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  • FIRST POST
    • durutticolumn
    • By durutticolumn 20th Apr 17, 11:44 AM
    • 2Posts
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    durutticolumn
    Saving & Investing Newbie!
    • #1
    • 20th Apr 17, 11:44 AM
    Saving & Investing Newbie! 20th Apr 17 at 11:44 AM
    Hello all

    New to the forum and to the concepts of long-term saving and investing so trying to find my way.

    Having been intending to jointly buy a first property, I'm no longer going to need to in the near future (perhaps never) as it will be bought be my partner's family. This leaves me with some responsible saving/investing to do with both my current savings and future savings of currently around £15k/year.

    I currently have
    - A savings account at 1% with £50k
    - A HTB Isa that's giving me 3.5% as I picked it up when it was still at 4%. it has 2,400 in it.
    - £100 in a Lifetime Isa which I opened on 6th April in case it would be of use.
    - (Recently) a workplace pension into which I'm contributing 1%.

    Hoping to develop a portfolio that will get good interest in places and be safer and easy to access in case of changes of circumstance in others.

    Currently thinking of:

    - Putting a lot more into pension, maybe around 15%; I'm a higher rate taxpayer
    - Max-ing out the HTB ISA each year given the interest rate
    - Putting (remaining) £1,600 into a Stocks & Shares Lisa
    - Putting the remainder of my ISA allowance into a Stocks and Shares ISA, maybe half in a safe fund and half in more aggressive one.

    I can take a fairly long-term view - does the above sound sensible or am I missing a trick? Should I be ditching contributing to the HTB ISA in order to get a cash one for some safety? Should I get an advisor or can I deal with this stuff on my own?

    Thanks all
Page 1
    • dunstonh
    • By dunstonh 20th Apr 17, 12:30 PM
    • 88,271 Posts
    • 53,500 Thanks
    dunstonh
    • #2
    • 20th Apr 17, 12:30 PM
    • #2
    • 20th Apr 17, 12:30 PM
    - (Recently) a workplace pension into which I'm contributing 1%.
    You really need to take that more seriously. Pay peanuts in, get peanuts out.

    - Putting a lot more into pension, maybe around 15%; I'm a higher rate taxpayer
    That is more like it. Especially as you are a higher rate taxpayer.

    40% relief, tax free growth and potential to reinstate child benefit (if you have children and earn over £50k a year) make this the most financially viable option. Trumps an S&S ISA unless you plan to use the S&S ISA for pre-retirement spending.

    Should I get an advisor or can I deal with this stuff on my own?
    DIY well and it can save you money. DIY badly and it can cost you more money. Its the same as any job in life where you can DIY or use someone to do it for you.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
    • EachPenny
    • By EachPenny 20th Apr 17, 12:54 PM
    • 1,366 Posts
    • 1,358 Thanks
    EachPenny
    • #3
    • 20th Apr 17, 12:54 PM
    • #3
    • 20th Apr 17, 12:54 PM
    Having been intending to jointly buy a first property, I'm no longer going to need to in the near future (perhaps never) as it will be bought be my partner's family.
    Originally posted by durutticolumn
    Beware of the position this puts you in regarding housing yourself in the future if the situation ever changed. Will you be a joint owner (e.g. the share of the property being gifted to you?), or will the property remain owned by your partner's family?

    If you have no rights over the home you live in then I'd suggest any savings/investment strategy you adopt should have the facility to allow you to re-house yourself at relatively short notice in case the worst* should happen. You might want to consider legal and tax advice, in addition to any investment advice.

    *'worst' in this context could be any number of things - splitting up, unemployment, bankruptcy, bereavement, to name a few.
    • durutticolumn
    • By durutticolumn 20th Apr 17, 1:12 PM
    • 2 Posts
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    durutticolumn
    • #4
    • 20th Apr 17, 1:12 PM
    • #4
    • 20th Apr 17, 1:12 PM
    Thank you both dunstonh and EachPenny.

    That is more like it. Especially as you are a higher rate taxpayer.

    40% relief, tax free growth and potential to reinstate child benefit (if you have children and earn over £50k a year) make this the most financially viable option. Trumps an S&S ISA unless you plan to use the S&S ISA for pre-retirement spending.
    Complete agree - it has only been so low previously as my focus was deposit saving (which isn't now a priority). However, I do want the possibility of accessing to an increasing amount of savings in case of changes in circumstances/other expenditure that I need to make that isn't locked into a pension scheme.

    DIY well and it can save you money. DIY badly and it can cost you more money. Its the same as any job in life where you can DIY or use someone to do it for you.
    Noted!

    Beware of the position this puts you in regarding housing yourself in the future if the situation ever changed. Will you be a joint owner (e.g. the share of the property being gifted to you?), or will the property remain owned by your partner's family?
    Thanks for this - it's something I've been thinking about/discussing with my partner. I think I have to assume that I have no stake of any sort in the property; as a result I will have almost no housing cost and this puts particular emphasis on a strategy that can deal with all eventualities*. The combination of HTB ISA and LISA goes some way towards this (i.e. if I ended up in a position in which I needed to purchase on my own then I'm not losing out on the benefit of those accounts). So I suppose I need to combine this possiblity (that would require substantial access to most of my current and future savings) with a more long term view towards retirement.

    *which I hope are very unlikely
    Last edited by durutticolumn; 20-04-2017 at 1:15 PM.
    • ColdIron
    • By ColdIron 20th Apr 17, 2:19 PM
    • 3,182 Posts
    • 3,619 Thanks
    ColdIron
    • #5
    • 20th Apr 17, 2:19 PM
    • #5
    • 20th Apr 17, 2:19 PM
    Complete agree - it has only been so low previously as my focus was deposit saving (which isn't now a priority). However, I do want the possibility of accessing to an increasing amount of savings in case of changes in circumstances/other expenditure that I need to make that isn't locked into a pension scheme.
    Originally posted by durutticolumn
    Your older self may regret that decision. How are you planning on making up those 4 pounds in every 10 you are giving away? Does your employer match your contributions? Putting the money out of reach is a positive not a negative
    • EachPenny
    • By EachPenny 20th Apr 17, 2:36 PM
    • 1,366 Posts
    • 1,358 Thanks
    EachPenny
    • #6
    • 20th Apr 17, 2:36 PM
    • #6
    • 20th Apr 17, 2:36 PM
    I think I have to assume that I have no stake of any sort in the property; as a result I will have almost no housing cost and this puts particular emphasis on a strategy that can deal with all eventualities*.
    Originally posted by durutticolumn
    This puts you in a positive position of having small housing costs allowing you greater ability to save/invest more per month, but it does come with the downside that while property prices continue to increase, what you have saved/invested may not keep pace with what you would need to be able to afford to buy.

    It is a personal decision, but I think in my case I would be looking to continue to save towards the deposit on a property with a view to buying as soon as possible and letting it out so you have a fall-back position if circumstances change in the future. That may involve a difficult conversation with your partner, and I know how hard this can be as I had a similar one not so long ago.

    At the very minimum I would keep an easily accessible emergency fund which was sufficient to pay a deposit plus moving costs for a rented property, plus several month's rent. And keep the amount under review to make sure it is enough to get the kind of property you'd want to live in in the right area.

    We all hope certain eventualities are unlikely, and I certainly do hope so for you, but we still ought to plan for them, just in case.
    • grey gym sock
    • By grey gym sock 20th Apr 17, 4:26 PM
    • 4,040 Posts
    • 3,504 Thanks
    grey gym sock
    • #7
    • 20th Apr 17, 4:26 PM
    • #7
    • 20th Apr 17, 4:26 PM
    i would be inclined to forget about adding anything more to the LISA. as a retirement plan, it's far inferior to a pension, given that you are a higher-rate taxpayer. and it's unclear whether you will get to use it to buy a home. and if you do neither, there is a penalty for access (or there will be, after this tax year).

    i would keep adding £200 a month to the HTB ISA, however. no penalty if you don't use it to buy a home. in any case, you need some cash savings, and it is paying a decent rate of interest. its main limitation relative to LISA-for-home is max deposits of £2,400 a year instead of £4,000. that's unless you would be buying outside london and would find the higher house price limit of £450k (for LISA) instead of £250k (for HTB) useful.

    in addition to pension (for retirement), and HTB ISA (for cash savings, though could turn out to be for a home), i'd also think of using (non-LISA) S&S ISA for intermediate term investment (could be for buying a home if necessary, or for early retirement, or could even cash it in and buy a BTL property if you haven't bought a home and that looks like a good idea).
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