Advice on investments

Tjames595

Hi
Im 33 years old, married and have 40k in savings and wondering what the best option for me to do with it is.

I was looking at the following options:

1. reducing my mortgage down which reduce the repayments by £350 per month.

2. Increasing my Pension

3. Buy to let and get a rough return of 10% on the 40k investment after tax.

4. Shares, I've made small investments but nothing of this size.

At the moment I have the money in a mixture of ISAs and premium bonds.

Any help would be appreciated.

Regards

T James

Linton

1. What rate are you paying on your mortgage? If you think you can get a significantly better return from an investment then it may not be the best idea to pay off the mortgage, assuming its a standard repayment type.

2. Could be a good idea. Will your employer match additional contributions,or are you a higher rate tax payer - in either case a very good idea.

3. Really?? 10% return after tax, expenses and void periods?

4. Could be a good idea. If you want to invest, you should probably be looking at funds rather than individual shares.

First question though is how much emergency cash do you have. Before you make any long term investments, which these really are, you are strongly advised to have say 6 months living expenses in accessible cash. Premium bonds would do as well. Otherwise if you lost your job or had some other emergency your family could have difficulties, assuming you are the main breadwinner.

Tjames595

Hi
Thank you for your prompt response.

1. My current rate is 3.09, if I remortgaged and invested my 40k into that I could reduce this to 1.99.
I do hear a lot of people saying you shouldn't pay off your mortgage and invest your money else where.


2. I'm self employed so make a pension contribution through my company at the end of our financial year.

3. 10% isn't inc maintenance or void period, it's all the costs you know will happen through out the year like man fees, insurance and int only mortgage payments, I haven't incl the 10% wear and tear allowance in this equation either.
This is on student HMO properties rather than your typical Buy to Let.
You also get capital appreciation with property.

4. I've looked a lot at HArgreaves Landsdown but never taken the plunge .

These funds are all of our savings/emergency funds but we are in a very fortunate situation where we are able to save 2.5k per month and really want to make this money work for us as much as possible.

Regards

T James

dunstonh

2. I'm self employed so make a pension contribution through my company at the end of our financial year.

If you are self employed, then it doesnt matter if you pay it or the company. Company payments are only suitable employees (such as directors). Self employed currently get lower state pensions. That is changing shortly but only on future qualification. Not historic.

There is a very crude guide that says you should aim to have £35k in your pension by age 35. It is more to make you think of the sort of amount you should have in your pension at that point (someone starting late but paying more wouldnt fit that for example). So, how are you doing on your retirement provision?

At the moment, you have listed some solutions but you havent listed the needs. You should look at your needs before you find solutions.

atush

I'd save more into a pension, and save some in S&S isas too.

Tjames595

Sorry I didn't clarify that.
I'm a company director and made a contribution personally of 8k which is effectively 10k with the governments contribution and also gives me an increase on my dividend allowance.

So up to now my total pension pot is 10k

Ideally I would like to retire by 45.

The big issue I have with putting a lot of money into a pension is legislation can change and also not being able to get hold of it until I'm 55.

Like was said in the other replies I don't know what around the corner so I would like a investment that gives me an income but would also like to have some invested in something else.

Tjames595

Sorry that was meant to retire by 55

dunstonh

I'm a company director and made a contribution personally of 8k which is effectively 10k with the governments contribution and also gives me an increase on my dividend allowance.

Ahh right. That means you are not self employed. In your case, you are best to not make the contribution personally. Instead make it via the company (it gets money out of the company and reduces your corporation tax and avoids NI.

So up to now my total pension pot is 10k

Oh dear. a bit light then.

The big issue I have with putting a lot of money into a pension is legislation can change and also not being able to get hold of it until I'm 55.

Legislation changes are a pain with pensions. However, most legislation changes in the last 20 years have improved terms and options for most people and only restricted those with very large funds or large contributions. A £10k pot has little to be worried about.

Also, the point of a pension is to provide for retirement. Why would you need an earlier than 55 age?

Sorry that was meant to retire by 55

And your current planning will get you the £1 million or so funds to allow that?

Tjames595

Ok I see.
If all goes to plan I still will look to invest 10k per year into my pension through the company.

So what would you recommend to do with the money I'm able to save per month?

Jegersmart

Tjames595 wrote: »

Ok I see.
If all goes to plan I still will look to invest 10k per year into my pension through the company.

So what would you recommend to do with the money I'm able to save per month?

It would seem prudent to use your tax-efficient ISA wrapper for that, unless there are better options in your particular situation. In most s&s ISA's you can choose different funds that invest in different assets and regions according to your preference and as long as you are in for the longer-term then most of the volatility may not matter to you.

GL
J