Please Help

Wwfc2015

Hello,

I'm totally new and need abit of advice. I'm 28 years old, live with my girlfriend and currently have 95k left on the mortgage, I am over paying the max without penalties.

I have 40k in a good rate ISA
15k in santander 123
5k in lloyds

I currently have no pension in place and really looking to make the most of my money.

I'd like to stay away from S&S ISA, would anyone recommend a buy to let mortgage?

I'm currently earning £5,000 per month with no debt apart from £1,000 which goes out on mortgage and bills.

Any help would be much appreciated.

bigadaj

If you want a buy to let you are on the wrong board.

Nothing wrong with buy to let but it's a business and there is risk, as well as voids, bad tenants etc

If you're earning £60k then not paying into a pension with a large disposable income is a bit mad. Compared to any other investments you're getting an immediate 40% uplift, impossible to beat elsewhere without crazy levels of risk.

bigfreddiel

Buy to let is far riskier than a well balanced equity isa.

Think about it, with buy to let what can go wrong?

No tenants, each month your property is empty you are losing 8% of your annual income. Then there is 20% tax to pay on the income, insurance, agent fees, property maintenance, problem tenants, problem neighbours, and of course the buy to let mortgage. And that only needs to go up by 1% to negate any profit.

On the other hand a nice balanced equity isa, cheap to run, no tax, just let it roll on year on year, adding your max allowance.

Cheers fj

Wwfc2015

Thank you for both replies. I was only suggesting the buy to let as an option.

When you say equity Isa, can you explain sorry? I've never really looked into stocks and shares ISA. Would I have to do this through a IFA?

Many thanks

colsten

You don#t have to use an IFA but it might be appropriate if you are unsure about investments. Read this for starters: https://www.fandc.com/isa/?utm_source=google&utm_medium=cpc&utm_campaign=isa&gclid=CIz32d-qx8YCFY7ItAodO2kP0w. Ignore that it is from F&C - you probably wouldn#t wat to use them for your ISA but their guide is good.

bigfreddiel

Wwfc2015 wrote: »

Thank you for both replies. I was only suggesting the buy to let as an option.

When you say equity Isa, can you explain sorry? I've never really looked into stocks and shares ISA. Would I have to do this through a IFA?

Many thanks

Check out the monevator web site, read up about passive investing.

Keep your costs low, create your portfolio with exchange traded funds, and use an online trading platform, such as TD Direct Investing.

Google those keywords and do a bit of research.

Buy Investors Chronicle, it comes out every Friday. It will probably look like meaningless rambling sat first, but persevere with it for at least 6 months and then prepare to get rich slowly.

If you want to get rich fast just go to your nearest turf accountant.

Cheers fj

ViolaLass

Pension, pension, pension.

Easy.

Wwfc2015

Thank you for all your replies, I will have a look into all options.

I work for myself so can't have a workplace pension. Would you still recommend a private pension?

bigfreddiel

ViolaLass wrote: »

Pension, pension, pension.

Easy.

I agree plus isa

So for pension go down the sipp route and do the same with an isa


Pension or isa is the age old question, and you can look at it this way.

Money going into a pension is tax free, money out of a pension is taxed, but money into an isa is taxed, money out of an isa is tax free.

Bit like betting tax, you can pay it on your stake or on your winnings, or had that changed recently?

Cheers fj

xylophone

You can certainly have a private pension.

You could consult an IFA - https://www.unbiased.co.uk/

Or do it yourself - http://monevator.com/compare-uk-cheapest-online-brokers/

http://monevator.com/cheapest-pension-diy/

Re pension tax relief http://www.hl.co.uk/pensions/interactive-calculators/tax-relief-calculator

kangoora

With that income and those outgoings i'd definitely consider a pension to reduce your income below the 40% tax bracket. For every £60 over (roughly) £43k you'll get £40 in tax relief, £20 added to your pension and £20 refunded by HMRC. Then look at S&S ISAs for any other savings - after being sure you have an emergency fund of 6 months household expenses. The max you can contribute to a pension in any one tax year is £40k gross including tax relief.

The above assumes you pay 'normal' tax, it's completely different if you pay yourself in dividends as a director and there are ways to contribute to a pension from your company if this is the case.