My current plans, advice welcome.

btb1

Hello everyone,
First post.
I have been reading through many threads about investing here and thought i would sign up to see what some of you long timers think of my investments/ plans.

Basics.
45 years old.
85k mortgage.(23 years remaining)
30k in cash isa
25k in multi asset funds (fund of funds uk, japan, global).
15k nsi linked certs.
3k nsi premium bonds.
5k stocks on share dealing platform (my own picks).

Ongoing yearly investment.
2.4k into funds of funds isa.
2.4k share dealing platform.
12.6k into cash isa with view to pay mortgage off when amounts match.

If you could give any advice into where i might do better it would be much appreciated.
I would like to keep the equities towards retirement and keep adding to the cash isa to pay off the mortgage.

Do you think this is a good plan?

Thank you in advance.

Linton

I think you would be better off investing more in your multi asset funds and less in cash. What is your annual return from these funds? What is your mortgage interest rate? What do you conclude from that?

btb1

Thanks Linton.

I had not thought of it like that.
At the moment the funds are probably doing better than the interest on the mortgage % wise.(for know).

Since taking out the mortgage ive been focused on paying it off with cash.

Youve made me think,
Thank you.

bowlhead99

I'd also query why someone would borrow £85k simply to give them the resources to put £48k into cash and premium bonds/ index linkers. And building up a pile of cash to pay off the mortgage "when amounts match"? Why not pay off the "amount that matches" (i.e. the new £1,050 you save into cash ISA), every month? Are you earning more on your new subscriptions into cash ISAs than you would save in mortgage interest by not owing the mortgage?

There is definitely something to be said for having some gross borrowings at the same time as some cash and investments, rather than clearing everything out to leave you at net zero with no emergency fund or rainy day fund. It is good to have a safety blanket. However, if your mortgage is only 85k over a long long time, your cash allocation seems way too high. I can see why someone with takehome pay of £60k and a £2kpm mortgage plus other bills might want £30k in cash, preferring to keep 6mths net pay in liquid savings rather than clear down some of the debts. But £30k cash on hand when your minimum mortgage payment is maybe £5k per *year*? Seems excessive unless you've been able to borrow at under 2%.

Aside from that rant: you are mostly using up your ISA allowance with cash but you don't seem to be using the high interest current accounts that are around these days (e.g. Santander at 3% up to £20k, others higher rates for smaller amounts. You could use some of those and net more than you would get gross in an instant access cash ISA, allowing you to put your shareholding money in the same ISA you do your funds in. Might save a bit of tax on divs or gains every so often

Kendall80

Rather than adding to your cash ISA with a view to paying off your mortgage you would probably be better off overpaying.


The existing amount in your ISA could also go towards your mortgage depending on any overpayment penalties you may have. Alternatively, you could invest it in your S&S ISA or startup a SIPP. 30k into a SIPP as a basic rate taxpayer becomes a nice 36k straight away.

pauljoecoe

Depends on your mortgage interest rate I suppose but personally I'd be paying of the mortgage. 45 years old with another 23 to go makes you quite old when its paid off.

enthusiasticsaver

Unless you are on a very low mortgage rate you would be better off using some of your cash funds to pay that down. Do you have a pension as that is a tax efficient way of saving particularly if your company also pays in to it?

suebfg

I would gradually pay off the mortgage provided that you feel you have enough of a savings cushion should you lose your job etc. Any spare amounts I would plough into a stocks and shares ISA or pension (depending on your tax bracket) - interest on cash ISAs is dismal and subject to inflation erosion.

Plus, being mortgage-free is a very nice position to be in - psychologically at least.

btb1

Hello.

Thank you for your replies, some very good advice.
I will explain a bit more to help any readers to understand my position and see if any of the advice remains the same.

Im self employed so no option for a company pension.
Ive always been aware of cashflow, hence why i have so much in cash.
I started saving back when cash isas first came out and they were my first choice, trying to max them out every year became my first goal.
I now feel ive become a bit hooked on this and need to review.

Also if i make part over payments on the mortgage and get in trouble later i assume the bank will not take these over payments into consideration.(10% max per year allowed).
This is why i thought i would wait until the savings and mortgage were equal.

Your replies have made me think i need to review my plans.

Thank you.