Pension or mortgage?

edinburgher

May I ask why on earth you have 60%+ of your portfolio in a single share? :eek:

I'm guessing you used to work for them?

You might like to sort that, a bit of diversification is in order.

atush

Yes, and at the very least i'd be putting the GSK (or what is left of your holding) into an ISA. As you are perhaps building up a high CGT exposure (although you could give some to your spouse to negate this).

Dont forget that 300 into a pension isn't just 300. It would be 375 into a pension as it would get 75 in TR.

And your wife will have as big a PA as you will in retirement which could go to waste, so her pension needs boosting. She can put in her entire income up to 40K, or if she is not working she can put in 2880 (which becomes 3600 with TR). If she doens't have the cash for it, it could some from your 300.

Slashman808

I did used to work for GSK & I believe that part of my redundancy was all my shares (different schemes) were tax exempt so, I'm hoping no CGT?
The divi's are good (2k+ pa) which pays for a decent holiday!
I don't want to save everything as I'd like to live a little now ... Could get hit by a bus tomorrow!
I have to say the feedback I'm getting is great & giving me plenty to ponder over. It's only taken me 30 years of working to realise I need to think about what happens when I stop! I've been told I've a good pension pot but, I know there's 2 of us & I really need to address that.
Keep the comments coming please..

nicknameless

The biggest eye opener for me was building and playing with some spreadsheets. You only really need a basic working knowledge of excel and some common sense.

I've built sheets that summarise current income and outgoings which demonstrate how much is available to invest for the future. Have also built sheets for retirement at certain ages based on a target income, predicted pots (pension, ISA) to pay for retirement, to see how long funds would last at different rates of withdrawal. Very basic and not a model by any stretch of the imagination but it puts into perspective what might be possible and how based on current spend, income, and disposable income and where you might allocate that.

There is always a balance between the here and now and the future but informed choices are exactly that.

Predictions for retirement are linked to income and outgoings and so they adjust automatically and at the end of each year I can simple add in actual figures for things like s&s ISA amounts to see how things are progressing. Unknowns like investment returns and state pension etc. are all on the pessimistic side.

Triumph13

And the immediate action you should take, whilst working out what to do about pensions, is to stop those mortgage overpayments and stick them in wherever gives you the best after tax interest rate on cash. Even if you stick them in a 1.5% easy access ISA that is still a 1.5% return vs 1.08% on your mortgage. If the base rate goes up you can always just pay it back in the mortgage again (assuming no overpayment restrictions).
In fact, take a look and see if you can take your past overpayments back out again to stick in a cash ISA as this gives you a zero risk net profit (assuming you stay within the £85,000 per bank limit.)
Once you've done that you can start getting down to the nitty gritty of investments and pensions vs S&S ISAs

kidmugsy

Not only should you diversify your GSK dosh pronto, you should consider using the current loss-leader madness of interest-bearing current accounts. Get yourselves 5%p.a. at TSB (two sole accounts and one joint, £2k per pop), ditto at Nationwide (£2.5k per pop), and one, two, or three Club accounts at Lloyds (4% p.a. on up to £5k per pop). Remember that you can always flood money back into ISAs if these loss leaders disappear, at £30k p.a. between you. For details of how to meet the T&Cs, see multiple threads at the Savings & Investments forum.

atush

Your GSK shares are NOT tax free. Thye may have been when you recieved them, but any increase in value since then is taxable. what was the price when you acquired them? What is the price now (i should know I own some lol).

So if you want to keep them, transfer them into an ISA. If you want to sell some to diversify, use your annual CGT exemption.

Dunnit

In 2000, staff shareholders in Bank of Scotland and Tesco probably thought they were on a safe bet as well.

atush

Then think abt the enron guys who lost not just their jobs, but their share saves and pension when it went down.

Slashman808

Atush, I thought you couldn't put a single share into an ISA? Also what is the CGT expemtion?
I'm learning so much in the last 24hrs!