Where will our Savings work for us?

Rainbowchild

I wondered if anyone could offer some advice please on buying to let verses investments/savings accounts.

A bit of history. We are a couple in our late 30’s/early 40’s. We both work full time, earning a joint income of £26k a year. We have no mortgage after paying it off this year and no dependants. I will have a very small pension through work and my husband doesn’t have one. We have 68k in NS&I, 38K in HSBC investments and at the moment £52K in an instance access ISA due to the fact I don’t know what to do with it yet. 15K is earmarked for a new (to us) car as we’ve never had a newish car. We also manage to save roughly £600 each month and while some of this goes towards holidays (we love to travel) and some at the moment towards house repairs we generally have around 7k as an emergency fund.

Initially were thinking of buying a house outright, in Goole, as an investment. This area attracted us due to house prices of £60k and thinking of buying outright because after expenses (tax, repairs, agent fees etc) the rent would be additional income. But the more we look into it and speak to people other questions have been raised.

Would we be better getting a mortgage and buy a house in our home town (York) which we can still rent out, although part/most of the rent will just cover the mortgage repayments? This is an idea as we believe that when house prices go up York prices will increase more than Goole.

Also with property I understand there will be a bit of stress as in getting the right tenants, repairs etc. but I am ok with that.

Or would it be better to investing it with a bank/financially investor. If so what to people recommend?
As this money is going to be our pension and I just want to have as much information to look at before making a decision.

Any, constructive J comments would be welcome, thank you for reading.

edinburgher

If you only have a small pension and OH has none, you are far better considering more conventional investment options before leaping into a BTL. I know the idea is very popular in Britain, but at the end of the day a house is a highly illiquid asset (difficult to sell) and all your eggs will be in one basket. You also have to allow for void periods, unpaid rent etc.

Considering your respective ages, you are at the point where pension investments will still have decades to grow. There are also tax benefits to investing in pensions. Why doesn't OH have a pension? Self employed? If he has an employer, he should be grabbing any pension contributions match with both hands (as should you).

Considering your current provision, I would personally be putting BTL way down the list of possible investment choices.

You're in a great position to grow wealth now you're mortgage free :coffee:

Rainbowchild

Thanks for your reply edinburgher.


My OH struggled to get employment after coming out of the army after 5 years of service. The jobs that he has taken have mainly been minimum wage eg shelf stacking, security and the companies did not contribute. At the time we have put any extra money into overpaying the mortgage we had.


We could put the money that would have been going towards our mortgage each month (£300) into a pension fund for my OH and look to investment for our savings.

greenglide

after coming out of the army after 5 years of service.

So he should have five years service deferred in the MOD pension scheme then?

Rainbowchild

Oooh yes, thanks for that greenglide, I've just mentioned it to him and he said oh yes I'd forgot about that!! I'm now looking into how much he will get.

xylophone

Does your husband have a job now?

If so, his employer will have to contribute to a pension at some point. https://www.gov.uk/workplace-pensions

You mention shelf stacking - Sainsbury, Tesco, Waitrose etc have pension schemes for their employees?

Rainbowchild

He worked at Asda but the work was through an agency. He works in a hotel now and asked about the pensions there but was told they hadn't started it yet.

xylophone

they hadn't started it yet.

He needs to ask when the scheme will be available - the company will have a staging date - see link in my post above.

You could both consider additional pension provision. If you contributed more to your occupational scheme would there be a matching contribution from the employer?

http://www.cavendishonline.co.uk/pensions/

Re state pension https://www.gov.uk/new-state-pension/overview

Deferred army pension https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/313089/20140501_deferred_pension_advice.pdf

You might look for the best rate you can find for the isa

http://www.moneysavingexpert.com/savings/best-cash-isa

Do you have the best current account(s) for your needs?

Joint Santander account?

Don't forget using current accounts to obtain the best possible interest rates.

https://forums.moneysavingexpert.com/discussion/5090719

Rainbowchild

Thank you so much for your help xylophone.


From what you have advised we need to both look at getting our pensions sorted.


I didn't think about using current accounts for best rates so will definitely look at that.


Thanks again, its really appreciated.