Choices at 33

marathonic

gadgetmind wrote: »

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?

5% is also way out. I know it's the mid-rate projection figure used by new pension guidelines but it's nowhere near the long term average return on equities. The people coming up with these guidelines are no more capable of predicting the future direction of stockmarkets than you or I.

I, personally, think that 7% is a sensible forecast - 2.5% for GDP growth, 2.5% for dividends and 2% for inflation.

newfoundglory

Paying off your existing mortgage should only be done if its cost exceeds the return from your investments elsewhere.

The monthly saver is clearly worthwhile, even at the lower 6% rate, as your return will be be more than 3% after tax.

In fact, thinking about it, could you get a cheaper mortgage? Rates are very low at the moment. But there could be a case to pay off sooner if reducing your LTV % would get you a better rate. You should look into this, as often the cheapest rates have the highest fees and for a 90k loan this approach may not be as beneficial in your case.

Stocks and shares clearly come with risks, especially over the short-term. There has been a lot of debate recently about whether the market is headed for some sort of correction due to large gains over the last 12 months. For that reason, you might like to consider equity income funds which pay higher dividends to offset any short-term losses. But you might like to balance your choice of funds with growth potential also. Research some funds and their annual changes, and the best platform to hold them on (there are plenty of discussions on here about that)

Bounderby

Ok, as a little update here is what I have done since posting:

- Renewed the regular saver, now at 6%, at £300/month
- Overpayments to the mortgage of £200/month, for the next two years until the fixed rate (2.79%) finishes, to achieve a LTV of 60% when I come to re-mortgage
- Lump sum of £3k into a Vanguard 60% LifeStrategy (Acc) into a S&S ISA.
- Cash ISA rate of 2.4% finishes October, at which point transfer a further £6k to the Vanguard fund, leaving £10k in cash in whatever ISA I can get a reasonable rate in. Is this still too much cash? It's more than 6 months expenses.
- Further monthly payments to the S&S ISA up to limit (or affordability)

kidmugsy

Seems to me to be a well diversified plan (except for the absence of gold). I could nit-pick e.g. bonds are paying poorly, bonds will sink when interest rates finally rise, etc ,etc. But nobody knows what will happen next: maybe interest rates will stay low on a Japanese scale i.e. for a generation. I like the principle of index-linked Gilts, but they too pay poorly at the moment.

May I point out that it's hard to know what your LTV will be whilst the V two years hence is unknown: so it might be wise to have a fair bit of cash available in two years time when your fixed rate period ends, just in case it is needed. Are there any two-year term accounts that pay superior interest at the moment? Actually, you might be better off with a high-interest current account such as those from Nationwide, Lloyds, HBOS, or Santander.