Where should I save money next??

Shabbycat

Hello,
I'm new to this forum and would like some advise on where to put my money. Some basic facts on my position:-
I'm 52 years old, mortgage and debt free. I have 25years in a final salary pension which pays out at 60 and so far 3 additional years in, sorry can't think of the term, where it's based on a percentage of what you earn each year and pays out at 67. I plan to remain in my current job for another 3 or 4 years when I will hopefully have enough money to live on until I claim my pension at 60.
I currently have £20,000 which is in various bank accounts paying 3% and a cash ISA. I plan on saving between £1250 and £1500 per month. I don't really want to invest in another property but feel I should do more than just putting it all in an a basic ISA. I'm thinking of a fixed term bonds?? Stocks and shares ISA?
How can I make my money work for me without too much risk?? Any advise will be gratefully received. Thank you.

sjp999

Basic or Higher rate taxpayer?

I'm sure further questions will follow, one might even be... Might your employer allow salary sacrifice into a further pension?

MallyGirl

If you need to use the money to live off in the next 3 or 4 years then S&S would not be the best choice. The market might be on a down just when you needed to start using some of the money.
With a little work you could be getting 5% on some of your money in other bank accounts and regular savers.
You could open a SIPP since you will be able to access it at that time, and you would benefit from the tax relief on the money going in

Shabbycat

Basic rate.

cloud_dog

MallyGirl wrote: »

If you need to use the money to live off in the next 3 or 4 years then S&S would not be the best choice. The market might be on a down just when you needed to start using some of the money.
With a little work you could be getting 5% on some of your money in other bank accounts and regular savers.
You could open a SIPP since you will be able to access it at that time, and you would benefit from the tax relief on the money going in

Would echo the short period for S&S but you could consider adding in to a SIPP and leaving as cash. You would get a tax-relief uplift of 25% of your contribution (20% of the whole). I suppose you need to consider if the additional 3 or 4 years of tax relief 'uplift' is better than current best interest rates.

Shabbycat

I don't know much about SIPP but will do some research. Thank you

cloud_dog

SIPPs are pensions that allow more flexibility in the assets you invest in. TBH, the majority of SIPP account holders will probably simply be investing in funds (OIECs, ITS, ETFs).

There are some SIPP providers who do not charge a fee when you hold cash. Hargreaves Lansdown being the primary one. So you can deposit money in to the SIPP, they automatically claim the 25% from HMRC and if you leave it as cash you are not charged anything. HL will make an early closure charge if you close your account within 12 months, I beleive, but this wouldn't be an issue should you use the account for 3 or 4 years.

Obviously you would have the ability to take 25% of this pot tax free and would be liable to income tax on the remainder but, if you are planning to use this money as a stop gap before your pensions start paying out then you are unlikely (????) to have any taxable income anyway so you could fully utilise your personal tax allowance (currently £11500 for 2017/2018), and potentially not pay any tax.

Shabbycat

Thanks Cloud_Dog. Is this something I would pay in s a lump sum of invest in monthly???

cloud_dog

Shabbycat wrote: »

Thanks Cloud_Dog. Is this something I would pay in s a lump sum of invest in monthly???

Either, as you please. Obviously HL provide a regular investment option and I think (would need to confirm) that you could set it up to collect the cash but not invest it, i.e. leave it in the cash account.

Alternatively, simply deposit the cash as and when.

Shabbycat

If I leave it in cash account the advantage is in the 20% that would be added from HMRC does it earn any interest at all?? After I've withdrawn my 25% tax free lump sum, can I withdraw the remainder whenever I like albeit taxed?? My aim after 56 is to not have to work unless I chose to.
I think I am going to try an maximise interest paying bank accounts and regular savings accounts and consider putting the remainder in a SIPP.
Having spent the last few years overpaying my mortgage (12 year mortgage paid off in 5 - so addictive!!) I don't envisage a reduced income being a problem but I think I should start keeping track of what I spend. Can you recommend user friendly tool to do this??

Shabbycat

MallyGirl wrote: »

If you need to use the money to live off in the next 3 or 4 years then S&S would not be the best choice. The market might be on a down just when you needed to start using some of the money.
With a little work you could be getting 5% on some of your money in other bank accounts and regular savers.
You could open a SIPP since you will be able to access it at that time, and you would benefit from the tax relief on the money going in

I've already got one 5% regular saver and have found an open to everyone near me that pays 3.5%. Thanks for the advice.