What to do with £10,000

averi101

zygurat789 wrote: »

It looks I haven't done much with my life...After your answer I pulled out my mortgage papers and one good thing is mortgage will finish in 4 years as I am overpaying.I have a pension which will give a oneoff of £100,000 at 60 yrs and annually around £24000. I have insured my life for the amount of mortgage. Whole objective now is to save for old age.I better keep £10000 for sudden emergency as previously advised.Any comment?

One of the best things to come out of this is that you have now started to take stock of your situation and plan.
I would suggest that you and spouse, if applicable open cash ISAs and put as much of your instantly available cash into them. The interest is tax free whereas at the moment you are probably paying 40% tax so that's increased you income by 2/3rds.
Is your mortgage insurance mortgage protection or for the full amount of the original mortgage and is there any savings element?
Look atv other relevant boards on MSE particularly Savings, Pensions particularly "the number".
Trust me you can have hours of fun making yourself more financially secure[/QUOTE]

Thanks.Yes my mortgage is protected for £100000 and i have overpayed about 30,000.I spoke to my bank today and i got negligible interest on my saving from them.As suggested by you,transferring it to cash ISA in my and wife's account in Nationwide account,I have account with them,and probably will get better interest.Thanks a lot for your help,I was so puzzled last night!!!

Averi

zygurat789

Thanks.Yes my mortgage is protected for £100000 and i have overpayed about 30,000.I spoke to my bank today and i got negligible interest on my saving from them.As suggested by you,transferring it to cash ISA in my and wife's account in Nationwide account,I have account with them,and probably will get better interest.Thanks a lot for your help,I was so puzzled last night!!!

Averi[/QUOTE]

If you are paying 40% tax an d your wife is not, she would pay less tax than you on any interest. You both pay no tax at all on ISA interest

averi101

Thanks.
First ISA done -very pleased.Nationwide will give 2.5% interest which is good.Transferred my money from Saving barclays where it was not getting any.Wife will also do the same.

I could n't understand "interest" bit.Do you mean we shoould have separate current account to pay less tax?Our both incomes come in one single account at present.

zygurat789

averi101 wrote: »

I could n't understand "interest" bit.Do you mean we shoould have separate current account to pay less tax?Our both incomes come in one single account at present.

If you are on 40% tax then that is what you pay on the interest you receive. If your wife pays 20% tax then that is what she pays on interest she recives.
Now if you were to give her all your non-ISA savings..........
Yes she would pay half the tax that you would have paid on the same income.

monkeyspanner

Your mortgage is at a good (low) interest rate and you will clear the mortgage prior to 60. You could consider scaling back your mortgage repayments so you will clear your mortgage on retirement and using this income to make top-up pension payments. The top-up pension payments would qualify for tax relief at the higher tax rate if you pay higher rate tax. The relevant HMRC page is here.
http://www.hmrc.gov.uk/pensionschemes/understanding-aa.htm

Diastolic

zygurat789 wrote: »

If that's all you've got saved at 52 then you need to have it all available fairly quickly, for a rainy day. Interest rates are appallingly low giving you £300pa on your £10K so, I'd get a few premium bonds, if the big ones come up you can bung me a bit.

Unless you go into fixed rate cash isa's, they're usually quite good. Only issue is not being able to touch the money for x number of years and only being allowed £5,760 p/year

zygurat789

Diastolic wrote: »

Unless you go into fixed rate cash isa's, they're usually quite good. Only issue is not being able to touch the money for x number of years and only being allowed £5,760 p/year

But then when you're saving that's the good news.

That's for cash only, there's also a stocks and shares ISA and the limits are X 2 if you have a spouse.

NAR

OP you look to have your finances in not too bad a shape, especially for retirement. Remember life is for living, so please ensure you spend plenty on spoiling yourselves loads as there are no pockets in shrouds!

yorkshireman2

It looks I haven't done much with my life...After your answer I pulled out my mortgage papers and one good thing is mortgage will finish in 4 years as I am overpaying.I have a pension which will give a oneoff of £100,000 at 60 yrs and annually around £24000. I have insured my life for the amount of mortgage. Whole objective now is to save for old age.I better keep £10000 for sudden emergency as previously advised.Any comment?

It looks like you're not doing so bad already.

I'd agree with the other people who suggest building up some ISA savings.

It is always wise not to have all your eggs in one basket (e.g. a pension) and so ISA (shares or cash) would help diversify a little.

As for savings for a rainy day, it sounds like you already earn enough to cover such eventualities, or could, if the emergency was big enough, increase your almost paid of mortgage, so I wouldn't worry too much about having an emergency fund.