Pension or mortgage?

pathtofreedom

Not all SS Nisas are the same. Some do only allow funds like cavendish but some had share dealing components. It is worth shopping arround as the charges vary but if you're only going to do a couple of transactions a year rather than buy / sell every day it is weighing up any yearly fee's over individual transacion fees.

As for the capital gains, if you bought the shares at £1 then they go up to £10 and you sold enough to make over £10,900 profit you'd be taxed capital gains on that depending on your tax band. By keeping the shares in a nisa you are protected from paying the capital gains and also against some of the tax on the dividends.

You can put 15k into a nisa right now, so if you found one to use before April you could some of the shares now, and some more after April, then look at rebalancing your investments with the isa by selling some and investing into something else so you're not so exposed.

Slashman808

I thought after so much advice from you all I'd give you an update on what I've done with that said advice ...
Well, I've contacted C&G & stopped my over payment
I've set up 2 regular saving accounts with Kent Reliance (me & my wife). We will pay in £500 into each from our ISA's. They pay 4% (which after tax is 3.2%) which is much better than my 1.5%
We found that we had a 3yr fixed ISA @ 4.25% which finishes in April which is nice! this will go into our Santander 123 account which I believe pays 3% (1.8% after tax).
My pension advisor has now my wife's pension details & we will take his advice on what best to do with the £300 we've saved from our mortgage over payment.
Lastly, my GSK shares ... Now, I understand diversifying but, I can't get my head around putting it into a nISA as I'm not a high tax payer. Also, we've used the divi's every year for the past 10 years to pay for a holiday. So, all I'm going to do is split them with my wife to counteract any CGT if/when I need to sell.
I haven't worked out how much I've saved but, I know my money is working a lot harder for me with all your help!
Thanks guys

Annisele

Slashman808 wrote: »

Lastly, my GSK shares ... Now, I understand diversifying but, I can't get my head around putting it into a nISA as I'm not a high tax payer. Also, we've used the divi's every year for the past 10 years to pay for a holiday. So, all I'm going to do is split them with my wife to counteract any CGT if/when I need to sell.

That sounds an extremely high risk strategy to me. RBS's share price went from about £6 to 15p in less than two years - and that (or worse) could happen with any single stock.

I wouldn't keep the GSK just because they pay dividends - other shares also pay dividends, and it would be much less risky to have a basket of different ones. Or, for the amounts you're talking about, a fund/tracker might be an idea.

atush

You 'understand' diversifying but still aren't going to do it huh?

I know you really want to soend those divis and that's ok. But why not sell some GSK buy a few other good dividend payers? Even an investment trust? That way you'll still have divis to spend but wont be as exposed to a downturn in GSK (as there was quite recently?).

Having said that, long term big pharma is a safe enough bet. As long as you wont ever be a forced seller during a DT.

Edit, for instance, the high in the last year for GSK was 1709. So given you have 35K worht now, they were worth nearly 40K back then. so on paper you lost abt 5K in market value of your shares since the high. Diversifying would help you not suffer such a large fall in value in future.

Obv another correction in the price could come, as I dont think the situation that put GSK down earlier this year has been resolved. having said that, it is up strongly recently.

Slashman808

Atush, I do see your point but, I have no intention of selling them (although I do keep an eye on the price). As stated I recieve £2k every year & I've held these for 10 years now so, that's £20k. Another fact is nearly half of my shares we given to me free as part of my redundancy so, unless they totally implode I've already made on them.
I've dabbled in shares in the past & got stung, losing enough to realise shares ain't my thing.
The fact I've stopped over paying my mortgage (going against my mantra of wanting to be free of it asap, & putting on 3 years more paying at least, started taking money out of my ISA & putting it into a regular saving account, boosted my wife's pension all within a week is testament of all the good advice I've taken on board for all & sundry.
I feel as if I've taken quiet a large financial step in another direction (& hopefully the core t direction) & for that I'm very grateful. I can't thank you all enough for your quick & knowledgable responses.
Thank you

Annisele

I can see you've done quite a lot in the last week, and you might well want to take a breather before you make more changes! But I still think your views are a little conflicted - you've got about 65% of your money in a single share, and yet shares aren't your thing.

Slashman808 wrote: »

I've around 3,000 shares in GSK (£45k) & around £20k in an ISA (instant access as its our emergency fund) & £5k in a 5yr bond (5%).

Slashman808 wrote: »

I've dabbled in shares in the past & got stung, losing enough to realise shares ain't my thing.

Sometimes I think it helps to try a thought experiment (in your head; I'm not asking you to post your results). Imagine you don't actually have any shares at all, and instead you have £70k in cash. What would you do with it? Would you buy £45k of GSK shares? Why or why not?

I know CGT means it's not quite that simple, but I think it's extremely unlikely that you'd buy so many GSK if you'd started out with cash. If you'd do something other than buy £45k of GSK, then presumably that means you think your money would work better elsewhere - and if you think that, you should probably sell and buy the other thing.

atush

I agree, yo have done a lot recently all of it good. But do take time to reflect picking a few more good Div paying shares in solid companies or better yet, a good investment trust or 2 would help.

And you'd still get those divis to spend every year.

And I based my figures on 35K, or 2330 shares, not 45K so even more proof you should consider diversification. I realise you are very happy with your 2K in income on 45K of assets. Which is a 4.4% yield. But this year your investment is down 7%. So you lost 1.5 times as much as you received in income.

Slashman808

That is an excellent point ... I will take a breather & then think over that quandary.
Again thanks

atush

no probs. It is hard I realise.

Have a good sunday