What would you do if you had £400 a month to save?

trailingspouse

As a previous poster has said, you need to decide what exactly you're saving/investing for before you can decide the best way to go about it. Otherwise it's a bit like setting off in the car, then posting 'I don't know where I want to go, but can anyone tell me how to get there?' Not that you would post while driving, obviously...


So - what do you want this £400 a month to do for you?

Albermarle

Lifetime ISA v crap work pensions

.
There are a lot of people on this forum who post that their work pension is rubbish .
In fact normally the work pension arrangements/provider they have are OK . The problem is usually that neither the employer or the employee is putting enough money in it .
Perhaps it is a fine distinction but an important one to be clear about.

AngelOfTheNorthWest

That's a very useful way of looking at it trailingspouse. Thanks for providing that clarity of vision. Well we're not bothered about using it for a better quality of life as we're happy enough already. What I would like to do is build up some more assets and get a bit of security that way. I'm also interested in assets other than property and cash, as that's where we have most of ours at the moment (we also have a share in another property but that isn't likely to be realised for some time due to a lifetime interest). I've got quite good at some financial stuff over the last few years so we are on the best deals for everything, highest interest rates for savings etc but when it comes to investing extra, that's where my knowledge runs out.

I wouldn't have said we were high earners Tammer, think our household income 45kish puts us bang on median, but I agree it's not a huge amount. I would feel more comfortable with more, that's only about 5 months bare bones expenses max really. The kids have a couple of grand in savings accounts too which could be accessed if we were on the bones of our backsides but yes, I would like more to feel comfortable with the cushion (I also understand many people could only dream of that and we are very fortunate to be in this position).

Re pensions, the employer contribution is just the legal minimum. I suppose it's a matter of opinion whether that's crap or not! But yes absolutely, there's nothing much in them. Mine in particular is low because I only earn about 12k from my main job so the minimum contributions really aren't much at all. Husband and employer put about £150 a month between them in his. So the question really is whether we should try to make the pensions less crap or use the money elsewhere.

Alexland

AngelOfTheNorthWest wrote: »

Mine in particular is low because I only earn about 12k from my main job so the minimum contributions really aren't much at all.

In which case making additional pension contributions via your employer might not save you any income tax now and then later (if you build up a big enough pot) possibly cost you tax in the future.

Alex

AngelOfTheNorthWest

Ah, really? I do pay income tax as I earn about 15k altogether, and this is likely to increase in the next few years. In that case perhaps best avoided for now then?

Alexland

The personal allowance (the money you can earn each before paying income tax) is currently £11,850 rising to £12,500 next tax year.

https://www.gov.uk/income-tax-rates

kidmugsy

AngelOfTheNorthWest wrote: »

build up some more assets and get a bit of security that way.

If it's security you want consider insurance - for example, insurance against one of you falling ill and being unable to earn.

http://monevator.com/do-you-need-income-protection-insurance/

AngelOfTheNorthWest

Oh yes we do have insurance too, but I'm thinking of the security of using it to build up some more assets.

AlanP_2

Alexland wrote: »

In which case making additional pension contributions via your employer might not save you any income tax now and then later (if you build up a big enough pot) possibly cost you tax in the future.

Alex

Would agree with that but on the other hand making contributions to a separate Personal Pension or SIPP would have a tax benefit as tax would be added to the pot by HMRC even though it hadn't been paid.

£400 paid per month would be made up to £500 per month by HMRC so £1200 per year.

On £15k you will have paid about £630 tax.

Alexland

Still the risk the pension might be subject to tax on withdrawal depending on the eventual pot size and withdrawal rate. The LISA would give the same 25% bonus with no tax on withdrawal.

Alex