Saving in run up to retirement

cacique

Wonder if anyone has any thoughts that might help me to make a decision?!
I keep changing my mind about the best thing to do!
Here's the issue:
I have a minimum 4 and a maximum 7 years to retirement.
I have just started a mini cash ISA which pays 5.4% interest into which I plan to save £100 pm.
I have £700 in a maxi Virgin Tracker ISA for which I pay 1% charges. I can't transfer this to another provider ,as you can't transfer a maxi ISA into a mini ISA, but I feel I could do better by taking it out and putting it somewhere where the charges are lower.
So, I can't decide if it would make more sense to take the money out and pay it into an M&G Tracker mini ISA on which the charges will only be 0.3% and pay £100 pm into that, or, with retirement looming, should I play ultra safe and just take the £700 out and pay it into my cash ISA. Or should I just leave the £700 where it is and stop thinking about it?!

EdInvestor

Conventional wisdom suggests you should opt for safer investments near retirement, which would mean paying into the cash ISA.

On the other hand life doesn't suddenly stop dead when you're 60 or 65 (we hope;)) indeed you may well have another 30 years to go.That suggests to me you should be looking for higher returns long term for at least a portion of your savings, which means equities.

Is a tracker a good idea? It has the virtue of low charges ( you shouldn't pay more than 0.5% - which is what M&G charges if you look at the fine print).Getting the cash and the equities amounts more balanced might settle your worries.

dunstonh

You can transfer it to another provider. Once you have left the tax year, the mini/maxi side of an ISA is no longer important. You cannot transfer an equity into a cash ISA and vice versa.

A tracker at 1% is expensive and as Editor says, it may or may not be time to look at lower risk funds such as gilts, corporate bond funds which have lower volatility. Also, UK tracker funds havent been that good over the recent years and most managed funds (in the same or similar areas) have beaten them. Particulary in the similar investment area of UK equity income where dividend income is a greater focus. Gordon Brown is one of the reasons why the UK stockmarket is depressed due to his increased taxation on stockmarket investments. It is unlikely that is going to change in the future.

deemy2004

As above you should use up your full £3k mini cash isa allowance so put in more than £100 per month

I'd leave the £700 where it is as 1% is not going to make much difference especially when you will likely lose something like 8% on the selling and then buying spreads.

But do max out your mini cash ISA allowances ! As Cash ISA's have another 5 years to run so you could save £15k in them

cacique

Many thanks for that everyone.

Now I'm thinking again! Perhaps I'll leave the £700 alone for the time being, carry on with the £100pm into the cash ISA but also, as Dunstonh suggests, look into putting something each month, maybe £50, into lower risk funds such as gilts and corporate bond funds. I have never even thought about them and, have to say, know nothing about them. I know you can't give any sort of advice, but can anyone give me some idea of which funds/providers I should be looking at?

I like the idea of maxing out my cash ISA but also like the idea of investing in something more interesting as well (as long as there isn't much risk attached - once bitten twice shy!!)

FreebeeKing_2

yeah i think you should not retire because they you have no ambition anymore, and you feel unimportant and people take advantage of you as an old age pensioner unless you really h8 your job

i feel really strongly on this topic its up to you!

carnet

FreebeeKing wrote:

yeah i think you should not retire because they you have no ambition anymore, and you feel unimportant and people take advantage of you as an old age pensioner unless you really h8 your job

i feel really strongly on this topic its up to you!

Rather a sweeping generalisation is it not ?

Everybody has to retire sooner or later, whether they "h8" their job or not !

Personally, I find your ill-considered comments rather offensive. I chose early retirement some years ago and find my life now infinitely more busy and much more fulfilled (personal investment, selling on eBay etc.etc.) than ever I did when working.

As for having "no ambition anymore", feeling "unimportant" and "people taking advantage of me as an old age pensioner" it very much sounds as though that may have been your experience, but it certainly hasn't been mine !

Life is what you make of it M8 - working or not.