Some advice please? :)

Tidd83

Last June I posted a thread in the mortgage free roll of hour, after finally achieving my goal to pay off the dreaded debt. After using the largest chunk of my savings I managed to pay it right down and leave an outstanding balance of £500 which I have left running for the remainder of the 24.5 year term. The payments each month are around £2.50 so barely noticeable and it means future borrowing will be much easier at the rate of whatever the mortgage is running at (currently 2.5%).

My question now lies in what is the best option to invest my money both for the distant future and the next couple of years. I have managed to build up an easy accessible savings buffer of around £20k in a Santander Esaver account paying 3.1% APR. I have reached my yearly limit in a Cash ISA of £5,300 and have £2,500 in Premium Bonds. Around 4 months ago I opened an account with HL and setup a stocks and shares ISA for an ETF which at the moment stands at around £1,600. At the moment I pay £500 each month (plus any left over spends) in to the Esaver and £250 in to the Stocks and Shares ISA to take in to account the highs/lows of the market. My aim for the Stocks and Shares ISA is to leave it hopefully for retirement and add to it in the way I am doing now. The rest of my money obviously goes to cost of living and running a household as well as a decent monthly allowance to spend on what I want. I am 28 with no children and live alone, I have no outstanding debts and I have a company car with my house paid for so I am in a very fortunate position which has taken a lot of working to get me to. I wondered if what I am doing with my money is the best way given the situation I am in or can some of you give me opinions on what may work better or how I should split my funds etc to make them work best for me? Thanks in advance!

opinions4u

A pension may well be better for you than a stocks and shares ISA.

Less flexible though.

See an IFA. www.unbiased.co.uk

buffman

I think your approach is commendable. I would possibly put a portion of your instant access cash into a one year bond where you will get a higher rate of interest. I would suggest the AA 1 year postal account that pays 3.6% or Monmouthshire's Flexible Saver that pays 4% for a year (providing that it is not closed before the bonus is paid - see separate thread).

Tidd83

Hi, thanks for the post.. I forgot to add I have a pension currently setup with my employer for which they contribute 5% regardless of any contribution I make. The S&S ISA was simply for my own peace of mind to run along side it and keep an eye on it. I was considering an IFA thanks, I was just wondering what the "general public" response was just to see if what I have set up sound sensible was all.

VT82

Tidd83 wrote: »

I managed to pay it right down and leave an outstanding balance of £500 which I have left running for the remainder of the 24.5 year term. The payments each month are around £2.50 so barely noticeable and it means future borrowing will be much easier at the rate of whatever the mortgage is running at (currently 2.5%).

On an unrelated note, I don't think this will necessarily be the case. New advances are usually done at the going rate at the time, by pretty much everyone.

Tidd83

Hi VT thanks for the info, you are probably right... to be honest there were a number of reasons why I left it open. One for the borrowing but also to save the redemption fees that get slapped on when you end a mortgage. Although it may be easier to lend against for the future, even if it were the current rate it would still be lower than a loan I would hope. I kind of just want it there for a peace of mind, god willing I won't ever need to use it and take a loan again!

atush

Ok, so you have 20K, a pesnion, a mtg free house, and an S&S Isa. Great going!!!

Move as much of the cash into tax free status as you can (so move 5640 next april, put some in an ILSC if some are lreased) or put some into one year bonds (but not all as you say you need 'emergency money'. And yes, I would keep filling your S&S iSas

Pension your employer puts in 5%, how much do you.? Maybe boost it a little.

psychic_teabag

HL are not an obvious choice if you are going to hold ETFs rather than funds. IIRC they charge an annual fee (0.5% ?) to hold them for you. And their dealing charges are relatively high. (The headline rate is only if you trade frequently.)

Somewhere like iii allows you to buy shares regularly for £1.50 or so, and I don't think they have an annual charge.

But if you also hold (active) funds, maybe HL are okay.

Out of interest, which ETF(s) do you use. (I'm just being nosy.) Do you plan to switch them around as economic situation changes, or are they buy-and-hold ?

fairleads

Tidd83 wrote: »

Last June I posted a thread in the mortgage free roll of hour, after finally achieving my goal to pay off the dreaded debt. After using the largest chunk of my savings I managed to pay it right down and leave an outstanding balance of £500 which I have left running for the remainder of the 24.5 year term. The payments each month are around £2.50 so barely noticeable and it means future borrowing will be much easier at the rate of whatever the mortgage is running at (currently 2.5%).

My question now lies in what is the best option to invest my money both for the distant future and the next couple of years. I have managed to build up an easy accessible savings buffer of around £20k in a Santander Esaver account paying 3.1% APR. I have reached my yearly limit in a Cash ISA of £5,300 and have £2,500 in Premium Bonds. Around 4 months ago I opened an account with HL and setup a stocks and shares ISA for an ETF which at the moment stands at around £1,600. At the moment I pay £500 each month (plus any left over spends) in to the Esaver and £250 in to the Stocks and Shares ISA to take in to account the highs/lows of the market. My aim for the Stocks and Shares ISA is to leave it hopefully for retirement and add to it in the way I am doing now. The rest of my money obviously goes to cost of living and running a household as well as a decent monthly allowance to spend on what I want. I am 28 with no children and live alone, I have no outstanding debts and I have a company car with my house paid for so I am in a very fortunate position which has taken a lot of working to get me to. I wondered if what I am doing with my money is the best way given the situation I am in or can some of you give me opinions on what may work better or how I should split my funds etc to make them work best for me? Thanks in advance!

Sad to think you've left it this long to for ask for advice because mine would have been don't pay off your mortgage.

Tidd83

Thanks all for the comments so far, in regards to the last few posts just a couple of questions and notes to what has been suggested...

This may sound like a daft question but what exactly is an ILSC? In regards to the bonds, I did consider the idea but interest seems so low nowadays that moving it from an account paying 3.1% where I have full access to something where it may pay + 0.5/0.8% higher at the risk of tying it down for a year or two doesn't really sway me. Maybe I am looking at this wrong, I see there is a benefit but since the gain is so small it seems like I am losing my flexibility for peanuts. Then again though, this is the way things are at the moment I suppose.

So my employee pension is contributed to by 5% by the employer however in order for this to work I have to make a minimum of at least 1%. I did consider raising this however if I was to jump it to even 10% the employer wont pay any more and since I have no control over what is happening with the pensions of today I find it a bit risky to invest more money there when in 40 years time I may end up with nothing. I know that goes for investing in the stock market but I feel I at least have a little more control over it.

Psychic Teabag - Apologies for the confusion on the ETF part, I do in fact have a fund with HL (I was looking at ETFs at the time of typing earlier) and so got confused. The Fund I have just setup in my S&S ISA is the Invesco High Income Acc. To be honest I don't plan on switching out of it and this is set up for the long term so should the market dip and raise I am hoping for a steady return over the years even if it just keeps up with or slightly beats the rate of inflation which todays savings accounts don't. Another query regarding this though is commodities, has anyone got any experience in this such as Oil/Gold etc and how risky it can be? I suppose currency conversion also has a big factor in this or am I mistaken? (I am learning btw and this is my first delve in to the stock markets).

FL, as for the "don't pay off the mortgage" tactic.. this did occur to me. I know my mortgage interest rate is extremely low and I would have made money leaving the money in a savings account and despite me having a great sense of discipline not to splurge it and waste it anywhere the fact that I would have no monthly outgoings each month seemed so much more appealing to be fair. There probably is a loss there on my part but it feels so refreshing to know that every month that I get paid I don't have a huge lump paying out to Nationwide and with it paid I feel sort of liberated. Ok the money was there to pay it but you don't quite get the same feeling or at least I didn't but then I suppose everybody is different.

One other question for you guys regarding all this (and again this may seem pretty stupid) is to do mainly with my cash ISA. I understand there is a capped limit of £5,000 and so may hundred pounds that you can pay in during a tax year. So for me I took my ISA out last July.. now if I can take out an ISA next April how am I best going about this. Lets say I instantly want to max my ISA out, if I was to open a new ISA and stick in the high figure come July when my original one ends I wont be able to transfer it in. Am I best to wait until July when my original ISA bonus period ends and transfer that to a new ISA plus pay in my maximum all in one go? The reason I ask is, if the later is more beneficial is it just something I have to deal with in the fact that I will lose April/May & Junes interest or am I looking at this all wrong?

Thanks again for all the comments.

Ifts

Tidd83 wrote: »

This may sound like a daft question but what exactly is an ILSC?

Index linked savings certificate offered by NS&i. But none for sale at the moment, they may release a new issue sometime this year.

In regards to the bonds, I did consider the idea but interest seems so low nowadays that moving it from an account paying 3.1% where I have full access to something where it may pay + 0.5/0.8% higher at the risk of tying it down for a year or two doesn't really sway me.

True not a lot of difference in rates between 1 year fixed term bonds and an easy access account. But keep some money in easy access account for rainy day savings, and put the rest in to fixed rate bonds. If you are wanting to keep it in cash, then its all about damage limitation when it comes to inflation, so every little bit helps even if it is just 0.8% difference although its more if you can fix for a longer term.