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world_of_tights
Posts: 131 Forumite
Firstly, I am sure posts like mine are very frequent and tiresome, so apologies for that. I have read through lots of posts, but I have zero experience of investing, and no one I know does it, so still wanted to ask the question.
I am 31, and trying to become more financially aware. Background:
After savings and monthly outgoings, I have around £350 “spending” money left. I’m interested in using £50 of that to invest each month, with a view to learning more about investing as I go.
I have read a lot of articles and posts on the forum, and I think I’m leaning towards a Vanguard LS80 – but I’d be really interested to hear what others would do in my position, and with such a small amount to invest p/m. This isn’t money I have any plans for, so it can do its thing for as long as prudent.
Or am I just being foolish, and should direct all spare change into my pension and mortgage?
Also, stupid question, I’m sure – but am I better opening an S&S ISA now, or waiting until April? I don’t have a lump sum to deposit before the end of March, so it really would be just the £50 a month I’m looking to part with at the moment.
Any thoughts would be much appreciated.
I am 31, and trying to become more financially aware. Background:
- I own a house with my partner that we bought almost 2 years ago with a 5% deposit and 35 year mortgage – ouch. 2 year fixed rate is up in August so planning to pay off £5k (half each) and move to a different provider.
- I only started paying into my company pension around 2 years ago. Employee contribution 3%, employer contribution 7% - there’s currently only £7k in there, which is scary.
- I have £4k in savings. £300 a month goes into a 5% regular saver, and £500 a month goes into a 1.3% easy access account. I will keep saving this way for the foreseeable.
- I have a pre-2012 Scottish student loan, which is a pain, but no other debts. No other savings or investments either.
After savings and monthly outgoings, I have around £350 “spending” money left. I’m interested in using £50 of that to invest each month, with a view to learning more about investing as I go.
I have read a lot of articles and posts on the forum, and I think I’m leaning towards a Vanguard LS80 – but I’d be really interested to hear what others would do in my position, and with such a small amount to invest p/m. This isn’t money I have any plans for, so it can do its thing for as long as prudent.
Or am I just being foolish, and should direct all spare change into my pension and mortgage?
Also, stupid question, I’m sure – but am I better opening an S&S ISA now, or waiting until April? I don’t have a lump sum to deposit before the end of March, so it really would be just the £50 a month I’m looking to part with at the moment.
Any thoughts would be much appreciated.
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Comments
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Sounds like you are being sensible with your savings plans. Once you have built up a reasonable emergency fund, I would suggest trying to build up the equity in your house.
Presumably with a 95% LTV at the moment you!!!8217;re interest rate is pretty hefty. Appreciate you are trying to remortgage but tackling this first will reduce your monthly repayments over the long term.
A good tactic with pension contributions is to bump up your contributions every time you get a pay rise, even if it is just by half a per cent. That way you have never missed the pay rise before, but gradually build up your pension pot.0 -
Pension! You can invest in 80% equities and learn within your pension, while benefitting from tax relief.0
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world_of_tights wrote: »Firstly, I am sure posts like mine are very frequent and tiresome, so apologies for that. I have read through lots of posts, but I have zero experience of investing, and no one I know does it, so still wanted to ask the question.
I am 31, and trying to become more financially aware. Background:- I own a house with my partner that we bought almost 2 years ago with a 5% deposit and 35 year mortgage !!!8211; ouch. 2 year fixed rate is up in August so planning to pay off £5k (half each) and move to a different provider.
- I only started paying into my company pension around 2 years ago. Employee contribution 3%, employer contribution 7% - there!!!8217;s currently only £7k in there, which is scary.
- I have £4k in savings. £300 a month goes into a 5% regular saver, and £500 a month goes into a 1.3% easy access account. I will keep saving this way for the foreseeable.
- I have a pre-2012 Scottish student loan, which is a pain, but no other debts. No other savings or investments either.
After savings and monthly outgoings, I have around £350 !!!8220;spending!!!8221; money left. I!!!8217;m interested in using £50 of that to invest each month, with a view to learning more about investing as I go.
I have read a lot of articles and posts on the forum, and I think I!!!8217;m leaning towards a Vanguard LS80 !!!8211; but I!!!8217;d be really interested to hear what others would do in my position, and with such a small amount to invest p/m. This isn!!!8217;t money I have any plans for, so it can do its thing for as long as prudent.
Or am I just being foolish, and should direct all spare change into my pension and mortgage?
Also, stupid question, I!!!8217;m sure !!!8211; but am I better opening an S&S ISA now, or waiting until April? I don!!!8217;t have a lump sum to deposit before the end of March, so it really would be just the £50 a month I!!!8217;m looking to part with at the moment.
Any thoughts would be much appreciated.
A few points to consider:- Your pension contribution is pretty low at only 10% combined, especially as you have only recently started contributing. If you continue at this level you are likely to find that your pension pot on retirement is insuficient to meet your needs and hopes. I'd increase the pension contribution.
- If you are saving £300 p/m into a regular saver (First Direct, by any chance?), but putting another £500 in to an easy access saver at 1.3% then you are missing out on valuable interest, as a 5% regular saver will give you an effective rate of more than twice that, at 2.69%. You could open another couple of regular savers to deposit that £500 too (or near to it). To get 5% rates this would mean opening another couple of current accounts, but this is not necessarily a problem. Look at Santander 123 Lite, Nationwide FlexDirect and HSBC Advance to access the regular savers. Santander and Nationwide also have flexible terms on their regular savers, allowing you to withdraw money, if need be, without penalty.
- If you have no other savings then you have no obvious emergency fund. What happens if something goes wrong like one of you loses their job, or an unexpected and urgent bill lands on you, e.g. a new boiler is needed? You ought to have an emergency fund of around the value of 6 months outgoings. Build this up before you start investing.
- Overpaying on your mortgage may be to your advantage, especially as it has such a high LTV and is over such a long time period. Reducing both of these would be in your interest so as to secure more advantageous terms at the next re-mortgage date, and so as to not still be trying to pay the mortgage when you get near/to retirement.
- I wouldn't bother with an S&S ISA until you have built up the emergency fund and reduced your mortgage debt a bit in preparation of accessing better deals due to a more favourable LTV.
- If you really do insist on opening a S&S ISA then opening it now has the advantage of allowing you a little longer in the market, but the difference is pretty negligible and at £50 per month there is no risk of you running out of ISA allowance in 2018/19.
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Do a budget so you can see where to save....the greatest investment return is money that you don't spend.
Then save a 6 month's cash emergency fund in the bank.
Next learn about investing in equity, bond and multi-asset funds so you can sensibly invest the bigger contributions you are going to start making to your pension fund. Then look at a S&S ISA and use the same asset allocation and investing strategies that you have implemented in your pension.“So we beat on, boats against the current, borne back ceaselessly into the past.”0 -
Thank you all for the responses!
Mortgage interest is currently at 2.75% with Bank of Ireland, who make it as difficult as possible to make any over payments. They have no phone or online banking and we only get a mortgage statement once a year, which is massively frustrating. That's why we're planning to pay off at least £5k when we remortgage in August. After which we plan to start making overpayments.
I'm really concerned about having left paying into a pension so late, so I will definitely look into upping my contributions at my next pay rise. However, don't know how I actually control what my pension is invested in as it all seems to be done by the provider, but I can look into this.
The £4k is 4 months emergency fund, which I'm working to up to 6 months. Then I need to start saving all over again.
I have a yearly and monthly budget, so happy with knowing where my money goes.
It sounds like I'm not quite financially secure enough to think about investing. I read an article about how fewer women invest, which piqued my interest, but I can see it is more sensible to focus on mortgage and pension.0 -
Your pension will be invested (most likely) so well worth finding out what it is currently invested in, what the choices are, and whether any of the others would be more suitable for you.0
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world_of_tights wrote: »It sounds like I'm not quite financially secure enough to think about investing. I read an article about how fewer women invest, which piqued my interest, but I can see it is more sensible to focus on mortgage and pension.
Unless you have a final salary pension plan your pension will depend on the investment funds that your contributions are buying. Before you do anything else understand those funds and the fees you are paying. Make sure you are invested appropriately and make any necessary changes. This is your money and your future so make sure you are 100% in control of it and understand exactly what you have.“So we beat on, boats against the current, borne back ceaselessly into the past.”0
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