Please advice on where and how I should invest money

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kamp013
kamp013 Posts: 20 Forumite
in Savings & investments

I get confused as to where and how I should invest money. I don’tbelieve in debt and I have about £5k saved up.

Since 2011, I have been able to invest in a buy to letproperty and the rent is paying that particular mortgage. I have also got anendowment policy which will pay out in 2020, this money will not be required forthe mortgage as the mortgage is now a repayment mortgage.



I do a budget every month and after paying all expenses Ihave £850 that I can save. This is after all utility bills, mortgage, food andfuel bills have been paid off. Should I be keeping some money on side foreating out and unexpected guests?



How should I invest the balance? I want to see my moneyinvested and grow and there are so many ISA’s, stocks and shares ISA’s, bondsetc. OR should I invest in different places?

Should I be paying extra towards my own mortgage which has16 years left? If so how much extra?



Your help will be much appreciated.



Thank you

Comments

  • jimjames
    jimjames Posts: 17,619 Forumite
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    If you want advice then you'll need to speak to an Independent Financial Adviser (IFA)

    There is lots of reading on here and various blogs such as monevator.com but ultimately it is your decision what to do as a DIY investor. If you go to an IFA then they will make the decisions for you.

    As you already have a BTL then think about the process you used to decide on that - can you do the same thing to think about other investments?

    Having said that, if you have £5k saved up, is that your only savings and presumably your emergency fund? It's normally suggested to have enough for 3-6 months living expenses but if you have BTL then I'd suggest more as you need to cover voids as well as any emergency repairs to that as well as your own property. Are you getting the best rate on this amount which is currently 5%?
    Remember the saying: if it looks too good to be true it almost certainly is.
  • Linton
    Linton Posts: 17,162 Forumite
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    I assume you are employed, no dependents, aged around 40.....

    Do you pay into a pension? If not why not?

    Your monthly budget should cover everything you want to spend - the essentials and anything extra you want for inessentials. You need to be happy that this will meet your normal monthly expenditure. Its easiest to keep this in your current account, and make it a rule not to take anything extra out of your savings.

    The next step beyond that is the emergency fund. I agree with Jimjames on the need for 3-6 months living expenses as per your budget plus sufficient to cover emergencies with the BTL. This could be kept in a savings account, but it does need to be instant access.

    With your immediate needs, emergencies and pension covered you can them start to think about investing. Perhaps in an S&S ISA or possibly extra pension. We can discuss the details once the other things are in place, and we know a bit more about you. Are my assumptions at the top correct?
  • kamp013
    kamp013 Posts: 20 Forumite
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    HI. Thank you for your replies.

    I am going to be 42 this year, I am employed and have had a pension since I was 25. I am married with two dependants.


    I felt that leaving my money in current account might not be the best thing, hence this post.

    I want to feel better knowing I have done what I should have done with my money.

    Hope I have been able to explain myself.

    Thank you again
  • Eco_Miser
    Eco_Miser Posts: 4,708 Forumite
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    Right now a lot of people think that leaving some of their money in current accounts earning 5% (or 4% or 3%) AER is the best thing. Have you read the threads about current accounts on this board? And about the so-called savings loophole on the main site: http://www.moneysavingexpert.com/savings/savings-loophole?
    Eco Miser
    Saving money for well over half a century
  • atush
    atush Posts: 18,726 Forumite
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    Have an emergency cash savings, have a pension (and pay more in if not paying enough) have S&S isas.
  • chezmoi
    chezmoi Posts: 9 Forumite
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    For what it is worth, and assuming you know all the rules for savings and mortgages, I would recommend an instant access cash ISA to which payment can be regularly added or a monthly savings account paying 3% and transferring this sum to a cash ISA (assuming it ends in 12 months), followed by reducing your mortgage.

    In theory, assuming you have a high mortgage interest rate say more than 3% than you should pay off your mortgage. However once a mortgage payment is paid then you can't get the payment back. So set aside some money in a saving account for rainy days (eg job loss), emergencies or guests.

    One more thought, I think the stock market is too high for that sort of investment although the fans of regular monthly share investment would remind me that this takes some account of volatility.

    In a similar situation in the past when interest rates were much higher, I maxed my cash tessa/isa with the odd investment pep/isa but paid off my mortgage more quickly by reducing term!
  • atush
    atush Posts: 18,726 Forumite
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    Drip feeding is the way to go, esp for nervous investors.
  • colsten
    colsten Posts: 17,597 Forumite
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    chezmoi wrote: »
    For what it is worth, and assuming you know all the rules for savings and mortgages, I would recommend an instant access cash ISA to which payment can be regularly added or a monthly savings account paying 3% and transferring this sum to a cash ISA (assuming it ends in 12 months), followed by reducing your mortgage.

    This is possible but by far not the most lucrative approach as you can get much better interest outside cash ISAs, and much better than 3% monthly saver accounts.
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