Minimising ISA S&S risk

AlanP_2

Elika0215 wrote: »

@lpgm - yes, I am reconsidering it. In this case, I'm delighted that I may have been wrong before committing!

@Linton - It is in case of an emergency. Ultimately, I want to have the option to access it in 6 years time.

I may have dismissed pension contributions too quickly as I didn't consider that I could withdraw 25% of it without penalty at 55. So if there was an emergency my partner would have access to around £25,000 in 6 years time. In fact, couldn't 100% be withdrawn at 55? I need to check on the penalties for this. Just thinking of a worst case scenario...

Assuming it is a standard DC pension then yes 25% tax free at 55 is an option for an undefined emergency.

If you have a reasonable cash pot though what sort of emergency would be needed to access the pension on top?

Be careful about taking anything over the 25% TFLS out as it will be taxable (taking the whole £100k would mean 40% tax at least, ignoring any other income), and it triggers a reduction in permissible pension contributions down to £4k a year (Money Purchase Annual Allowance or MPAA).

I can sense your caution and desire to be able to get at the money "just in case" but consider the realistic scenarios that could affect you - ill health / retirement / death / replacing car / replacing boiler etc. etc. and how you would handle them. Planning for a vague, undefined "emergency" can result in poor choices.

Elika0215

AlanP wrote: »

Assuming it is a standard DC pension then yes 25% tax free at 55 is an option for an undefined emergency.

If you have a reasonable cash pot though what sort of emergency would be needed to access the pension on top?

Be careful about taking anything over the 25% TFLS out as it will be taxable (taking the whole £100k would mean 40% tax at least, ignoring any other income), and it triggers a reduction in permissible pension contributions down to £4k a year (Money Purchase Annual Allowance or MPAA).

I can sense your caution and desire to be able to get at the money "just in case" but consider the realistic scenarios that could affect you - ill health / retirement / death / replacing car / replacing boiler etc. etc. and how you would handle them. Planning for a vague, undefined "emergency" can result in poor choices.

Thank you.

Maybe I'm verging on paranoid rather than caution...

I will have a think over the weekend before committing. Having read everyone's views on here, I have shifted my position.

Right now, I'm thinking along the lines of having interest paying current, then savings account (Marcus) with instant access for a smaller emergency fund.

Lock some for 1 year at somewhere like Al Rayan (2.17%) and then another lot for 18 months at Al Rayan (2.32%).

(I think you'll be pleased to hear...) contribute about 15% of savings to my partners pension

Invest about 6-8% in Vanguards Lifestrategy ISA fund 40% equity which I intend to use as the first port of call if by 55, I'd like to withdraw (rather than the pension) but I can decide that later.

How does that sound? I keep saying thank you because I really do appreciate the help!