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    • Marcus_563
    • By Marcus_563 30th Sep 17, 9:01 PM
    • 6Posts
    • 1Thanks
    Marcus_563
    Advice and opinions for long term investment needed
    • #1
    • 30th Sep 17, 9:01 PM
    Advice and opinions for long term investment needed 30th Sep 17 at 9:01 PM
    I'm looking for some thoughts on the best options to invest towards retirement.

    Both me and my wife are in our late 30's and are in the enviable position of living in the house we plan and staying in for at least the next 20 years (until kids have fled the nest) with the mortgage fully repaid and surplus cash from the sale of our old house. We both have reasonable jobs and are level headed with money which has helped us get to this envious position. I don't mean to brag but just thought it best to lay my cards on the table if I'm going to get good financial advise

    Hence we are completely debt free and have around £25,000 in savings we're looking to invest. My initial thoughts are to invest £15,000 in a long term (15 year min) investment fund, maybe £5000 in a 5 year fixed rate (maybe a P2P lender, or fixed term bond) and £5000 in something with instant access. We still have a few thousand buffer for emergencies so I'm not leaving us completely exposed...would be around £8000 instantly accessible total.

    On top of this I'm expecting to be able to add £1250 per month to the pot. So probably split this in the the same 60/20/20 ratio as my initial investment.

    I'm looking for opinions on:

    1) My general plan of action, ratios I'm suggesting etc.
    2) Specific funds / websites I should be looking at for each of the 3 (or maybe 2) areas I'm putting my money into.

    I'd say I'm good with money generally, but my knowledge of stocks, funds and bonds is basic having never really dabbled in them.

    Initial reads through the forum seem to recommend Vanguard, which I thought sounded appropriate for the main 15k + £750/month, for 15+ year strategy (probably the LifeStrategy fund with 60% shares / 40% bonds). Their website suggested 70% / 30 bonds based on the questionnaire results.

    Beyond that I would appreciate any thoughts or advise. I am considering getting an independent financial adviser to assess our position more thoroughly, but thought I'd turn to this forum before committing to that. Thanks in advance for any suggestions.
    Last edited by Marcus_563; 01-10-2017 at 5:59 PM.
Page 1
    • Alexland
    • By Alexland 30th Sep 17, 9:50 PM
    • 451 Posts
    • 267 Thanks
    Alexland
    • #2
    • 30th Sep 17, 9:50 PM
    • #2
    • 30th Sep 17, 9:50 PM
    Your asset allocation doesn't sound unreasonable but I would probably skip the P2P and hold more in funds and a bit more rainy day cash.

    Are you maximising the tax breaks available for committed long term investing in Lifetime ISAs (eg you can buy £4k each year of Vanguard Life Strategy with AJ Bell, get a £1k bonus each year to invest and can withdraw from the account from 60) or via company and private pensions?

    We are also in our 30s (and own most of our forever house) and are investing £4k each in our LISAs and around 60k in total across our 2 company pensions, my SIPP and partners stakeholder. Company pensions can be good at getting employer contributions and NI savings and private pensions can get tax back even on your tax free income band.

    Alex
    Last edited by Alexland; 30-09-2017 at 10:07 PM.
    • Audaxer
    • By Audaxer 30th Sep 17, 11:10 PM
    • 482 Posts
    • 204 Thanks
    Audaxer
    • #3
    • 30th Sep 17, 11:10 PM
    • #3
    • 30th Sep 17, 11:10 PM
    Hi there, a few points below which I hope are helpful.

    I think a VLS fund is a good option for the £15k and £750 per month. Some people would say VLS60 is a bit cautious at your age, but depends on what volatility you are prepared to accept.

    I think an IFA would be far too expensive for the relatively small sum you are investing, and not really necessary in my opinion.

    I don't know much about P2P but always thought it sounded a bit high risk, especially if you are a cautious investor.

    If it was me I would want to keep more than £8,000 as an accessible emergency fund.
    • greenglide
    • By greenglide 30th Sep 17, 11:14 PM
    • 2,863 Posts
    • 1,839 Thanks
    greenglide
    • #4
    • 30th Sep 17, 11:14 PM
    • #4
    • 30th Sep 17, 11:14 PM
    No mention of pension?

    Paying off your mortgage generally is not the best use of money even though it can be satisfying.

    You sound as if you do need to invest in the long term rather than just saving.
    • Marcus_563
    • By Marcus_563 1st Oct 17, 3:19 PM
    • 6 Posts
    • 1 Thanks
    Marcus_563
    • #5
    • 1st Oct 17, 3:19 PM
    • #5
    • 1st Oct 17, 3:19 PM
    In regards to whether it's better to pay off your mortgage or pay into a pension, that ship has already set sail I guess. In hindsight I can see what people are saying, get ~ 5-8% growth on a pension or pay off 2% interest on a mortgage. It makes sense, but I do like the piece of mind that my house is now my own in any eventuality.

    With regards to P2P - I've come across Bond Mason, which seems an interesting option - aiming for an average annual growth of 8% by investing in all the various P2P ventures and selecting what loans to invest in is how I understand it. Does anyone have any thoughts or experience with Bond Mason?

    Im still looking for suggestions for where to put a lump sum for easy access, presumably a cash ISA is the best option so it's in a tax free wrapper for future tax free growth (although I appreciate it will be minimal interest at the present time). Would Premium Bonds be a better alternative at present given the poor interest rates?
    • Eco Miser
    • By Eco Miser 1st Oct 17, 5:14 PM
    • 3,088 Posts
    • 2,850 Thanks
    Eco Miser
    • #6
    • 1st Oct 17, 5:14 PM
    • #6
    • 1st Oct 17, 5:14 PM
    Im still looking for suggestions for where to put a lump sum for easy access, presumably a cash ISA is the best option so it's in a tax free wrapper for future tax free growth (although I appreciate it will be minimal interest at the present time). Would Premium Bonds be a better alternative at present given the poor interest rates?
    Originally posted by Marcus_563
    Unless you've got good reason (high tax rate, already using full PSA, you'll be transferring it to another sort of ISA next FY), a cash ISA is not a good idea.
    See the Top Savings Rates link at the top of this page, especially the promotional rates on current accounts. A couple can get 5% on £7500 for a year with Nationwide (3 accounts), plus a further £500 pm in their Regular Saver (2 accounts), then look for what's available in a year's time.
    Eco Miser
    Saving money for well over half a century
    • Marcus_563
    • By Marcus_563 1st Oct 17, 6:00 PM
    • 6 Posts
    • 1 Thanks
    Marcus_563
    • #7
    • 1st Oct 17, 6:00 PM
    • #7
    • 1st Oct 17, 6:00 PM
    Eco Miser - do you have a link for the current accounts you're referring too. I can't find anything offering 5% up to £7500?
    • Bravepants
    • By Bravepants 1st Oct 17, 6:27 PM
    • 268 Posts
    • 302 Thanks
    Bravepants
    • #8
    • 1st Oct 17, 6:27 PM
    • #8
    • 1st Oct 17, 6:27 PM
    I'm 49 (going on 18! :-) ) . My ISA is a mix of VLS 60 and Fidelity World Index (MSCI) fund, giving me 70% to 30% equity/bond split. I will probably move everything down to VLS 60 when I hit 55 for potential early retirement.

    My partner has just transferred a small (£25k) pension from a UK only fund investment to VLS 80; she is 45, but happy with the risk level. She also has about £100 k in VLS 60 in an ISA, and about £100k cash, which she will mostly shift over to ISA by drip feeding.

    Some well respected contributors to this section of MSE state that 40 to 60 percent equity allocation is about the average risk level of a UK investor.

    I also have a DB pension that kicks in at age 60, which will be core retirement component going on from there.
    • Alexland
    • By Alexland 1st Oct 17, 7:47 PM
    • 451 Posts
    • 267 Thanks
    Alexland
    • #9
    • 1st Oct 17, 7:47 PM
    • #9
    • 1st Oct 17, 7:47 PM
    To follow Eco Misers suggestion you would need 3 Nationwide Flex Direct accounts (1 each and 1 joint) for a couple to get 3x 2500 at 5% for a year. It's not a long term solution for cash but it's something.

    I still think it's really worth considering the tax advantages of using LISAs and Pensions if you are serious about long term investment.

    Alex
    • Marcus_563
    • By Marcus_563 2nd Oct 17, 9:29 AM
    • 6 Posts
    • 1 Thanks
    Marcus_563
    Thanks for clarifying Alexland, that makes sense now. I've done the whole money shuffling thing before, but with 2 young kids these day don't think I have the will or time to bother doing it right now. I estimate it's worth around £300 interest after tax, so £120 of which I could probably get without the hassle of 3 separate accounts and 2 sets of login details - so about +£180 for all the messing around and money shuffling. Think I'd rather just put it somewhere offering around 2% when all is said and done.
    • Eco Miser
    • By Eco Miser 2nd Oct 17, 10:31 AM
    • 3,088 Posts
    • 2,850 Thanks
    Eco Miser
    I did mention that it's three accounts with nationwide.
    I estimate it's worth around £300 interest after tax, so £120 of which I could probably get without the hassle of 3 separate accounts and 2 sets of login details - so about +£180 for all the messing around and money shuffling. Think I'd rather just put it somewhere offering around 2% when all is said and done.
    Originally posted by Marcus_563
    That's your choice - money or time.
    Do you have so much interest (or so high an income) that your savings interest is actually taxed?
    Eco Miser
    Saving money for well over half a century
    • Alexland
    • By Alexland 2nd Oct 17, 1:29 PM
    • 451 Posts
    • 267 Thanks
    Alexland
    I started putting a lot more work into shuffling money around to get the best return when my son was born as my financial liabilities suddenly widened and I had to start from the beginning on new investment objectives!

    I really want to get a lot of his life events pre-funded so I don't need to worry about my future earned income requirements and to give me flexibility towards the end of my career in 20+ years time.
    Last edited by Alexland; 02-10-2017 at 1:34 PM.
    • Marcus_563
    • By Marcus_563 2nd Oct 17, 3:47 PM
    • 6 Posts
    • 1 Thanks
    Marcus_563
    Eco Miser, It's been a good few years since I looked at the market, at which point tax was applicable to everyone earning enough for basic tax tax (I'm just earning basic rate). But now you mention it I'd completely forgotten about the Personal Savings Allowance (only read up about it the other day). So no I'm not paying tax on my savings, and so my numbers above aren't quite correct. Thanks for reminding me about this.
    • Alice Holt
    • By Alice Holt 2nd Oct 17, 8:09 PM
    • 1,481 Posts
    • 1,577 Thanks
    Alice Holt
    My thoughts - FWTW -

    I'd want a bit more than £8k as an emergency fund.
    Perhaps £20k in a Santander 123 account (for the sake of simplicity).

    But then I'd commit all the £1250pm month for long term savings.
    Split between a LISA (pension - only accessible without penalty after your 60th year), and an S&S ISA (for non-pension expenses 7 to 10+ yrs down the line).
    Vanguard would be fine - I'd tend to go for Life Style 80% and /or a solid Global Investment Trust (e.g Witan).
    • Alexland
    • By Alexland 2nd Oct 17, 9:07 PM
    • 451 Posts
    • 267 Thanks
    Alexland
    LISAs are not pensions but can help towards retirement expenses. Pensions (at least the initial contributions each year) tend to be significantly better than LISAs.
    • Thrugelmir
    • By Thrugelmir 2nd Oct 17, 9:40 PM
    • 55,553 Posts
    • 48,913 Thanks
    Thrugelmir
    Does your employer not offer a pension scheme?
    "Wide diversification is only required when investors do not understand what they are doing." - Warren Buffett
    • Marcus_563
    • By Marcus_563 8th Oct 17, 10:26 AM
    • 6 Posts
    • 1 Thanks
    Marcus_563
    Sorry for the late reply, just myself in the office last week pulling 10 hr days :|

    We're a small limited company, I'm actually a minor shareholder at present so I'm in a good position at present. Company is doing well with a healthy bank balance, I'm currently getting a small dividend from this as well, typically 1-2k per year, which is tax free. We've just set-up the auto enrollment scheme and I'm currently contributing 1% and the company is matching, this will increase to 3+2% and 5+3% over the next 2 years as the scheme dictates. I aslo have a private pension scheme I've been paying into since my early 20s.
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