s and s isa and beginner help

suse*

HI, as you can see from my sig I have been focused on paying my mortgage off early which I have been making a good dent in so far. I currently have 20k in my offset accounts, which is saving me 3.44% interest on that a day.

I used to have a cash isa which is where a lot of that offset money came from but my logic was it is better in an offset mortage saving me over 3% than only earning 1.5%.

This might sound stupid but I always thought a stocks and shares isa meant you only bought individual shares, and that you managed it all yourself. The idea of that always scared me that it would be too much work and I'd loose all the money.

I changed jobs last year and with that got a pension where I pay in 7% currently and they make it up to 18% overall. In there you have the option then of choosing different funds, or for it all just to go into a passive fund. So again as I was scared of loosing it all so the first year I stuck it all in the passive fund but it has hardly grown at all.

So I have decided it is time to learn more about this as I am 36 a would like to retire early if possible, or well before the state pension kicks in anyway. I know to do that I need to look at medium / higher risk options for some of this pension money just with how late I am starting. This is how I've now realised you can put funds in isa's too though which also seems like a good long term investment to me.

I plan to keep overpaying my mortgage, and adding to the offset to pay it off early, hopefully to be mortgage nuteral in 6-7 years. I just want to start trying to learn how to invest as well I suppose, just to beat inflation and make more of my money longer term.

I have read a few posts that recommened Tim Hale’s Smarter Investing so I have reserved that at the library. I can't seem to find much on Martins site about S and S isas with funds, as the page says the info is out of date.

Are there any other websites or places you'd recommend I go read up on investing in general just to get a bit more understanding about funds and bonds etc.

I am thinking of starting small so it would only be a grand to start with and maybe £50-100 a month after that. As I am a higer rate tax payer so am I right in thinking it would be best to use some sort of isa wrapper for this.

innovate

Try monevator.com/investing

BTW, you don't save 3.44% a day- if anything, it's per annum.

suse*

HI thanks I'll have a look at those.

Sorry you're right it would be 20k's worth of 3.44 compounded per day so I have gone from paying about £11 a day interest to £8.80 a day right now.

CLAPTON

suse* wrote: »

HI thanks I'll have a look at those.

Sorry you're right it would be 20k's worth of 3.44 compounded per day so I have gone from paying about £11 a day interest to £8.80 a day right now.

I don't know what calculation you are doing but if you have 20,000 at 3.44% APR then that's about
20,000 x 3.44% /365 i.e. about £1.90 per day

suse*

sorry I haven't explained that well. Before any money was in the offset it was £11 a day interest in October. I have gone from 17k to 20k in the offset since then as well as some overpayments and normal payments which has reduced it to £8.80 a day. So I have knocked 5 years off already according to the statement they sent.

So I do plan to keep adding most my money to the offset, as then in about 7 years it will match the remaining mortagae so no more interest. So at that point I would use the mortgage payments to invest with.

Just with this work pension being made up of different funds too, I want to start learning now with some little investments, so I don't waste those 7 years of isa wrappers, or miss invest the pension money.

CLAPTON

suse* wrote: »

sorry I haven't explained that well. Before any money was in the offset it was £11 a day interest in October. I have gone from 17k to 20k in the offset since then as well as some overpayments and normal payments which has reduced it to £8.80 a day. So I have knocked 5 years off already according to the statement they sent.

So I do plan to keep adding most my money to the offset, as then in about 7 years it will match the remaining mortagae so no more interest. So at that point I would use the mortgage payments to invest with.

Just with this work pension being made up of different funds too, I want to start learning now with some little investments, so I don't waste those 7 years of isa wrappers, or miss invest the pension money.

yes, it's just that money savings, investments etc are all about detail


3.44% per day is very different from 3.44% per annum, compounding daily in very usual;
if you are comparing saving/returns on different strategies it's important to compare like for like etc.

suse*

well that is why I am here to learn before risking any money . I freely admit I am confused so I will be doing a lot of homework.

grizzly1911

Interest on the debt is accrued daily at the annual rate of 3.44%. If it were repaid tomorrow then x number of days interest would be due from the point at which it was last charged/applied.

By having 20k offset the OP is saving the interest that would have been charged on that amount.

Instead of £11 being charged/accrued only £8.80 is being accrued. (£11 minus the £1.90 calculated by PP roughly).

The question is could a better return be made through investment. Personally I would prefer to "pay down" the mortgage but there is always a balance to be struck between savings/investment and debt levels. If the debt can easily be serviced it may be appropriate to invest at the same time for some.

marathonic

CLAPTON wrote: »

3.44% per day is very different from 3.44% per annum

There's a slight difference alright. In one year, £100 grows to £103.44 at 3.44% per annum. It grows to £22,213,567 at 3.44% per day.