Whats the smart thing to do?

[Mabozza]

Whats the smart thing to do here with £45K?

put it into a savings account eg 4.3% Newcastle Base Rate Tracker account?

or

put it into a pension pot? Currently pay 13K in work pension per year, so in theory £47K short of the max 60k annual allowance



I'm discounting a S&S ISA as Vanguard has only gained +0.38% in 2 years


thanks

[Rob_125]

Assuming you are paye, which tax threshold are you in?

Remember if you earn over 50kish, you'll end up paying an awful lot of tax on interest earned.

I have 20k in s&s isa, 15k in premium bonds (which I will now add to monthly), 2k @4.3% NBC. And there's around 2k float in other nil earning debit accounts.

My aim is to minimise my tax liability.

[bitchstewie]

Mabozza said:

Whats the smart thing to do here with £45K?

put it into a savings account eg 4.3% Newcastle Base Rate Tracker account?

or

put it into a pension pot? Currently pay 13K in work pension per year, so in theory £47K short of the max 60k annual allowance



I'm discounting a S&S ISA as Vanguard has only gained +0.38% in 2 years


thanks

Why would you discount a S&S ISA because of what a particular fund has made in the past two years?

Your pension would have had the same return (excluding fees) if it invested in the same funds.

Return is a function of the investments not whilst pension v ISA is more about the wrapper.

And two years is a very short period to judge an investment.

[Mabozza]

Rob_125 said:

Assuming you are paye, which tax threshold are you in?

yes PAYE and 40% tax bracket

[OutInTheShed]

Whether it's smart to put money into a pension IMHO depends heavily on whether you can imagine wanting the money out before you're allowed to draw a pension.

You might consider whether it's better to sacrifice more of your salary over the next few years and hence save some NI as well as tax?

It's good to put money into a pension, for sure.
But equally it's good to have some accessible savings, should you want to move house, your career 'blips', you decide to invest in a business, need to buy a kidney, take a sabbatical, etc etc etc. Invent your own opportunities and crises.

Depends how old you are, the closer you get to retirement age, the more obvious pension is a good choice.
when you are younger, all sorts of things are possible.

So personally, when I was younger I tried to split between pension, ISA, paying off mortgages, buying boats and motorbikes etc etc.

If you have to kids to invest in, it could be even more complex.

[MaxFromage]

Bear in mind £47K into your pension at higher rate is only £28K net cash if your 40% band is large enough.

[Edible Roadkill]

Lots of variables, how’s your pension pot looking, do you need to boost the pension. How long to pension age. Do you think you’ll need access to the cash before pension age etc

[supersport]

A nice 2 seater. A Boxster would do the trick nicely