Finances sense-check

noclaf

Hi all,
Seeking input here on the state of my finances and the 'what would you do/suggest' to a few questions so all constructive advice and tips appreciated.

Late 30's and married.
£30k spread across current accounts including 5k in a cash LISA.
Just over £3k in a VLS100 Acc index..drip-fed monthly (less than 4% of my monthly take-home pay)
Debt - £5k on 0% cc..paying off monthly and the card is not used for any purchases.its simply acts as a holding place for this debt which was accumulated via stopping..was originally about £9k so I've chipped away at it in a few lumps and now paying rest at a slower rate.
Employer Pension - 20% a month..8% from me and 12% from employer.
I dnt own a property but my wife does... Qu.1: If I wanted to use the LISA for a HTB property..could wife still be a joint owner with me even though she is not eligible for HTB? As an fyi I am yet to use this year's LISA allowance for 4k..
Qu.2: I hold a cash LISA and a Vanguard S&S ISA..does that rule out opening a joint cash ISA with wife?

VLS100 - dawned upon me this is the highest risk version.
Qu 3. Do I wait till 40 then ask Vanguard to transfer my holding to VLS80 or 60 to de-risk gradually..or should I try to change asap or just continue for now? Monthly it's a v small amount of my pay going in but ack that investing while saving for a property is not usually advisable.
My cash is currently languishing in around 5 low interest accounts so plan is to close 3 and run with two..Santander 123 will stay..other tbc

Excuse the long post and hope it makes sense.thanks

MaxiRobriguez

What's your salary? If you're a higher rate tax-payer you may want to increase the salary your sacrificing into your pension and get that 40% boost.

VLS100 is OK for your age. You need to consider the definition of risk used when you say "highest risk" - it's highest risk in terms of volatility, but perhaps the lowest risk in terms of losses to inflation. If you're not touching the money for decades, which it sounds like, then it's fine to be in a VLS100. Re-assess when you're 10-15 years away from accessing it, bring it down slowly.

In terms of house, your wife owning a house means joint ownership of a new house will land you into additional stamp duty. Might be easier for you to purchase in your name outright if possible, and share the proceeds/benefits of both houses between you.

Biggest issue is you're carrying £30k of cash. What's the point? Do something with it or it becomes less valuable every year due to inflation. You need an emergency fund but you could probably get away with that being 20% of your current cash holding. Do something with the other 80%.

noclaf

MaxiRobriguez wrote: »

What's your salary? If you're a higher rate tax-payer you may want to increase the salary your sacrificing into your pension and get that 40% boost.

VLS100 is OK for your age. You need to consider the definition of risk used when you say "highest risk" - it's highest risk in terms of volatility, but perhaps the lowest risk in terms of losses to inflation. If you're not touching the money for decades, which it sounds like, then it's fine to be in a VLS100. Re-assess when you're 10-15 years away from accessing it, bring it down slowly.

In terms of house, your wife owning a house means joint ownership of a new house will land you into additional stamp duty. Might be easier for you to purchase in your name outright if possible, and share the proceeds/benefits of both houses between you.

Biggest issue is you're carrying £30k of cash. What's the point? Do something with it or it becomes less valuable every year due to inflation. You need an emergency fund but you could probably get away with that being 20% of your current cash holding. Do something with the other 80%.

I'm a higher rate tax payer but my contribution is the max % allowed within my employers scheme...it might be possible to add more but haven't considered as may need to prioritise funds for a deposit first though as mentioned I'd say at least 9-12 months away from even beginning to look etc
Regarding the VLS and house suggestions both seem sensible and practical options. Last year the VLS was -17% for me and it's currently +20%..I have been comfortable with those swings so far..will continue to invest monthly and review periodically.
I thought £30k was a sensible buffer but take your point on the inflation erosion...a proportion will likely go towards a house purchase later so am hesitant to 'invest' but it's painful to watch as the already low int rates are now being slashed to a pittance....so I need to buy a car soon too...as my old banger has taken quite a beating...likely to use some cash plus 0% cc to fund that but not planning to spend a lot..6-8k max and even that's pushing it so let's just say 6k.
Thanks for the perspective though, v helpful.

MaxiRobriguez

noclaf wrote: »

I'm a higher rate tax payer but my contribution is the max % allowed within my employers scheme...it might be possible to add more but haven't considered as may need to prioritise funds for a deposit first though as mentioned I'd say at least 9-12 months away from even beginning to look etc
Regarding the VLS and house suggestions both seem sensible and practical options. Last year the VLS was -17% for me and it's currently +20%..I have been comfortable with those swings so far..will continue to invest monthly and review periodically.
I thought £30k was a sensible buffer but take your point on the inflation erosion...a proportion will likely go towards a house purchase later so am hesitant to 'invest' but it's painful to watch as the already low int rates are now being slashed to a pittance....so I need to buy a car soon too...as my old banger has taken quite a beating...likely to use some cash plus 0% cc to fund that but not planning to spend a lot..6-8k max and even that's pushing it so let's just say 6k.
Thanks for the perspective though, v helpful.

There shouldn't be an upper limit on what you can sacrifice, just an upper limit on what your employer will contribute. So you may not get more than 12% from them, but you can still up your contribution, and avoid 40% tax on the money that otherwise would have come in as salary. It will be by far the best way of adding to your wealth, because you're not going to generate 40% returns annually anywhere else. The downside is that any additional sacrifice is money you won't see until 57 or later, but... investing is about the long term after all.

In terms of the VLS volatility. Down 17% is about right, there was a peak in January 2018 and then a sell off in December 2018 which followed a previous sell off in October. The performance has matched the wider market. Stick with it, it's fine, try to ignore the headline figures and average it out so you get a feel of what expectation would be over the long term. Typically it'll have been about 6-10% gains, but most people who are cautious with their expectations are probably expecting annual gains of half that range for the next decade given high valuations and possible up-tick in central bank interest rates which would be a headwind on equity prices.

If the £30k is being lined up for a house purchase then it should stay in a bank account and not be subjected to volatility risk. Just don't sit on your hands too long with the house purchase if you're in a position to buy because you could be paying off that mortgage. Less important if you're not renting (either living in partners place or at home) because you've not got hundreds of pounds each month paying for nothing. If you're renting, get buying as soon as you can.

noclaf

Ok I see your point re tax relief for pension..for now at least untill I have bought a property will hold off increasing pension contributions but something to consider for future definately... for similar reasons I have held of increasing my monthly VLS contributions, tempting as it might seem.
I got burned badly on AIM many years back...VLS trackers are much less stressfull lol
Fortunately no rent obligations....just utilities bills but yes need to try to get on ladder asap.

On a slight tangent ....if I wanted to contribute to a second passive or active fund that complements VLS 100 (in layman terms 'makes sense' to use alongside VLS 100) and didn't want to use Vanguard what options are there? Main requirements here..I don't want to duplicate the VLS 100 allocation or relative risk level and must be a different provider..the Woodford fiasco got me thinking abt spreading my risk a bit....