What to do with my savings?

JC80

Hi, I am new to the site and after some advice in relation to my savings & future. I am 37 years old and have just over £100K in savings. I have just over £66K in an ISA paying 0.05% and around £36K in a standard saver account also paying 0.05% (gross). I have no debts, credit cards etc, I do have a mortgage on my house which is made up of my initial mortgage and a further advance when I moved which is £56,796.00 @ 2.25% and £14,629.00 @ 3.74%. I am a director & shareholder of a maintenance firm and can afford to put aside around £1K per month. I do not have any experience in stocks/shares/investments and don't know what to do for the best, should I leave it where it is or invest elsewhere?, any guidance would be greatly appreciated. Thank you.

ColdIron

Do you have a pension?

JC80

I have an Aviva Pension 98 from my previous employer which has £11.5K in the pot this has sat stagnant since I left. I also have a Peoples Pension through work which I pay around £50 into a month and this has a pot of around the same as the previous.

eskbanker

A lot depends on what you want to do with your money and when - in the absence of any specific requirements (e.g. large planned purchases) the usual recommendations on here are to ensure that you have an emergency/rainy day fund of 3-6 months' outgoings in readily-accessible cash form and then consider whether to look at investment if you're happy to tie the money up long term and protect its value.

In your case, you might wish to pay off some or all of your mortgage if you're able to do so without penalty, and should also look at optimising pension arrangements, as these are tax-efficient (being posted about as I write this I see!).

Articles worth reading include the quick links above about saving ('How to Start Saving' and 'Top Savings Accounts') and also http://www.moneysavingexpert.com/investments

Gorgeous_George

Pay the mortgage off.

Then it's down to your appetite for risk.

I like houses but I would need a yield of 8 - 10% depending on the type of tenant I had.

I like social lending and have some funds in Ratesetter.

I like shares in a particular company local to me.

Take advice from all sources but make your own decision.

If you don't like risk, just pay the mortgage off and hope interest rates rise for your worthless ISAs.

GG

xylophone

It does not seem sensible to accept 0.05% on savings while paying between 2.25% and 3.74% interest on the mortgage.

If you can do so without penalty, it could make sense to pay off the mortgage and regard the balance of your savings as your emergency fund (approx £30,000).

You could certainly get a better interest rate than 0.05% on this by using a combination of interest paying current accounts/regular savings/standard savings accounts.

Would a Santander 123 with cash back be worth considering?

Then you might look at a Nationwide Flexdirect for a year, a TSB plus, a Lloyds Club....

You might then consider paying what you normally pay into your mortgage into your pension and using the £1000 a month to make regular contributions to a stocks and shares ISA.

With regard to your pension, is it worth considering transferring the Aviva pension into the current pension?

kidmugsy

You could consider paying off the mortgages as equivalent to a low-risk investment, like gilts, but particularly tax-efficient. You will probably want to balance your portfolio with something higher risk - equities, perhaps. The best way to do that might be to get the company to make some more pension contributions for you, and to invest that money in low-cost, passive "tracker" funds. Vanguard is a highly thought of provider of such funds: perhaps their global equity tracker would suit you.

As xylophone said, perhaps keeping £30k in high-interest cash accounts would be a good idea. If you run out of attractive ones consider Premium Bonds. The prize fund pays out 1.15% p.a. tax-free. Think of this as about 1% p.a. going on the small prizes (£25, £50) that someone with a large holding would win quite often, and the 0.15% p.a. going on the big prizes that provide the exciting element in holding PBs. Quite a good deal, all in all.