Savings vs Investment and Pension advice

noclaf

just to update guys, my work pension is changing from Jan 2015 - I need to increase my contribution or the monthly amount contributed by my employer will decrease by 40% To counter this I will now contribute 5%, my employer will match with a further 11% - net pension amount per month will be around £530 which I hope can help to decrease the shortfall

whilst this is going against some of the advice given above I would still like to put a small amount (£100 p/month) on a tracker as a long term investment running in parallel to my shorter term cash savings for a property deposit. I understand am risking capital but at 33 thinking it would be good to start now - any suggestions for what I could use in the S&S ISA?aleady use Vanguard LS 80 in the SIPP, any alternatives or stick to Vanguard? Fidelity and L&G have some fairly cheap trackers too but I know cheap doesn't necessarily mean the tracker is a good option etc

atush

teepee83 wrote: »

As you are a basic rate tax payer I would save in a S&S ISA rather than a SIPP for now and when you hit 40% tax rate divert to SIPP. The ISA will also give you more flexibility should you need funds for house etc.. However you will have to save cash also for your house. Ideally you should be filling your ISA allowance given your salary and lack of mortgage/dependents.

While in theory you and kidmugsy have a point, I disagree. The money would nto be locked up so could be spent. Plus you'll miss years of compound returns, plus they might not ever whack up their contributions as there is always something 'better' to spend it on.

Get it in now while you have the spare dosh to do so, and in this case this OP has more spare cash than they are admitting which they will prove to themselves once they do a spending diary.

atush

noclaf wrote: »

it appears I must of OD'd on the poncy coffee's when I first read the new pension changes

my employer certainly isnt that generous : so via salary sacrifice if I contribute 5%, they will contribute an additional 11% so total contribution will be 16% and as per bowlheads post above, since its from gross no further tax relief etc 16% is still reasonable. Also note that 11% is max contribution/match they will offer

Yes, you have Od'd on those poncy coffees lol. So you get in 2324 per month and "might" be able to save 1200 a month. That leaves you spending 1124 per month on what exactly? 60 on coffee? Maybe 200 a month to help your parents with bills? Do you pay for your own food at home? If not, that 200 might just cover what you yourself eat/utility use so there is still 864 unaccounted for- you REally really need to do that Spending diary/SOA.

Even if you use some of the money to pay for your increased pension contribs, there has to be a whole lot of that, that could be for your house deposit. I'd go so far as to say you should put aside 400 per month for spending (and that is a good amt) and save the other 464 for a house deposit. Add that to the 1200 and you'll be flying ahead in both pension and savings.

Get the money saved ASAP, do the diary then think about a tracker. You are concentrating on things out of order.