What do you think of my plan?

banthecar

A bit of background :
Age :46 in good health, divorced about 5 years ago. All the finances etc were finally resolved 18 months ago and I started a new mortgage which has £87000 left on it (current repayments £395 a month)

Currently I earn about £37000 a year.
£25000 from civil service job and £12000 from self employed performance / tutoring work in the performance arts sector.

Now you may have seen this one coming but I want to give up the day job but I want to make sure everything is in place before I do that.

Two things I need to do before I quit.
I owe my parents £10,000. This will be done before the end of 2018.

I also want to save a year’s income in my self employed work. The self employed work is very seasonal so the plan is to live off the previous year’s income divided by 12 so that I don’t have to worry about the quiet times of the year. This should be done by the end of 2019 / start of 2020.

My current fixed rate mortgage expires April 2020 so I want to get my next mortgage deal set up whilst I still have the larger income .
So I’m aiming to quit the day job sometime in 2020 (my 20 20 vision if you like)

So here are my questions in relation to investment.
I have made an initial deposit of £1500 with £50 monthly standing order in a stocks and shares ISA, which I hope to increase contributions to over the years for retirement.
Is it worth saving all my self employed income this year up to the £10,000 I owe my parents in the ISA bearing in mind that I will need to withdraw it all before the end of the year?
Also in future years is it worth saving all my self employed income in the isa (I predict initial earnings of £17000 a year when I am full time self employed) and making a withdrawal of £1000 a month for living expenses.
Would this amount of activity in the account make it more difficult to manage ? And would I be better just keeping my year’s salary in a traditional savings account or traditional isa and placing any surplus income in my stocks and shares ISA for my retirement fund?
The way I’m thinking at the minute is probably open a normal isa for savings to pay my parents back and then use the same one for saving the years salary. Are monthly withdrawals out of an isa possible?

jimjames

Putting money into a S&S ISA that you will need by the end of the year is very high risk. What happens if the money has dropped by 50% by the time you need it? You can do it but it's not something I'd consider to be a good idea

AlanP_2

S&S ISA for investing long-term, Current accounts for spending over next 3-5 years is the rule lof thumb I would be working with.

Top up Curent accounts when S&S are growing to maintain that cash pot.

For much longer term e.g. retirment look at pensions as an alternative to S&S ISA.

Eco_Miser

banthecar wrote: »

Is it worth saving all my self employed income this year up to the £10,000 I owe my parents in the ISA bearing in mind that I will need to withdraw it all before the end of the year?
Also in future years is it worth saving all my self employed income in the isa (I predict initial earnings of £17000 a year when I am full time self employed) and making a withdrawal of £1000 a month for living expenses.

NO. First, S&S can vary a lot in the short term, so might be a lot less than you put in. (Over 20 years the ups will beat the downs, but over less than one year anything could happen.)
Second, depending on platform and investment, there may be charges for buying and selling. Over a short term these could be greater than any gain on the investment.

banthecar wrote: »

Would this amount of activity in the account make it more difficult to manage

Not significantly, but as mentioned above, greatly increases the chances of you making a loss. ?

banthecar wrote: »

And would I be better just keeping my year’s salary in a traditional savings account or traditional isa and placing any surplus income in my stocks and shares ISA for my retirement fund?

Yes, but not an ISA (you won't benefit from the tax shelter). Use Regular Savers and multiple current accounts to get 5% AER on your savings.

banthecar wrote: »

The way I’m thinking at the minute is probably open a normal isa for savings to pay my parents back and then use the same one for saving the years salary. Are monthly withdrawals out of an isa possible?

Yes, but don't use an ISA unless you find one paying more than you can get using current accounts and regular (monthly) savers - you are very unlikely to have to pay tax on your savings interest.
See https://forums.moneysavingexpert.com/discussion/5776240 and the quick links at the top of the page.