Choices at 33

Bounderby

Hi, I have created this ID specifically for this board as my long-standing username identifies me and I'd rather keep this private.

With the start of the new ISA year, I am asking myself questions about how to approach savings this year.
I am 33, a basic rate taxpayer, paying into an LGPS pension (10yrs so far). I currently have £15k in a cash ISA and pay £300 p/m into a First Direct regular saver at 8%, maturing in July. I'm a homeowner with a 75% LTV mortgage at 3%.

Including the £300, I can realistically save £800 per month. I don't think I need any more cash, so am considering a S&S ISA this year. I've zero experience of these. I've always wanted to own BTL property, but for no concrete reasons other than I like the idea of physical assets.

What would you do with the information provided? If I roll the £300 into another saver, albeit it at 6%, I'll have £6k 'new money' to invest each year, plus the £3.6k+interest from the regular saver maturing each year. So approx £10k. I plan to leave the £15k I already have, in cash.

I have no real goals other than to increase my wealth for the future.

Thank you for any comments

MoneySaverLog

Just a thought but with a S&S ISA, 25% per year return investing £960 per month for 14 years would make a cool million pounds.

I know 25% is high, but it's just a thought.

veryintrigued

If it was me I would be paying off as much as I could off my mortgage (you dont say whats left to pay on it). I know interest rates on borrowing are low but they are on saving too.

I was lucky enough to be able to pay mine off by a little older than you.

It allows you more decisions in terms of what you need to earn and what you can do with with the diaposable income you have.

Just my take on things - hope this comes across as helpful and not arrogant.

Good luck.

xylophone

You could overpay the mortgage and drip feed into a stocks and shares ISA, perhaps starting with an equity income fund?
You could consider contributing more to your pension?

Bounderby

Thanks for the comments so far.

My mortgage is circa £90k with 23 years to run. I like the idea of being mortgage free but thought I could do more with my money elsewhere. I always imagined it would be paid by 50, to allow a more flexible retirement, so I'll have to overpay at some point to achieve this obviously. I also don't intend to stay in the current house forever.

I have no intention of paying extra into my pension, as it's pretty good with 10 years locked in at final salary, moving on to career average where I'm more or less at the top of where I might expect to earn anyway, if I stay in my current career (no plans not to).

will111222

I would pay down the mortgage. Its a debt and being debt free changes your life. It keeps things simple which is also a good strategy.

veryintrigued

Bounderby wrote: »

Thanks for the comments so far.

My mortgage is circa £90k with 23 years to run. I like the idea of being mortgage free but thought I could do more with my money elsewhere. I always imagined it would be paid by 50, to allow a more flexible retirement, so I'll have to overpay at some point to achieve this obviously. I also don't intend to stay in the current house forever.

I have no intention of paying extra into my pension, as it's pretty good with 10 years locked in at final salary, moving on to career average where I'm more or less at the top of where I might expect to earn anyway, if I stay in my current career (no plans not to).

With that info I'd be even more keen that paying off your mortgage was the right direction. By feeding money into it you could see the term reduce hugely and the interest you pay reduce remarkably too.

Good luck

DMFR

As stated above, overpaying on your mortgage can bring the debt down sooner. Have a look at the MSE overpayment calculator to see what the difference in years could be - MSE overpayment calculator

kidmugsy

At the moment cutting the mortgage pays better interest than saving in a Cash ISA. Eventually it'll get you down to an LTV below 60%, which could save you more money. In your shoes I'd check whether overpayments can be borrowed back later.

gadgetmind

MoneySaverLog wrote: »

I know 25% is high

Yup, about five times the long term 5% pa from equities that is a sensible base line figure.

Out of interest, where did the 25% figure come from?

MoneySaverLog

I was just playing around with figures to see what kind of rate would be needed to make a million. It was curiosity more than anything else, with amount and time remaining constant, I just played around with the rates.