Could I improve how I'm saving/investing?

atypical

If your mortgage is as low as say 1.5% you'd be better putting the money in an instant access account at 2.8% net (assuming you're a 20% tax payer). That's probably what kidmugsy was talking about.

ViolaLass

grunder wrote: »

It's not a bad deal but the quicker it's paid off the less interest will be paid in the long term I suppose. Interest rates are low at the moment but that may not always be the case.

If it's 1% and you can get savings at 3% (these are just example figures) then you would be daft to overpay the mortgage. Saving and paying when interest rates rise would be far more effective.

It seems you have a bit of a lopsided deal - you and GF live in 'her' investment property so she gets help from you towards the mortgage but you get none from her towards your investments. If you really are serious, I would have thought pooling would be the way to go - after all, if one of you has a run of bad luck and loses everything, would the other really stand by and say "That was your investment, tough"?

Procrastinator333

Is your salary £40k? I'm guessing vbased on your note on pensions. Do you expect otto go up much next few years?

Employer matched contributions should always be taken. But after that, you may want to think bout increasing your pension contributions as you go over the higher rate tax band.

grunder

I see what you're saying voilalass but the way I look at it is that I'd have to pay rent wherever I was anyway so it's not as if I'm losing out.

Procrastinator333: that's about right and as far as I understand it every £60 I put in the HMCS will add another £40 as I'm a higher rate tax payer. Is this your undersanding?

Loughton_Monkey

The most important thing is that you continue to shove as much away as possible - especially while you are young.

Arguably, a total of 6% into pensions is too little. Overall, they give 6% more than Stocks & Shares ISA's in cash terms (tax relief), but there are restrictions on taking the pension. Hence you don't want it all in pension, but personally I would suggest a minimum of 15%, with at least another 10% going into other equity investments.

Your aspirations for property require (in my opinion) the use of 'savings' rather than investments. Possibly in longer term bonds (2/3 years) and possibly using up whatever Cash ISA limit you have unused after S&S ISA. Whilst I would endorse a modicum of property, try to understand that 'property investment' is not necessarily going to make you 'millions' - and if for any reason you eventually live in the house, then fine, but that's not money you can use to spend in retirement.

Purely a matter of opinion, but I would not put as much as you into US/Europe/UK when looking for long term growth. I believe these economies are 'dead in the water' - especially over the period of your own investment horizon. Some individual companies can do well, but overall, how can we compete with more modern, aggressive, and hard-working countries, full of natural resources and (more importantly) without all the 'Nanny State Baggage' that Western economies now laughably carry. [History lesson: Cadbury & Rowntrees - both very laudable, high value, British companies, with a 'homely', generous, 'Nanny', maternal attitude to staff. All very nice - but ultimately unsustainable. Hence slow death, with ultimate and inevitable take-over by more dynamic parents.]

Finally, and importantly, keep very good accounts. Firstly, this will inform you greatly on what you spend, where, and for what purpose. That way you will know intimately what your 'lifestyle' is costing as you go through life (as opposed to other expenses we have to carry along the way - such as mortgage interest). Secondly, it allows you accurately to see how "SS Early Retirement" is sailing and allow you to make minor changes in course along the way to get you to the required direction. Otherwise you find yourself miles off course, far too late, before you have time to turn things around.

Good luck.

kidmugsy

grunder wrote: »

....Procrastinator333: that's about right and as far as I understand it every £60 I put in the HMCS will add another £40 as I'm a higher rate tax payer. Is this your undersanding?

The detail is that you contribute £80. The pension provider gets £20 from the government to add to your fund. When you complete your tax return you tell HMRC that you've contributed £100 gross (i.e. = your £80 plus the reclaimed £20) and they refund you £20 so that the cost to you has now been reduced to £60 and there's still £100 in the fund.

ViolaLass

grunder wrote: »

I see what you're saying voilalass but the way I look at it is that I'd have to pay rent wherever I was anyway so it's not as if I'm losing out.

So would she.

grunder

Thanks you for all the advice through here it's certainly given me something to think about.

Much apreciated.

atush

I am also a bit concerned about you paying that large a chunk of someone else's mtg, and not having an equity stake. I think you should have some sort of written agreement about what would happen should you break up. Or even going into joint ownership, but with your portion to be much much smaller than hers to reflect her previous investment and increases in equity.

If you are both agreed that you will never participate in any uplift of value (just from the date you started paying) then perhaps you are paying too much and should pay more in line with what a Lodger would.

Do you also pay half the bills?

blinko

I agree on the written agreement, agree to purchase part of the house or something. Its a very bad deal, you need some legal backing behind it. It would be naive not to.

I work in teh city for 5 years, I have seen guys literally get robbed by pretty young things and as soon as the cash drys up so does she. Im not saying this will happen to you,

what I am saying is you need to sort out the mortgage/rent situation properly first