you make is tax free.
Do you plan on kids?
If you do start saving now. Don’t be a Scrooge life is short don’t forget but use this time to bank something and make a bit of profit if you can.
We have one with another one coming. Expensive. Even with our 2 good incomes coming in the hit was bigger than we had planned for.
I looked at paying some of our mortgage off but it wasn’t massively worth it. We are overpaying a bit anyway and keeping a years worth of mortgage payments in the account just incase.
I’m in no ways a financial advisor these are just some ideas I had.
Pay off thr loan.
You've got cash thst is earning how much in the bank?
And then take tax off that.
In thr meantime you are paying interest on a loan you don't have to.
As for the rest, they always say put into your pension early doors. Is thst your priority? Or woukd toy like to live some before you pursue that?
Me, I'd pay off debts. Loans and mortgage.
Put some I to a longer term (tax efficient) savings.
But also look to enjoy some whilst you have your health. You're a long time dead.....
You've got cash thst is earning how much in the bank?
And then take tax off that.
In thr meantime you are paying interest on a loan you don't have to.
As for the rest, they always say put into your pension early doors. Is thst your priority? Or woukd toy like to live some before you pursue that?
Me, I'd pay off debts. Loans and mortgage.
Put some I to a longer term (tax efficient) savings.
But also look to enjoy some whilst you have your health. You're a long time dead.....
Thanks for the replies.
I don't think I'm likely to have kids and I'm not sure I'm wanting them, so that's not a consideration in terms of planning.
I've a work's pension - I think a combined contribution is 5% - but I've only been there a year so it's not worth much. The £20K is sat in a SIPP. I know what you mean about pensions and the risk. They're only as good as the market at the time you look to draw on them. I feel for anyone who was just about ready to do this recently.
I definitely won't be sticking my eggs in one basket for this reason despite it being very tax effecient as a result of tax relief. Instead I'll be putting some in my pension and some in a stocks and shares ISA.
I've no cash in the bank. All my spare cash has now gone into a stocks and shares ISA. The returns have been pretty good. All of the below was invested within the last six weeks or so in the hope everything had bottomed out. Can't help but think sticking £40K in there for a year or two might see the best returns.
I'd love a toy but that's what I've got now with the boat, albeit not a typical PH toy. But toys invariably cost money to run and depreciate.
I think another toy would leave me with near instant regret in light of having a s
t pension etc. I'm not in dire financial straights at all - many I'm sure would be very glad to be in my shoes - but it's come about that any big financial spends leave me with feelings of guilt and recklessness.
Returns on the money invested since March, start point was zero:
I don't think I'm likely to have kids and I'm not sure I'm wanting them, so that's not a consideration in terms of planning.
I've a work's pension - I think a combined contribution is 5% - but I've only been there a year so it's not worth much. The £20K is sat in a SIPP. I know what you mean about pensions and the risk. They're only as good as the market at the time you look to draw on them. I feel for anyone who was just about ready to do this recently.
I definitely won't be sticking my eggs in one basket for this reason despite it being very tax effecient as a result of tax relief. Instead I'll be putting some in my pension and some in a stocks and shares ISA.
I've no cash in the bank. All my spare cash has now gone into a stocks and shares ISA. The returns have been pretty good. All of the below was invested within the last six weeks or so in the hope everything had bottomed out. Can't help but think sticking £40K in there for a year or two might see the best returns.
I'd love a toy but that's what I've got now with the boat, albeit not a typical PH toy. But toys invariably cost money to run and depreciate.
I think another toy would leave me with near instant regret in light of having a s
t pension etc. I'm not in dire financial straights at all - many I'm sure would be very glad to be in my shoes - but it's come about that any big financial spends leave me with feelings of guilt and recklessness.Returns on the money invested since March, start point was zero:
What do you want? What interests you?
when we were fortunate enough position to have spare money, we bought this, the 'forever home'. It was in need of complete renovation and I like doing that sort of thing. Over a year later and we're still living downstairs....misses hasn't left me yet
when we were fortunate enough position to have spare money, we bought this, the 'forever home'. It was in need of complete renovation and I like doing that sort of thing. Over a year later and we're still living downstairs....misses hasn't left me yet
mcg_ said:
What do you want? What interests you?
when we were fortunate enough position to have spare money, we bought this, the 'forever home'. It was in need of complete renovation and I like doing that sort of thing. Over a year later and we're still living downstairs....misses hasn't left me yet
I'm still love cars and only sold my last hot hatch to free up some cash and that's pretty much everything that's sat in the stocks and shares ISA. I've never had anything extravagent, only newish small hot hatches, but I spose they had a dual purpose. I do up to 20K miles a year so needed something half decent. I'm still in 12 year old Yaris, albeit in decent nick, but it's bloody awful.when we were fortunate enough position to have spare money, we bought this, the 'forever home'. It was in need of complete renovation and I like doing that sort of thing. Over a year later and we're still living downstairs....misses hasn't left me yet
I'm really interested in making a house a proper home. Mine's a new-ish build terrace but do fancy something much older that I could start from scratch on. I really like some of the interior / design websites I've seen posted on other threads showing other properties and how they're done up. I do want to sell up and take out a larger mortgage - maybe an extra £40K - to enable this.
Other than that, travel, but that gets hard at my age and when you're single when most mates are married etc, so ended up doing a solo trip to the ring last year again and drove down to Chamonix for a group hiking trip in the mountains.
thenortherner said:
Thanks for the replies.
I don't think I'm likely to have kids and I'm not sure I'm wanting them, so that's not a consideration in terms of planning.
I've a work's pension - I think a combined contribution is 5% - but I've only been there a year so it's not worth much. The £20K is sat in a SIPP. I know what you mean about pensions and the risk. They're only as good as the market at the time you look to draw on them. I feel for anyone who was just about ready to do this recently.
I definitely won't be sticking my eggs in one basket for this reason despite it being very tax effecient as a result of tax relief. Instead I'll be putting some in my pension and some in a stocks and shares ISA.
I've no cash in the bank. All my spare cash has now gone into a stocks and shares ISA. The returns have been pretty good. All of the below was invested within the last six weeks or so in the hope everything had bottomed out. Can't help but think sticking £40K in there for a year or two might see the best returns.
I'd love a toy but that's what I've got now with the boat, albeit not a typical PH toy. But toys invariably cost money to run and depreciate.
I think another toy would leave me with near instant regret in light of having a st pension etc. I'm not in dire financial straights at all - many I'm sure would be very glad to be in my shoes - but it's come about that any big financial spends leave me with feelings of guilt and recklessness.
Returns on the money invested since March, start point was zero:
I don't think I'm likely to have kids and I'm not sure I'm wanting them, so that's not a consideration in terms of planning.
I've a work's pension - I think a combined contribution is 5% - but I've only been there a year so it's not worth much. The £20K is sat in a SIPP. I know what you mean about pensions and the risk. They're only as good as the market at the time you look to draw on them. I feel for anyone who was just about ready to do this recently.
I definitely won't be sticking my eggs in one basket for this reason despite it being very tax effecient as a result of tax relief. Instead I'll be putting some in my pension and some in a stocks and shares ISA.
I've no cash in the bank. All my spare cash has now gone into a stocks and shares ISA. The returns have been pretty good. All of the below was invested within the last six weeks or so in the hope everything had bottomed out. Can't help but think sticking £40K in there for a year or two might see the best returns.
I'd love a toy but that's what I've got now with the boat, albeit not a typical PH toy. But toys invariably cost money to run and depreciate.
I think another toy would leave me with near instant regret in light of having a s
t pension etc. I'm not in dire financial straights at all - many I'm sure would be very glad to be in my shoes - but it's come about that any big financial spends leave me with feelings of guilt and recklessness.Returns on the money invested since March, start point was zero:
Chuck some into AIM firms,this is since 14/04 btw,was higher but bought few speculative lol
It seems your in a decent position and young enough to really make the disposable income work for you.
I would be considering trying to buy a larger house once the dust settles, and if prices fall significantly due to recession/covid then definitely worth exploring. Assuming your career is secure.
I would only contribute to pension schemes where your employer matches or contributes personally or as part of tax planning once you got a bigger mortgage sorted.
Stocks and shares ISA a good idea, more so again if markets fall again in near term.
Don't make mistake of giving half to a future ex missus and you will do well into retirement!
PS. Absolutely don't pay 10% penalty for mortgage overpayment, clearing your loan would be better.
I would be considering trying to buy a larger house once the dust settles, and if prices fall significantly due to recession/covid then definitely worth exploring. Assuming your career is secure.
I would only contribute to pension schemes where your employer matches or contributes personally or as part of tax planning once you got a bigger mortgage sorted.
Stocks and shares ISA a good idea, more so again if markets fall again in near term.
Don't make mistake of giving half to a future ex missus and you will do well into retirement!
PS. Absolutely don't pay 10% penalty for mortgage overpayment, clearing your loan would be better.
Edited by vindaloo79 on Wednesday 13th May 01:19
Well I'm a lot older than you so I'm going to apply some hindsight. May or may not apply to your lifestyle.
Interest rates are very low, and I've never seen a time where I'm so confident about where interest rates are going, which is nowhere. In 1988 I saw them go from 8% to 13%. Can you imagine? It ain't gonna happen now. So I'd keep the mortgage, it costs you very little.
How happy are you with the house for your medium term needs? You do have the opportunity to trade up. On the other hand, if you meet someone it'll be a house you both choose, which is different from a house you choose on your own. Depends where you see your future.
I would start to build that pension, but not using the £40k. Because you earn £56k, your paying some 40% tax which is a fool's game when you have disposable income. All your earnings over the 20% band (about £47k without looking it up) can be put in your company pension plan where you pay 0%. I do like to pay 0% instead of £40%. Better than that if your company runs a salary sacrifice scheme. Where you invest this money inside the pension scheme is a whole other discussion, but it's lovely to see big numbers build up, because that's your money to spent on fun and games later.
If you fancy a car, why not buy one, because money can be spent as well as saved. But new cars are money down the drain, and they last so long these days anyway. I spent £10k on a BMW 325 convertible, 50k miles and 9 years old. Looks and runs like new.....but whatever floats your boat.
If there's any left I'd be buying investment funds, but not just yet. Cash for the next six months or so.
Interest rates are very low, and I've never seen a time where I'm so confident about where interest rates are going, which is nowhere. In 1988 I saw them go from 8% to 13%. Can you imagine? It ain't gonna happen now. So I'd keep the mortgage, it costs you very little.
How happy are you with the house for your medium term needs? You do have the opportunity to trade up. On the other hand, if you meet someone it'll be a house you both choose, which is different from a house you choose on your own. Depends where you see your future.
I would start to build that pension, but not using the £40k. Because you earn £56k, your paying some 40% tax which is a fool's game when you have disposable income. All your earnings over the 20% band (about £47k without looking it up) can be put in your company pension plan where you pay 0%. I do like to pay 0% instead of £40%. Better than that if your company runs a salary sacrifice scheme. Where you invest this money inside the pension scheme is a whole other discussion, but it's lovely to see big numbers build up, because that's your money to spent on fun and games later.
If you fancy a car, why not buy one, because money can be spent as well as saved. But new cars are money down the drain, and they last so long these days anyway. I spent £10k on a BMW 325 convertible, 50k miles and 9 years old. Looks and runs like new.....but whatever floats your boat.
If there's any left I'd be buying investment funds, but not just yet. Cash for the next six months or so.
Ignore all that boring shiiite above. That's for bores and geography teachers. You ain't a geography teacher, right? There are two things you need in life, for sustainance, enjoyment, pleasure in life, fun. Houses ain't it. Jerking over low interest rates ain't it.
What you need, my pedigree chum, is coke and hookers.
What you need, my pedigree chum, is coke and hookers.
Get your loans to as cheap as possible as said above. Interest free cards etc. If not then maybe reduce it a little. I would look at how much interest you are forecast to pay over the term. As borrowing is cheap at the moment but obviously any investment has to outperform the interest on the loan.
If this house is for ever then no need to think about changing.
Personally I wouldn't overpay your mortgage in a lump sum as it isn't that much. I would get use it in a stocks and shares isa.
Let that money accumulate and then maybe use that to finish off your mortgage in the distant future.
I wouldn't lock the money down in your Pension either, just incase you need it. You may need it for wedding,kids etc. I would consider salary sacrifice as above.
If this house is for ever then no need to think about changing.
Personally I wouldn't overpay your mortgage in a lump sum as it isn't that much. I would get use it in a stocks and shares isa.
Let that money accumulate and then maybe use that to finish off your mortgage in the distant future.
I wouldn't lock the money down in your Pension either, just incase you need it. You may need it for wedding,kids etc. I would consider salary sacrifice as above.
thenortherner said:
Mortgage of £76K on a property worth maybe £130-140K
Not sure what property prices are like in your area, but you must be low down on the property ladder.As others have said house borrowing is crazy cheap at the moment, am about to apply for an additional £200k borrowing to do a major renovation on our house. That's a crazy amount to borrow but the TOTAL amount of interest been charged over 15 years assuming I don't do any over payments is only about £20k, that's about £40k LESS than the effect of inflation at 2% on £200k. So it's as close to 'free' money as you can get.
Clearly though you might be at a point in your life you don't care about house or even need to move up the ladder. But if your job is secure and you even have a tiny wish to upgrade your living spaces now is the time to do it!!!
Interest rates on mortgages have to go up at some point, inflation has to go up at some point with all the money printing the government is doing, so now is the time to grab a crazy cheap fixed deal mortgage before reality catches up with the financial world!
Edited by gangzoom on Wednesday 13th May 06:47
thenortherner said:
I'm really interested in making a house a proper home.
Cars are nice but the most any us spends driving a day is a few hours. You are in your home for longer than anywhere else, forget new builds and get some where with a good plot and you wouldn't regret it.This is view I now relax too at home, I would say its 'priceless' but there is a very clear price I pay, though thank to crazy low interest rates that price is actually surprisingly manageable
.
I wouldn't do anything just yet to tie that money up.
The next 6-12 moths are likely to be very, very turbulent.
You have till April next year to invest into an ISA, so no rush.
Mortgage payments are so low that another 12 months interest is not going to break the bank.
The loan, that might be something I would *consider* paying off... but again perhaps might wait a few months.
As for moving up the property ladder, if you are happy with where you are I would stay put. Having a low cost of living property in times like this could be a very good thing.
Then, in a year or so when the dust is settling you might be able to put that money to better use - if the markets are down etc.
Its all what ifs though. The market might rocket (housing and stocks) for all we know.
The next 6-12 moths are likely to be very, very turbulent.
You have till April next year to invest into an ISA, so no rush.
Mortgage payments are so low that another 12 months interest is not going to break the bank.
The loan, that might be something I would *consider* paying off... but again perhaps might wait a few months.
As for moving up the property ladder, if you are happy with where you are I would stay put. Having a low cost of living property in times like this could be a very good thing.
Then, in a year or so when the dust is settling you might be able to put that money to better use - if the markets are down etc.
Its all what ifs though. The market might rocket (housing and stocks) for all we know.
Thin White Duke said:
Personally I'd clear as much debt as possible. The loan and as much on your mortgage as you can.
Given the economy is about to st the bed I would also be doing this. Pay off any loans early (if you can) and throw the rest at the mortgage. Once the mortgage is cleared, look at savings/investments/pension.red_slr said:
I wouldn't do anything just yet to tie that money up.
The next 6-12 moths are likely to be very, very turbulent.
You have till April next year to invest into an ISA, so no rush.
Mortgage payments are so low that another 12 months interest is not going to break the bank.
The loan, that might be something I would *consider* paying off... but again perhaps might wait a few months.
As for moving up the property ladder, if you are happy with where you are I would stay put. Having a low cost of living property in times like this could be a very good thing.
Then, in a year or so when the dust is settling you might be able to put that money to better use - if the markets are down etc.
Its all what ifs though. The market might rocket (housing and stocks) for all we know.
If this is the case I'd chuck it into premium bonds whilst you ride this out, see how secure your job is etc. Secure and a chance of winning, leaving all sorts of options open later in the year.The next 6-12 moths are likely to be very, very turbulent.
You have till April next year to invest into an ISA, so no rush.
Mortgage payments are so low that another 12 months interest is not going to break the bank.
The loan, that might be something I would *consider* paying off... but again perhaps might wait a few months.
As for moving up the property ladder, if you are happy with where you are I would stay put. Having a low cost of living property in times like this could be a very good thing.
Then, in a year or so when the dust is settling you might be able to put that money to better use - if the markets are down etc.
Its all what ifs though. The market might rocket (housing and stocks) for all we know.
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