Advice for 400pm

Moam

Happy new year all,

Like many I'm wanting my money to work for me, each month I'm due to have around 4 to 500 spare, in brief I'm paying into a company pension £50 pm, not saving anything, no ISAs, and overpaying a little on the mortgage..

I've been looking at all sorts private pensions, ISAs, overpaying more on mortgage, not after as much as I can reap, just like to say it work for me in the best way.

Cheers

S

Linton

Can you pay more into your company pension? £50/month is very little. If you did would your employer pay more?

Eco_Miser

First you should have some cash savings - three to six months income is often suggested. This is to cover emergencies of various kinds, including losing your job. It's also nice to be able to buy stuff when you want, without having to apply for credit.
It can be held in current or Regular Saving accounts.
Nationwide Flexclusive Regular Saver and the FlexDirect Current account, both paying 5% with instant access would seem the best for you, but check the T&Cs for yourself.

da_rule

Some company pension schemes will allow you to pay higher rates (whether the employer will match this is another issue).

If not, making full use of your ISA allowance is a good place to start. Overpaying on the mortgage is also an option. With my mortgage, I can overpay but can take the overpayments out of the mortgage, they don't get 'locked in' until the end of my fixed rate period. However, the money is not earning me anything in terms of interest while sat there.

YorkshireBoy

da_rule wrote: »

If not, making full use of your ISA allowance is a good place to start.

Best ISAs pay c. 1%?

OP only has £5-6K per annum to save...and he'd get all* of that making 5% AER over the next 12 months with Nationwide. That's 5x the ISA return as they'd be under the PSA regardless of their tax band.

So that's the "best place to start" isn't it?

With a £20K per annum limit from April, the situation can be reviewed at a later date...maybe even as late as 2020...when they STILL might not have £20K saved up.


* I accept the 5% regular saver rate is variable, not fixed like the FlexDirect account. And if there are two of them it isn't a problem at all.

ColdIron

You should prioritise a cash emergency buffer but £50 pm into a pension isn't enough, less than a cheap cup of coffee a day. Investigate your employers pension options

Moam

Thanks for the quick responses, I will look at the pension tomorrow, only been with them 5 months , the 400 is spare as I have calculated 300 saving for emergency and 300 mortgage overpayment.

YorkshireBoy

Moam wrote: »

the 400 is spare as I have calculated 300 saving for emergency

With some discipline, you can/could lump them together.

and 300 mortgage overpayment.

What's the interest rate on the mortgage?
How long before you'll be re-mortgaging?
Are there two of you?

Moam

Interest rate is locked in at 3.2% for 5 years, yes there's two of us.

Moam

Just looked it seems my employer contributes 2% of my salary so if I increase it wouldn't really change their contributions, should I increase mine or is their any benefit in have a separate personal one.

ColdIron

Moam wrote: »

Just looked it seems my employer contributes 2% of my salary so if I increase it wouldn't really change their contributions, should I increase mine or is their any benefit in have a separate personal one.

Some companies will pay in a straight percentage of your salary, others will match your contributions up to a set level. For instance if they say 6% and you only put in 2% then 2% is all they will put in. 2% isn't particularly generous so check out exactly what the terms are. Workplace pensions are usually a better deal for most people