Aged 45, no pension, invest 100k

Trimmer_2

I'm not sure if I should post this here or in the pensions section, if its in the wrong place - sorry.
Heres the scenario - could be me soon.
A man aged 45 has no pension fund currently running but has one that he paid into for 12 years and then stopped contributing to due to a change in circumstances.
He has his own ltd company which produces a small profit each year (enough to pay the bills and live on).
He has just come into some money (100k) - whats the best thing to do with it?
Should he pay off some of the mortgage (mortgage is 200k with 18 yrs left), see if he can put it in a pension fund or invest it elsewhere (isa, stocks, etc).

dunstonh

You are asking for too specific advice and we cannot give that. Mainly as the board is not authorised to do so but also because we dont know enough to give advice.

A man aged 45 has no pension fund currently running but has one that he paid into for 12 years and then stopped contributing to due to a change in circumstances.

The basic state pension is £4700 a year. A 45 year hold has a state retirement age of 66. So, currently this person has an income coming at age 66 of around £4700. Plus an old pension.

Is that something this person can afford to live on in retirement? Is 66 the age they want to retire?

He has his own ltd company which produces a small profit each year (enough to pay the bills and live on).

Payments into a pension are best from the limited company.

He has just come into some money (100k) - whats the best thing to do with it?

Too many variables and too many answers without knowing more.

Should he pay off some of the mortgage (mortgage is 200k with 18 yrs left), see if he can put it in a pension fund or invest it elsewhere (isa, stocks, etc).

Could be any of those or a combination. Paying off the mortgage is probably not a good idea for most. Whilst you clear the debt the problem is that there is no provision for retirement. So you only end up having to borrow on the property again when you get to retirement because you havent got enough to live on.

Doing one option is a bit like saying "which utility bill shall I pay, water, gas or electric?". You dont choose to pay one you pay them all.

The same applies to short, medium and long term provision. You keep some money for the short term (emergency/rainy day) and you put some for the medium and long term (retirement being the obvious one here).

earlgrey_3

Would be interested to hear other views on this but being a simple soul I'd say, subject to all the complicated tax issues and costs, using most of it to reduce the mortgage would be my first instinct.

Otherwise you are effectively going to be borrowing money to invest. You will be paying the industry with the usual juicy commissions to provide your mortgage and paying them again to manage the investment of that borrowed money.

If you went to a commission-based adviser I could well understand why they might be inclined towards not paying off the mortgage and having them invest the money for you instead. :rolleyes:

The money saved each year on mortgage repayments should go into making provision for retirement.