Savings Advice

MarkP89
MarkP89 Posts: 3 Newbie
in Savings & investments
New to the forum, so hello!

I'm after some advice on what to do with my savings, I've looked at various options but unsure what would be best to do.

I have a total of £90k spread between premium bonds, ISA and Tesco 3% on £3000 account. I do own a house which has a £157k mortgage and an interest rate of 2.59% fixed until 2021. I can overpay 10% a year.

I'm not sure whether I should be overpaying my mortgage, look at a Buy to Let property or do something else? I'd rather not use all of the money for one thing and possibly look at investing a small amount of the money.

Current income is enough to cover general living costs without touching my savings.

I do have another small amount of savings as an emergency fund, what I don't want to do is restrict myself for the next 20 years, I'm 28 now, I want to be able to enjoy life now and in the future not just look to spend it when I'm in my 50s/60s. I will have inheritance later in life, although I don't want to rely on this or even assume any amounts.

Looking forward to hearing some of your thoughts!

Mark

Comments

  • tiz
    tiz Posts: 107 Forumite
    Loads of options. The first thing people will ask is if you have any sort of retirement savings already? If not it's worth looking at that because you have 30 years to grow it so it will cost you less now than if you wait until later to start. If you don't want to lock it in a pension, you could look at a LISA which lets you access it with a penalty if you really need it before 60.

    The LISA wrapped with an investment, which lets you add £4k a year and you get a 1k govt. bonus would give you a bit of saving towards retirement but still plenty to play with right now.

    Buy to let you'll pay 3% surcharge for stamp duty as you already have one property and then you've got expenses, vacant periods, upkeep etc. plus your cash is locked in a property you can't easily sell. I've got one from 10 years ago, but I don't think I'd get one with the current climate.

    Mortgage v. savings - over paying the mortgage is something to consider if you can't beat the interest rate with your savings/ investments. It's cutting close with interest rate rises, you might be able to beat it soon. Depends how you feel too - if you like knowing your mortgage is shrinking you might still go for that.
  • Audaxer
    Audaxer Posts: 3,506 Forumite
    First Anniversary Name Dropper First Post
    Hi Mark, welcome to the forum. You already have a good amount of savings, but my advice would be to learn about the benefits of investing by reading on this site and sites like Monevator. If you were to invest part of the £90k that you will not need in the short-term, within an S&S ISA and add to it monthly along with a pension you should have accumulated a very sizeable sum when you are in the 50s which will give you options of possibly retiring in your 50s when most of your generation will be working until their late 60s.

    You can still have enough to enjoy life now, but assuming you are not going to blow it all, investing for a period of around 30 years or more should give you a lot more wealth than leaving it in savings. However learn all you can about investment strategies, asset allocations and risk levels etc. before you make any rash decisions.
  • kidmugsy
    kidmugsy Posts: 12,709 Forumite
    First Anniversary Name Dropper First Post Combo Breaker
    Do you contribute enough to a pension to get the max employer contribution? If not that's probably a priority.

    What's your income?
    Free the dunston one next time too.
  • MarkP89
    MarkP89 Posts: 3 Newbie
    Hello,

    Thanks for the replies! I haven’t looked into S&S ISA so that is something I will do.

    Recently a Nest pension scheme was set up through work, which I contribute to, should I look to be putting more than the 1% into this from my wage?

    I don’t really require any of the £90k in the short term, but it would be nice to have some of it to enjoy. I don’t want to massively restrict what I can do in the next 20 years by locking the whole amount away.

    Currently between myself and my fianc! we earn £42k P/A.

    Assuming I’m looking at this correctly I need to consider if a BTL would return me more money in say 25 years if I was to sell the property than investing in S&S ISA, would that be the correct assumption?

    Thanks
    Mark
  • Eco_Miser
    Eco_Miser Posts: 4,708 Forumite
    Name Dropper First Post First Anniversary Combo Breaker
    You can access an S&S ISA at any time, but there will be times when it would not be sensible to if you could avoid it (see 2008 for an example).
    If you can manage¹ to get your treats from current income and short-term saving, you won't need to touch your investments.

    ¹I do mean manage - plan your savings to cover holidays, nights out, or whatever.
    Eco Miser
    Saving money for well over half a century
  • MarkP89
    MarkP89 Posts: 3 Newbie
    At the moment we do manage treats from our current income, we also are saving £50 a week towards our wedding plus approx £200-£300 a month left over from our bills account.

    I’m not really adding to the £90k at the moment due to our wedding fund but at the same time I’m not taking anything from it either.

    I’m going to research S&S ISA this evening. Any good tips or pages I should read on this?
  • badger09
    badger09 Posts: 11,201 Forumite
    First Post First Anniversary Name Dropper
    MarkP89 wrote: »
    At the moment we do manage treats from our current income, we also are saving £50 a week towards our wedding plus approx £200-£300 a month left over from our bills account.

    I’m not really adding to the £90k at the moment due to our wedding fund but at the same time I’m not taking anything from it either.

    I’m going to research S&S ISA this evening. Any good tips or pages I should read on this?

    This is a reasonable place for a beginner to start

    http://monevator.com/investing-for-beginners-why-do-we-invest/
  • Audaxer
    Audaxer Posts: 3,506 Forumite
    First Anniversary Name Dropper First Post
    MarkP89 wrote: »
    Assuming I’m looking at this correctly I need to consider if a BTL would return me more money in say 25 years if I was to sell the property than investing in S&S ISA, would that be the correct assumption?
    A Buy-to-Let is considered to be far more risky than a balanced investment in stocks and shares over a period of 25 years, and a lot more potential problems.
  • tiz
    tiz Posts: 107 Forumite
    MarkP89 wrote: »
    Assuming I’m looking at this correctly I need to consider if a BTL would return me more money in say 25 years if I was to sell the property than investing in S&S ISA, would that be the correct assumption?

    You need to consider how much you'll get in return through rent over 25 years, plus what you'd get selling it (if that would be your intention). Keep in mind there is no guarantee house prices will go up, and unlike investments in funds, for example, you can't change what you are invested in easily. Also when you sell a BTL, your liable for capital gains tax on any increase in value so you'll need to factor that in as it could take a big cut of any profit.

    My plan for my BTL would be that I'd have paid off the mortgage in 25 years and the rent would provide a monthly income in retirement, rather than selling off the property itself. Although of course it might be a completely different ball game by then.
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