Investing vs Pension Contributions

SpreadsheetWarrior

ColdIron wrote: »

If your employer offers salary sacrifice it makes sense to use it. It's not clear to me how this would affect your life insurance/death in service benefits. All your contributions go straight into your pension and saves you having to reclaim the higher rate portion of your tax back via self assessment or change of tax code, I assume you are doing this already? It reduces your National Insurance Contributions and as it reduces your employer NI some will split this with you, mine did, might be worth an ask

Possibly I've misunderstood? For example, if I SS £5k, my gross salary would reduce by £5k. I assumed that my life insurance payout would therefore be Multiple x (Gross Salary - Salary Sacrifice) or is that not the case?
The NIC benefits as outlined do look like an easy win though!

I will be claiming the HRT going forward - but thanks for the reminder, (previously I interest income = pension tax rebate if that makes sense). As was very cash heavy/ low pension contributions before the flat purchase.

Many Thanks,
/SW

Thrugelmir

SpreadsheetWarrior wrote: »

[*]Outstanding Mortgage £270k @ 1.19% (25-year MTG, 2 year fix).

Personally I would reduce that mortgage balance then lock into a 10 year fix. Buying into the markets when they sit at all time highs and interest rates are finally heading for normality. Bonds markets certainly appear to be signalling that they are getting closer to the end of their 30 year bull market.

atush

Do your current pension contribs take you below the HRT threshold?

If not, then paying enough in to bring you under the limit is a great idea. Any extra cash you have spare could go into a S&S isa.

kidmugsy

SpreadsheetWarrior wrote: »

... 30, single ... my life insurance/death in service...

You're single so LI/DIS doesn't matter. Some sort of income protection insurance might be money well spent once you've avoided 40% income tax by making pension contributions.

SpreadsheetWarrior

Thrugelmir wrote: »

Personally I would reduce that mortgage balance then lock into a 10 year fix. Buying into the markets when they sit at all time highs and interest rates are finally heading for normality. Bonds markets certainly appear to be signalling that they are getting closer to the end of their 30 year bull market.

Thanks for the reply. I will keep that in mind when the mortgage is up for renewal (hopefully the BoE can hold off IR rises until then :rotfl:)

SpreadsheetWarrior

atush wrote: »

Do your current pension contribs take you below the HRT threshold?

If not, then paying enough in to bring you under the limit is a great idea. Any extra cash you have spare could go into a S&S isa.

Hi Atush, the current contributions don't take me below HRT.
Financially it makes sense to increase my pension (possibly with SS if I can wrangle that). I do like the possibility of having a little spare cash to cover unforeseen circumstances / S&S ISA / possibly splurge money if I decide to pack in the London rat race. (although there is a clear opportunity cost - which I'm happy to forego).

I think I'll spend some time figuring out an appropriate ratio of increased pension contributions (over-weighted), with the remainder invested via S&S (and then the tiny bit on lottery tickets/ magic beans!).

Thanks for your input.

SpreadsheetWarrior

kidmugsy wrote: »

You're single so LI/DIS doesn't matter. Some sort of income protection insurance might be money well spent once you've avoided 40% income tax by making pension contributions.

My thought was that should anything happen, the flat I had would go to family/ the mortgage would be cleared via LI/DIS. Unless that's going down a different tangent?

I believe work covers income protection, but I will find out specifics. Thanks for your input.

Bravepants

Thrugelmir wrote: »

Buying into the markets when they sit at all time highs and interest rates are finally heading for normality.

Sorry Thrugelmir, this sentence doesn't seem to have a conclusion...what did you mean to say about all time highs? Are you suggesting not to invest in S&S ISAs?

I received an email "newsletter" today from Vanguard to say they expect equity returns to be in the region of between 3% and 5% as a ten year forecast going forward.

Thrugelmir

Bravepants wrote: »

Sorry Thrugelmir, this sentence doesn't seem to have a conclusion...what did you mean to say about all time highs? Are you suggesting not to invest in S&S ISAs?

I received an email "newsletter" today from Vanguard to say they expect equity returns to be in the region of between 3% and 5% as a ten year forecast going forward.

There is no conclusion. As I possess no crystal ball. Simply follow events as they unfold, read and listen. Moderating my view continually. As to what potentially could happen. Then positioning myself accordingly. I prefer to invest in defensive grey, not black and white.

From the little you've quoted. Sounds as if Vanguard expect markets to be flat. A return of that level including reinvested income suggests little capital growth. Hardly appealing. When one is leveraged with a large mortgage. Loose monetary policy has lifted markets over the past decade. Will the unwinding take the wind out of the markets? Also many market commentators are calling the end of the 30 year bull bond market. Interesting times lie ahead.

AlanP_2

Bravepants wrote: »

Sorry Thrugelmir, this sentence doesn't seem to have a conclusion...what did you mean to say about all time highs? Are you suggesting not to invest in S&S ISAs?

I received an email "newsletter" today from Vanguard to say they expect equity returns to be in the region of between 3% and 5% as a ten year forecast going forward.

Remember Vanguard are trying to sell you something, they are not going to email you saying that returns are likely to be -10% going forwards so invest now or miss this great opportunity.

Also, if inflation runs at 3%'ish that is actually 0-2% real growth for you.