Low risk investment/s or save cash

Alexland

Stevensuperbike wrote: »

We keen to get this mortgage paid for so it's no longer a liability.

Why does it being a liability bother you? You seem to have good income, low outgoings and plenty of time ahead. A bit of gearing is useful to successfully grow your wealth.

Having an easily affordable residential mortgage alongside fat balances in your ISAs and pensions is less risk than going down the tax inefficient and highly leveraged BTL route.

Alex

kidmugsy

My guess is that this is an excellent time to invest in cash savings accounts and mortgage overpayments, especially for someone who needs to take some time - for example a couple of years - to learn about investing in the stock markets.

So:
(i) Overpay as much as you can without penalty, in as financially efficient a way as you can. Make sure you understand how they do the sums on the consequences of the overpayments. Don't overpay £1 now that would get no greater advantage than the same £ paid in ten months time.

(ii) Do use high interest current accounts and regular savers to best advantage.

As for preparing yourself for investing, three tips.

(i) Look ahead to retirement, since that's the main thing people need to save for. Start with the (US) blog The Retirement Cafe, slowly reading through the archives from 2012 onwards. If there's stuff you don't understand you can always come back here and enquire. Patience and perseverance are the things.

(ii) For weekly reading follow the (UK) Monevator blog.

(iii) For occasional reading follow the reviews and reports on the websites of three investment trusts - Personal Assets Trust, Capital Gearing Trust, and Ruffer Investment Company. They are well written, quite entertaining, and they don't push the dangerous proposition that you can't go wrong by buying equities, and only equities, and never selling.

P.S. I should have said that if you pay higher rate tax it might be wise to avoid it by contributing more to pensions. That still leaves you with the question of what to invest the pension money in. Maybe a bit of equities, a bit of bonds, a bit of gold, a bit of commodities, a bit of commercial property, a bit of foreign currency. The future is so uncertain that nobody - including me - has a clue what the best proportions would be. But I'd think that somewhere in the range 10% - 80% equities would do for now.

steampowered

Personally, I would invest and would keep the mortgage, even if that means the mortgage takes a bit longer to pay off.

You presumably will have longer term savings needs (e.g. funding retirement?) than just paying off the mortgage, and there should be no particular rush to pay off a mortgage which you can easily afford on 2.46% interest.

Consider making the most of your annual ISA allowance over the next 4 years. Building up a stocks & shares ISA for the long term, even if it means paying off the mortgage a bit later, could be a tax efficient strategy.

Investing is very straightforward if you simply purchase an appropriate low cost tracker rather than trying to select individual shares.

Also consider upping your pension contributions. Now would be a good time to assess what your retirement income might be based on your current pension pot and current level of contributions. If you need to increase your pension contributions to be comfortable in retirement, now would be a good time to do do that.

Audaxer

Alexland wrote: »

Why does it being a liability bother you? You seem to have good income, low outgoings and plenty of time ahead. A bit of gearing is useful to successfully grow your wealth.

Having an easily affordable residential mortgage alongside fat balances in your ISAs and pensions is less risk than going down the tax inefficient and highly leveraged BTL route.

I understand what you are ,but lot of people, myself included, like the security and peace of mind in getting the mortgage cleared as soon as possible. Many people would love to be in position like the OP to be able to get their mortgage cleared at a young age.

Stevensuperbike

I really do appreciate all this financial advice. If I do not know what people are talking about I research it myself so I no longer feel uneducated about it. I have had no financial advice off my parents what so ever even though they both remain in full time work 45+hrs a week and have a career each. Saying that they have no assets and their view is to work until your old enough to take state pension. I have currently been reading a book written by Robert Kiyosaki 'Rich Dad Poor Dad' which I believe opens your eyes a little to the big bad world of finance and money and I do enjoy reading it and thinking abort what he says.. The main reason I have come here is to seek the advice I have wanted for some time but was unsure on what platform to obtain it. This is a very reputable place to search for advice and I do again appreciate all the help. Thanks

Alexland

Thanks but be careful with the 'advice' word as we are not regulated so can only talk in general terms.

Audaxer wrote: »

Many people would love to be in position like the OP to be able to get their mortgage cleared at a young age.

Agree it's a great position to be in but that doesn't mean it's the best course of action. I had a similar mortgage-free before 40 ambition (and was making great progress) before my epiphany. I am now happy knowing it was possible but I chose a more tax efficient and likely higher growth path. There's no shame missing your own target because you find a better approach. My new target is for our ISAs to match the mortgage by 40 which shouldn't be too hard.

Alex

Audaxer

Alexland wrote: »

Agree it's a great position to be in but that doesn't mean it's the best course of action.

Maybe not, but it made me feel good getting mine cleared years ago and it was only a small mortgage.

My new target is for our ISAs to match the mortgage by 40 which shouldn't be too hard.

Do you mean the total value of your investments to match your original mortgage amount?

Alexland

Audaxer wrote: »

Do you mean the total value of your investments to match your original mortgage amount?

Our investments are already worth more than our original mortgage amount and will soon overtake our property value. It would just be nice to know the ISAs (which are smaller than our pensions) are big enough to cover the current mortgage balance. We are nearly there.

Alex

Thrugelmir

Audaxer wrote: »

I understand what you are ,but lot of people, myself included, like the security and peace of mind in getting the mortgage cleared as soon as possible. Many people would love to be in position like the OP to be able to get their mortgage cleared at a young age.

You never know when that seemingly well paid job may come to an end. Or the misfortune of bad health strikes.

If making money on the markets was that easy. Previous generations would all now be millionaires. Unfortunately stock market returns failed to match expectations on their endowment policies. As with most things investment wise. Becomes a fad and everyone jumps aboard. Until the next downturn.

Audaxer

Alexland wrote: »

Our investments are already worth more than our original mortgage amount and will soon overtake our property value. It would just be nice to know the ISAs (which are smaller than our pensions) are big enough to cover the current mortgage balance. We are nearly there.

Nearly there but if there is a full blown equity crash soon, will that not put you back a good bit? You must have a much higher risk tolerance than me as in your position I would be tempted to clear more of the mortgage by cashing in some of the investments when they recover from this correction.