Property or Stocks & Shares

MartinRobson

Hi, briefly explain my situation - I'm 35 with mortgage of £150k with 20yrs left. Just moved so no real savings - I do have around £1k to save each month but can't decide best area to invest.

Not sure whether to save a buy property to rent out or invest in a fund?

What would you guys do?

Lokolo

Do you have a retirment plan?

MartinRobson

I have a work pension - however not the best.. Ideally I'd like to supplement income in retirement, hopefully around 60.

jimjames

If you have no savings then an emergency fund is a good first step so you have cash to cover any loss of income or unexpected household bills.

Beyond that I would be investing in S&S ISAs to build up a portfolio rather than property as you already have a large property exposure via your mortgage. If your employer will match larger pension contributions then that is an option to look into too.

Ximian

Any possibility to overpay on the mortgage without any penalties?
Do you have an ISA?
Are you a higher rate taxpayer?

atush

If you have no savings you can't buy another property (which I would advise against anyway as you'd have all your eggs in one basket).

So save that 1000 a month until you have 3-6 months spending set aside in easy access. Then look at investing for medium/long term.

Why is your pension 'not the best'? How much do you (and your employer) pay in? Is there a good range of investments? Ho w did it perform these last 12 months? Are you married? Do you have dependents?

After your emergency pot is full, I would split your 1000/month into S&S isas and pension.

MartinRobson

Thanks.. My work only contribute 1% to pension. I was looking to build up savings for retirement.

The funds looking at have performed approx 11-15% between 4 different funds within an isa for long term. Is it worth splitting with pension?

atush

The funds looking at have performed approx 11-15% between 4 different funds within an isa for long term. Is it worth splitting with pension?

Sorry that makes little sense to me. 11-14% this year? Or over several? How many?

As for savings vs ISA, you can use the employers pension or set up your own for extra contributions but you should be paying in a whole lot more than 1% (what do you currently add to it)? Each 80 you out into a pension becomes 100 immediately. So could fall 20% the next day and you haven't really lost out. Each 80 into an ISA, is just 80. But will grow and be free from HRtax, or CGT. And can be accessed anytime, unlike a pension for which you have to wait till you are 55 at least.

The sensible option is to use both S&s Isas and pensions as they each have a role to play.

thegrind

As has been mentioned I personally would aim for something a bit more liquid than property. Shares, Bonds and/or funds would be your next best route.

Its nice to have a physical asset such as a house, but a buy to let is a whole different ball game. Your relying on people to basically pay your income for that house which usually means your financial obligation to that property also. People are unreliable, they have problems, don't pay rent, devalue your investment and cost you money which all come out of your profits and in some cases your own pocket.

Shares don't ring you up because the oven dont work or require an annual boiler check or demand x% of your income to be managed by some agent and that why I like them.

I can hedge my portfolio as well, can that be done with a property? I don't think so.

I suggest you read up on investing it is something I also enjoy as a hobby.

Best Regards.