Paying Mortgage v ISA v Pension

Pendle_Gazza

I can't profess to be an expert, but with things as they are, I personally would be tempted to weight more towards paying extra off the mortgage.

Have a play with some figures on online mortgage calculators - the amount of time (and naturally money) you can knock off might be an eye-opener.

A work colleague has done this for years, and is less than six years away from paying off in full (it would have been 16 left with standard payments).

martinfollower_2

mintedmatty wrote: »

The 35k by age 35 in a pension is a good rule of thumb and if it works out you rae maybe short then upping your contributions wont be a a bad thing?

dunstonh wrote:

There is a rough rule that says you should aim to have £35k in your pension by age 35. You are 30. How close are you to that 35k?

I know it's a side track, but as I am nearing 35... is there a milestone to aim at after 35k at 35yrs old? If I started contributing at 30 (later than ideal, but not bad), do you guys follow the rule of 'contribute percentage of income equal to half age when contributions started' ie 15% if started at 30?

I'm should hit 35k for 35 yrs (unless we have another crash...), but just seeking reassurance/advice...

Aegis

DiggerUK wrote: »

How inflation is going to pan out we don't know, apart from the very real possibility that it is going up.
CPI is 3% and RPI is 3.7% this month, your 3% does not look so hot at the moment.

Why on earth would you compare the savings account to inflation instead of the debt you're recommending someone pays back?

The only correct comparison in this case is to compare the returns on the cash/investment in sterling terms with the notional return of paying back the debt. In this particular instance, the return on the savings account (3%) is significantly better than the notional return associated with paying back the mortgage (0.99%).

Inflation is pretty much irrelevant in this situation.

gavinm79

loads of good, thought-provoking advice. i appreciate the replies. thanks a lot.

getmore4less

One thing to remember pension does not mean "pension fund" that is just a tax defering wrapper.


The goal is to replace earned income, pension funds are just one way to achieve this.

mortgage free just reduces the size of the income needed.

bottom line is you need somewhere to live and an income

Work back from a target retirement date.

One basic stratagy is, save 1/3, buy a house with a 1/3, spend a 1/3, retire in 15years.

DiggerUK

Aegis wrote: »

.......Inflation is pretty much irrelevant in this situation.

Inflation is at a crossroads, it has trended up for 3 months now. At the same time savings rates have not trended up, but down.

We will have a better understanding of whether this is the tipping point, when savings rates part company from protecting cash against inflation in another 3 months. I believe it is.

I think you missed my edit in original post that agrees with your position on stoozing.