Increasing pension and savings for the future

Kez100

I have been working part time since having children and paid in £44 a month into a L and G stakeholder pension. Now I can afford to save a lot more. Probably about £5000 a year. I would like to do it quickly as my earnings have gone up due to extra hours and I'm not used to spending it at the moment.

I have no debts apart from a relatively small 0% car loan and a +0.69% tracker repayment mortgage on track to be repaid in seven years time. I also only have a few thousand savings which I don't treat as savings more like current account 'working capital'.

I am thinking that I should start ISA saving and put away £3600 this year in a cash ISA plus the balance of £1400 into my stakeholder.

My reasoning for ISA being greater than stakeholder being that at least I coud get my hands on the ISA cash if I needed too (i.e University help or interest mortgage rates rising a lot) I could put it into the mortgage now but that presently is 1.19%.

Anything screaming out as silly there?

Paul_Herring

Kez100 wrote: »

I have no debts apart from a[...] +0.69% tracker repayment mortgage on track to be repaid in seven years time.
[...]
Anything screaming out as silly there?

Only my perceived assumption that you're assuming that the base rate will remain small over the next 7 years. (Though mitigated by your mentioning using the ISA should they rise.)

Kez100

Paul_Herring wrote: »

Only my perceived assumption that you're assuming that the base rate will remain small over the next 7 years. (Though mitigated by your mentioning using the ISA should they rise.)

No, not at all. I fully expect them to go bonkers actually. Subject to our income staying the same, of course, I have already had the pleasure of paying 14% on this particular mortgage - if we go back to it's inception when it was a much higher balance as well. I ought to add we are also overpaying the mortgage, equivilent to a 16% interest rate at the moment.

I could throw the £5k that way too and max out on pension/savings once the house is fully paid for.

Twickenham_Green_FA

Hi Kez, increasing pensions and ISA contributes are good ideas. Making overpayments on your mortgage could be a prudent move as interest rates are so low.

However it is important you have rainy day funds, funds that you only touch in emergencies. If you haven't already done so, I would encourage to action this first. Typical minimum being 3 months expenses.

DiggerUK

Brendan_Bensley_IFA wrote: »

Hi Kez, increasing pensions and ISA contributes are good ideas. Making overpayments on your mortgage could be a prudent move as interest rates are so low.

However it is important you have rainy day funds, funds that you only touch in emergencies. If you haven't already done so, I would encourage to action this first. Typical minimum being 3 months expenses.

I never recomend anybody have confidence in IFA's anytime, now sod off.

Twickenham_Green_FA

DiggerUK wrote: »

I never recomend anybody have confidence in IFA's anytime, now sod off.

You have quite a way with words DiggerUK. With a personality like that, I doubt anyone would want to take your advice. Yes I'm an IFA, I like to promote the benefits of personal financial planning, I would not be in this industry if I didn't believe in my industry. It's a shame you don't allow PM's, means I have to reply on the thread totally unrelated to the subject.

Aegis

Brendan_Bensley_IFA wrote: »

You have quite a way with words DiggerUK. With a personality like that, I doubt anyone would want to take your advice. Yes I'm an IFA, I like to promote the benefits of personal financial planning, I would not be in this industry if I didn't believe in my industry. It's a shame you don't allow PM's, means I have to reply on the thread totally unrelated to the subject.

Personally I'd ignore Digger. He's admitted that he has an anti-IFA bias, and he's been seen encouraging people to put a lot of their money into commodities as a supposedly safe investment lately. If it's any help, you might want to remove the link from your signature as it's considered advertising, otherwise I thought your post was very helpful, unlike your new stalker's.

Twickenham_Green_FA

Thank you for the support Aegis, I have removed my signature as promised.

Kez100

Having got my pension statement today,and also owning an endowment (the only two things an IFA has recommended) I am inclined to agree!

I paid in £125 a month for about 4 years and (£55 gross) for another 18. Now it's worth £11000! Why bother? Argument about long term benefit is a pretty poor one considering this has already been pretty long term at 22 years and is now worth a third less than paid in.

I thought stakeholder pensions were cheap to run? My £55 per month is attracting a monthly charge of £16!

Aegis

Kez100 wrote: »

Having got my pension statement today,and also owning an endowment (the only two things an IFA has recommended) I am inclined to agree!

I paid in £125 a month for about 4 years and (£55 gross) for another 18. Now it's worth £11000! Why bother? Argument about long term benefit is a pretty poor one considering this has already been pretty long term at 22 years and is now worth a third less than paid in.

I thought stakeholder pensions were cheap to run? My £55 per month is attracting a monthly charge of £16!

What did you invest in, and how much has it recently fallen by? If an IFA sold you this pension, I'm quite shocked that in 22 years of contributions you've only put £18k in and apparently put it into extremely volatile funds for at least some of it if you got that sort of drop.

Which stakeholder pension is that and what funds are your contributions going into? Have you reviewed the fund selection periodically?

Kez100

I had it with Scot Eq until May 2007. It was then worth about £15k. No, I didn't review funds - is that not the job of an IFA who is presumably getting a regular fee income from this?

I questioned the IFA in 2007 who looked into it and recommended that it be transferred into Legal and General Stakeholder : funds are L and G Property and L and G Distribution. I did look at it again in 2008 as I found out one third is commercial property and I questioned the IFA (in writing) if that was a sensible choice as the property market looked as if was going to take a pounding and he replied (in writing) that it was as the fund had good rental cover which would support that 'fund'.

Especially given my written communication to him, I am pretty peeved to be honest. Apart from Scot Eq fund growth being non existant over the years L and G has fallen (despite £660 gross a year going in) from £15k (2007) to £13k (2008) and now £11k.

Could he not have just advised me keeping that bit aside in cash if I was concerned about property? (I didn't know holding cash in a pension was even a possibility until I read things on here recently as it's not my job)

I am also flabergasted at the management charge of £16 a month when I thought stakeholders were cheap. That's all my tax relief!