Where to put spare cash (other than under the Mattress!)

RETIREMENT

Hi All,


Was looking for some advice if I may. I am a higher rate tax payer and have maxed out my £40k tax free pension contribution allowance - I do still have some additional money to invest each month and wondered if you thought it made more sense to put this money into my wife's pension (25% tax relief) or alternatively take out an ISA - I am 46 now, looking to retire at 57.


Thank you in advance for any thoughts and opinions on this. Very much appreciated.

Anonymous101

My advise would be to do some reading around setting up a Stocks and Shares ISA and investing in some passive index funds.

This is a good place to start: http://monevator.com/category/investing/passive-investing-investing/

Bravepants

Don't forget that you can also carry forward unused annual allowance from the previous three years.

kidmugsy

If your wife would pay 20% tax her non-TFLS drawdowns the money is worth 6.25% more in the pension. If she could draw it down without paying income tax (e.g. because she retired before State Pension Age) then the superiority over an ISA is massive.

ams25

I'd do both... Based on my experience

I'm now early retired with good personal pension cover but I have 2 concerns:
- My wife's relatively poor pension provision. We should have done more earlier
- Maximising tax free isa provision to keep a reasonable tax rate. Not sure I missed an isa contribution year but did not max out every time in favour of pensions. Might have been better to move the needle a little.

Triumph13

Do you have any annual allowance available to carry forward from the previous 3 years? If you do, and a) are still a HRT payer even after your £40k contributions and b)aren't going to hit the Lifetime Allowance then more contributions for you wins.

kidmugsy

If your wife is under 40 get her to open a LISA, even if only for £1. That will keep her options open until she is 50.

RETIREMENT

Thank you. Will take a look

RETIREMENT

Hi - good point - to be honest i'm not sure - I guess I will have to back track and work out exactly what went in - certainly don't want to be paying tax on contributions !