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  • FIRST POST
    • CornishOptimist
    • By CornishOptimist 13th Jan 18, 9:34 AM
    • 25Posts
    • 50Thanks
    CornishOptimist
    The right thing to do?
    • #1
    • 13th Jan 18, 9:34 AM
    The right thing to do? 13th Jan 18 at 9:34 AM
    Morning all,

    Wanted some clarification that what I'm doing is the right idea, or some thoughts on what different to do with my money.

    Fairly frugal as a person and I like to save about £400 a month, but rather than just lump it into a 1% ISA I like to diversify my savings.

    £200 in T*sco current account at 3% interest (staff so no fee for account)
    £100 mortgage overpayments
    £50 in investment fund (long term plan, maybe 20 years before I cash out on it)
    £50 in premium bonds

    I'm 29 and my savings/investments are things I want to cash in on in decades, not months time. Want to retire at 55 ideally. Pay in maximum I can to my pension as well.

    Thanks
    CO
Page 1
    • Linton
    • By Linton 13th Jan 18, 9:45 AM
    • 8,847 Posts
    • 8,879 Thanks
    Linton
    • #2
    • 13th Jan 18, 9:45 AM
    • #2
    • 13th Jan 18, 9:45 AM
    Suggest you forget PBs and put the £50 into investment. The average return on PBs is 1.4% and with a small holding you may well not get that.

    Be careful how you put your drip feeding into investments. £50 or £100 is a very small amount to buy so you need to use a platform which doesnt charge a fixed fee for fund purchases.
    • Audaxer
    • By Audaxer 13th Jan 18, 10:06 AM
    • 768 Posts
    • 374 Thanks
    Audaxer
    • #3
    • 13th Jan 18, 10:06 AM
    • #3
    • 13th Jan 18, 10:06 AM
    Putting £50 monthly into Premium Bonds is not a good investment. If your mortgage interest rate is low a lot of people would say you shouldn't overpay it and that money would be better invested. However on the other hand I know it is a good feeling to get the mortgage paid off sooner rather than later.

    I would suggest after you have say, 6 months wages emergency cash fund saved, most of the £400 would be better invested in a low cost global diversified multi asset fund of passive indexes, with your preferred percentage of equity to bonds. If you are paying in monthly over 20 years or more you don't need to concern yourself with equity crashes as when they occur you will be buying the fund at a cheaper price.
    • misja
    • By misja 13th Jan 18, 10:58 AM
    • 7 Posts
    • 1 Thanks
    misja
    • #4
    • 13th Jan 18, 10:58 AM
    • #4
    • 13th Jan 18, 10:58 AM
    Savings being as they are, I would probably pay off your mortgage, and over pay as much as you can. The interest rate on that loan is higher than it is for saving, so by trying to keep money in savings you're losing out to the higher interest rate of the mortgage loan.

    If you can overpay by the usual 10% per year, I'd do that. That's what I'm doing anyway!
    • atush
    • By atush 13th Jan 18, 12:21 PM
    • 16,455 Posts
    • 10,198 Thanks
    atush
    • #5
    • 13th Jan 18, 12:21 PM
    • #5
    • 13th Jan 18, 12:21 PM
    S&S isas.

    And more into your pension.
    • jimjames
    • By jimjames 13th Jan 18, 4:38 PM
    • 12,326 Posts
    • 10,908 Thanks
    jimjames
    • #6
    • 13th Jan 18, 4:38 PM
    • #6
    • 13th Jan 18, 4:38 PM
    Savings being as they are, I would probably pay off your mortgage, and over pay as much as you can. The interest rate on that loan is higher than it is for saving, so by trying to keep money in savings you're losing out to the higher interest rate of the mortgage loan.

    If you can overpay by the usual 10% per year, I'd do that. That's what I'm doing anyway!
    Originally posted by misja
    I disagree. Obviously it depends on your attitude risk but when interest rates are so low it makes far more sense to invest than to pay down your mortgage. I now have a pot that could pay my mortgage off several times over but there is no point using it when I can borrow at 2% and my investments increased by 15% or so last year.
    Remember the saying: if it looks too good to be true it almost certainly is.
    • capital0ne
    • By capital0ne 13th Jan 18, 5:18 PM
    • 255 Posts
    • 123 Thanks
    capital0ne
    • #7
    • 13th Jan 18, 5:18 PM
    • #7
    • 13th Jan 18, 5:18 PM
    Suggest you forget PBs and put the £50 into investment. The average return on PBs is 1.4% and with a small holding you may well not get that.
    Originally posted by Linton
    I agree that £50 into PBs is probably a waste of time, it will pay out 1.4% but it may take an awfully long time, in the order of thousands of years before you could actually calculate it.
    • Eco Miser
    • By Eco Miser 13th Jan 18, 6:40 PM
    • 3,305 Posts
    • 3,077 Thanks
    Eco Miser
    • #8
    • 13th Jan 18, 6:40 PM
    • #8
    • 13th Jan 18, 6:40 PM
    Fairly frugal as a person and I like to save about £400 a month, but rather than just lump it into a 1% ISA I like to diversify my savings.
    Originally posted by CornishOptimist
    A cash ISA is good for almost no-one, so congratulations on avoiding it.
    £200 in T*sco current account at 3% interest (staff so no fee for account)
    Originally posted by CornishOptimist
    You don't say how much you've got right now, but that's only going to be worthwhile for 30 months maximum
    £100 mortgage overpayments
    Originally posted by CornishOptimist
    Depends on what rate you're getting, and if overpayments will lower your rate
    £50 in investment fund (long term plan, maybe 20 years before I cash out on it)
    Originally posted by CornishOptimist
    Good idea. Your mortgge ovepaymens and PBs might be better going here as well.
    £50 in premium bonds
    Originally posted by CornishOptimist
    You might win a million, but more likely you will win nothing. 3% guaranteed is a better bet.
    I'm 29 and my savings/investments are things I want to cash in on in decades, not months time. Want to retire at 55 ideally.
    Originally posted by CornishOptimist
    Sensible goals.
    Pay in maximum I can to my pension as well.
    Originally posted by CornishOptimist
    What do you mean by this?
    • What your employer will match?
    • The smaller of £40,000 or 100% of gross salary?
    • All your realisable assets?
    • What you can afford after other savings?
    Eco Miser
    Saving money for well over half a century
    • AnotherJoe
    • By AnotherJoe 13th Jan 18, 6:43 PM
    • 7,862 Posts
    • 8,458 Thanks
    AnotherJoe
    • #9
    • 13th Jan 18, 6:43 PM
    • #9
    • 13th Jan 18, 6:43 PM

    I'm 29 and my savings/investments are things I want to cash in on in decades, not months time. Want to retire at 55 ideally. Pay in maximum I can to my pension as well.

    Thanks
    CO
    Originally posted by CornishOptimist
    No, you dont.
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