25 and after some advise

Cam93

Hi all, long time lurker here.

so basicly im after some advise on what i can do to improve our fianacial accounts and also have some questions (which may seem daft) regarding VLS80

some ill start with some background info about me;

1. I am currently 25 with an annual salary of 48-50k and my OH earns 18k.
2. we are debt free other than our mortgage (ill go into this more further down)
3. we currently hold 3 months salary within a Santander 123 account for emergency's and easy access. the interest isn't the best but is sees us about 170 per annum which is good enough for our everyday account.
4. we utilise our AMEX card as much as possible, all purchases are made using it in order to gain the Avios points. we then pay the card off in full every month to avoid any charges. we also change all Tesco clubcard points into avois points too - these go towards holidays etc.
5. we brought our house 3 years ago on a 40 year term (37 years remaining) but we have been over paying by 1000 pcm for the last 9 months.
Now, before I'm shot down for over paying rather than investing let me explain, we are currently aiming to move to a much larger 'forever' home next September/October and it seems more logical to over pay for 18 months at our current rate of 2.06% rather than trying to beat this with ISAs or S&S etc. the other reason for over paying is to decrease out LTV ratio, the more we can decrease our LTV the better interest rate we can get on the next property therefore more money we can save in the longer term.

we are currently putting aside 600pcm towards our wedding which is due in 12 months. once the wedding is out the pay this will be surplus money to save/invest.

I have a auto enrolled pension with my current employer which is bog standard via 'smart pension' I contribute 5% and m employer contributes 3% - they will not increase their contribution. I have had a quick play around on their app and increased my 'risk' to high risk in the hopes of better long term growth - this is why im looking to start funding my own retirement pot in a VSL80 as below;

aside from the above I do not have any other form of pension/retirement plans which is why I'm interested in setting up a VLS80 to hopefully get 30+ years of compound interest and growth on my money to use as a retirement fund. However I have some questions regarding the VLS80;
1. can I withdraw money anytime? obviously this would only be as a extreme last resort
2. can I set up a DD to pay x amount in per month?
3. how is the interest paid? is it monthly, quarterly or annually?

once we have secured a new house (hopefully) next year the plans will change - ideally investing will become priority and I will just pay the required mortgage amount as requested bar a smaller over payment (say, 250pcm?) as I have read its always best to spread the risk and paying off a mortgage seems risk free. I will then look to put 50% of surplus money into a VSL80 and then 25% into other longer avenues - can anybody advise any other fuly managed portfolios that might be worth looking into?


any comments on where I can improve would be greatly appreciated - hopefully all of the above makes sense, this is my 2nd time writing this as I accidently deleted it all so this version isn't quite as in-depth as my original would have been.

steampowered

It sounds like you are in a really great place for someone of 25. A few thoughts:

- I've always found Avios very poor value for money when exchanging into economy flights and holidays. Bearing in mind that you have to pay taxes when you use them so end up paying almost as much as the normal fare anyway. Avios are better value for business class. You might be better off with straight cashback.

- Purchase your VLS80 through a stocks & shares ISA to build up the tax benefits.

- You will only get the benefits of going down an LTV band when you remortgage. However overpaying the mortgage is still a sensible thing to do given that you are planning to move as soon as next year.

- There is no need to increase pension contributions now given the desire to move house and pay for a wedding in the near future, especially as you are still very very young. However when the wedding is done and you are in your forever home look at increasing pension contributions to benefit from the tax relief, especially if you become a higher rate taxpayer in future.

george4064

Cam93 wrote: »

I have a auto enrolled pension with my current employer which is bog standard via 'smart pension' I contribute 5% and m employer contributes 3% - they will not increase their contribution. I have had a quick play around on their app and increased my 'risk' to high risk in the hopes of better long term growth - this is why im looking to start funding my own retirement pot in a VSL80 as below;

aside from the above I do not have any other form of pension/retirement plans which is why I'm interested in setting up a VLS80 to hopefully get 30+ years of compound interest and growth on my money to use as a retirement fund. However I have some questions regarding the VLS80;
1. can I withdraw money anytime? obviously this would only be as a extreme last resort
2. can I set up a DD to pay x amount in per month?
3. how is the interest paid? is it monthly, quarterly or annually?

once we have secured a new house (hopefully) next year the plans will change - ideally investing will become priority and I will just pay the required mortgage amount as requested bar a smaller over payment (say, 250pcm?) as I have read its always best to spread the risk and paying off a mortgage seems risk free. I will then look to put 50% of surplus money into a VSL80 and then 25% into other longer avenues - can anybody advise any other fuly managed portfolios that might be worth looking into?

1. The Vanguard LifeStrategy (LS) Funds are daily dealt, so you are free to buy or sell units on any business day. (mon-fri, exc bank holidays).

2. Depends on the platform that you use, most platforms will let you setup a direct debit with a regular investment plan. A good place to compare platforms is; https://www.monevator.com/compare-uk-cheapest-online-brokers

3. You can either have Accumulation or Income units, the former reinvest any income for you automatically which increases the unit price whilst the latter pays income out to unit holders.

The Vanguard LS Funds do not pay interest per se, but they pay income as this derives from equities (dividends) and bonds (coupon payments). Except for Vanguard LS 100% which is purely equities.

Income is paid once per year.