No mortgage, no debt ... now what?

joe_mcclaine

.............

richbeth

Hi,
you don't give your time horizon or risk level but assuming it's 5yrs+ and you're happy with equities you could look at an ISA with a global trackers such as vanguard lifestrategy series (there are lots of other options !). Your £1k pm for the rest of this year would be under the isa limit for the year so it would all be tax sheltered this year as the limit is ca £11,500. You might need to tweak the monthly payments down a bit for next year.

This assumes a passive approach to investing though.

You might want to look at the Monevator site as they recently did a cost comparison for online brokers/sipp/isa providers. they also have some articles on passive vs active investing.

R

quotememiserable

joe_mcclaine wrote: »

I haven't got any ISAs but I have money in a 123 account getting 3% (2.8%) and I'm quite risk averse.

Open to all sorts of suggestions but more interested in growth than income at this stage.

Thing is, risk averse and growth don't go together. You can get risk free income, although only at the small %age you mention. Any investment with growth opportunity will have risk. Fundamentally your choices for capital growth are shares or property, so if you're ruling out property then shares is what you're left with.
You might as well go ISA and make it tax free, and as Richbeth says, global funds would give you a good risk spread. I'd go for a UK opportunities fund (eg, fidelity money builder or special situations funds) plus a global emerging markets.

opinions4u

Does your employer match contributions for AVCs?

A bigger pension at 55 could be funded this way.

Alternatively, spend some and enjoy life!

FatherAbraham

joe_mcclaine wrote: »

I assume I can just chuck my money at some chap at a Bank / Brokers and leave them to work their magic rather than...?

Well, do that if you want to be poorer through huge charges and costs, whilst being exposed to unnecessary risk.

Another approach would be to find one big, cheap, global fund which you could put capital into, set up automatic divident reinvestment, and forget about it for ten years. You wouldn't "beat the market", you'd do slightly worse than the market return (because of the low charges), which is better than most actively-managed portfolios would do.

Warmest regards,
FA

atush

I agree that AVCs could help, but S&S isas could keep you afloat so you can take your FS pension later. Taking it at 57-58 would boost it hugely.

You say you are risk averse, but that really means you don't understand Risk in general. you are afraid of 'investment risk' but are quite happy to suffer the more guaranteed shortfall risk, and inflation risk.

given you pay tax on your 3%, you are getting less than inflation on your current savings. So instead of growing they are shrinking each month/year in their buying power.

If you invest for a time period of 10 years or more, you will find equities will outperform cash and other alternatives, giving you real growth over that period. There are some things that are less risky than others, esp the Vanguard range where a set % of your fund is invested in Bonds instead of equities. the 60% eq/40% one might do for you.

Doshwaster

joe_mcclaine wrote: »

Looking at my overall situation I suppose I should be able to 'afford' to take some risk now.

You've just hit the nail on the head. You are now in a financial situation where you can afford to take some risk. In fact, you need to take some risk if you want to see any significant growth. You are never going to make big money with a 3% interest rate.

The golden rule is not to invest money that you cannot afford to lose. However, if you are happy with the chance that your investments may go down in value in the short term (i.e. less than 5 years) then that opens up a whole new range of products.

My S&S ISA was up 18% last year (and would have been higher if it hasn't been for one poor performing fund). With some careful selection of funds you should be able to easily beat cash interest rates over the mid to long term (i.e. minimum of 5-10 years)

atush

Some of my shares and investment trusts are up 15-50+% in the last year. My cash savings make nothing (but are there for emergencies).

If you have an emergency fund, you will never have to sell investments at a bad time as you can wait.

Thrugelmir

joe_mcclaine wrote: »

I have a final salary pension in place which I've paid into for 25 years and intend to take early at 55 (50% of pension) in 12 years.

With many years ahead in retirement, possibly more than you've spent in the pension scheme. I would fund additional pension that could be drawn down at a later date. Be some years before you receive a state pension too.

quotememiserable

joe_mcclaine wrote: »

I assume I can just chuck my money at some chap at a Bank / Brokers and leave them to work their magic rather than having to read the FT and be on the blower every couple of days shouting "sell, sell, sell!!!" ?

I do it like this. Open an account with TD direct, transfer your money to it, purchase units in your chosen fund, nothing more to do. Pop back and check the current value from time to time.
When you buy a fund, such as Fidelity Special Situations (to take one example) that fund is made up of a wide range of shares selected and traded by the fund managers, you don't have to do any individual share buying or selling.

atush

joe_mcclaine wrote: »

I'm well aware of that.

If my money was matching / beating inflation this thread wouldn't exist.

I also understand "Risk", but thanks anyway.

No, you don't not really. As you insist you are risk averse but are in a risk only position of cash.

I am sorry you found my opinion on your question to be something to get upset about.

If you want to beat inflation, you will HAVE to take on some (perhaps small) invesment risk.