I'm after your opinion...

xylophone

My company doesn't offer a pension which is why i've not been paying into one for the last 3 years.

At some point they'll have to? See https://forums.moneysavingexpert.com/discussion/4203597

Gadfium

Radiantsoul wrote: »

A bit less locked up than in a pension though. And with any kind of investment you are to some extent locked in based on the whim of the market. If the market lacks liquidity(as in 2008) you will pay a pretty hefty price tag to access your money.

For sure...s I know all too well from having to offload a load of shares in 2009 to pay for a divorce...:mad:

The OP's point was that she had not that much in place for retirement. The value locked up in the house shouldn't be underestimated and it would provide a substantial lump sum if and when the OP "downsized".

ElleStar

Thanks again for the replies.

Having a large chunk of equity in my property (rightly or wrongly) gives me a great deal of comfort. The fact that the interest part of my mortgage is about a third of what i would have to pay in rent reminds me how worthwhile the sacrificies I made in the early days were!

I think Radiantsoul has hit the nail on the head with my slight procrastination on where to put my money. I know that inorder to maximise my investments, I need to become more comfortable with taking risks.

ElleStar

Thanks for link to new pension rules. I work for a small company so will have to wait until June 2015 before my boss has to pay into one.

Part of my retirement plan (in the scenario that I remain single) is to sell my flat and move to a part of the country where I could buy a house for twice the size and half the price!

atush

OK, you have a fair amt of cash, but I'd fill this years (or the next of that 11K includes this year) ISA. That will give you over 16K in cash.

Alongside that, until your company begins to pay (and soon) I would put as much in a pension as will bring you out of HRT ax and get that 40% relief. 3K approx?

The rest I would overpay your mtg by.

Review this plan once per year. If your salary rises, you need to put more into pension (and get that 40% TR) and once your cash gets to 20K you can open a S&S ISA alongside overpaying your mtg.

There is no reason you have to put 100% of your spare cash in one place

And you will end ip with a good pension pot, good ISA amts, and be mtg free. You may need to up your cash savings from time to time if you spend some (such as on a car/holiday etc).

joerugby

Personally I'd put about 2/3rds of what I had available into a SIPP each month and the rest into a selection of funds within an s&s isa wrapper. I'd also consider putting my exisitng pensions in the same SIPP so I could monitor and manage them better

But I know an awful lot about me and very little about you

Radiantsoul

ElleStar wrote: »

I think Radiantsoul has hit the nail on the head with my slight procrastination on where to put my money. I know that inorder to maximise my investments, I need to become more comfortable with taking risks.

Don't change Elle I am sure you are fine the way you are!

Perhaps the thing is when you do invest in your pension or a stocks and shares isa to choose lower risk types of investment. You can always change your portfolio if you feel more comfortable.

The other option is to work backwards. Figure out when you want to retire and how much you need to live on. You will presumably be mortgage free and will not need to save any more. So your income is probably 32k post tax, less 5k for mortgage, less 6k savings. so you probably spend £20k per year. You will presumaby get about £8k from the state pension. Therefore you need to get an extra £12k(+2K for tax). As annuity rates are 3.5% you need about £400k. You are starting with £75k and so only need to save £4500 per year with a 4% annual return to get there. And that is ignoring the tax relief(some of which will be at the higher rate). In fact even with a 2% return you get their with £8k per year savings.

TLDR: You don't need to increase your risk tolerance if you are happy to save as large a portion of your income as you claim.

kidmugsy

Is your mortgage of the kind where you can borrow back the overpayments if you want to? If so, do a small borrow-back just to ensure that it works and find out how long it takes. Then you can take comfort from the thought that it's like another emergency reserve. Otherwise, as others have said, it would be sensible to contribute enough into a pension to avoid higher rate tax. In your shoes that would be the max that I'd contribute to a pension at the moment.

ElleStar

Thanks again. I think I'm getting there with a plan now and feel a bit more comfortable that I can achieve my goals. All your thoughts and comments have been very useful.

I'm pretty confident I'd cope if I lost my job tomorrow. I can use my pot of overpayments to repay the mortgage. Most things are paid for in advance. Car is a luxury, not a neccessity (live on the tube and cycle most places anyway). I'm not tied into any expensive contracts. I live a pretty modest life!!

My next step is to decide whether a SIPP or regular pension is right for me - I'm a bit confused by all the different fees right now. It does seem like I've a fair bit of reading to do.

atush

I would look at fees and charges, but be aware that Sipps are mainly for those who want to choose their own investments incl individual shares, ETFs, commercial property etc.

If you are just interested in funds (and maybe trackers) then a personal pension could suit you.