What to do with money?

DFWATTS

All,


Looking for advice as to what we should be doing with our household income. Situation right now is thus:-


My Salary - 70k
Wife's Salary - 50k
Bonuses - 30-50k per annum (paid annually, in May)


Debts - 16.5k left on the mortgage of a 350k house. Cost per month currently 85/month, and as it's a flexx mortgage then we can pay the rest off without penalty whenever we wish. No other debt to speak of.


So, as you can see, we're in a pretty good position right now, and there are a few things we're currently doing with the future in mind:-


Trust Funds for both kids - 100/month each
S&S ISA - 200/month (my own ISA)
Pension - We both contribute 10% of our salaries into a workplace pension, and the company puts 5%
Savings - We have about 60k in cash/premium bonds


Last time I posted on here I got absolutely slaughtered, and I'm fully expecting to do so again, but I'm not particularly savvy with finances and I want to make sure we're doing the right things.


I'm assuming the main piece of advice will be to slap more into the pension (thus avoiding tax), but what % should I be looking to up this to? More into the S&S ISA?



All ideas/suggestions/comments/abuse welcome!


Many thanks,
Dan

pramsay13

Might be worth having a chat with a financial advisor rather than people here so that they can look at your earnings and outgoings together and explore your future plans and expectations.

Zero_Sum

If you only owe £16k on mortgage, but have £60k in saving (assuming earning little as in PB's) any reason why you're keeping mortgage since its a flex one?

Prism

I would ensure you both put as much into a pension so that you don't pay higher rate tax. With only £85 per month mortgage payments then enjoy the rest.

jamei305

What is the scheme's retirement age? If you want to retire earlier consider SIPPs to bridge the gap, or if you want to retire earlier than SIPPs allow, put more into S&S ISAs. Putting more into ISAs is probably a good idea anyway as a rainy day fund for the long term.

cloud_dog

DFWATTS wrote: »

All,


Looking for advice as to what we should be doing with our household income. Situation right now is thus:-


My Salary - 70k
Wife's Salary - 50k
Bonuses - 30-50k per annum (paid annually, in May)


Debts - 16.5k left on the mortgage of a 350k house. Cost per month currently 85/month, and as it's a flexx mortgage then we can pay the rest off without penalty whenever we wish. No other debt to speak of.


So, as you can see, we're in a pretty good position right now, and there are a few things we're currently doing with the future in mind:-


Trust Funds for both kids - 100/month each
S&S ISA - 200/month (my own ISA)
Pension - We both contribute 10% of our salaries into a workplace pension, and the company puts 5%
Savings - We have about 60k in cash/premium bonds


Last time I posted on here I got absolutely slaughtered, and I'm fully expecting to do so again, but I'm not particularly savvy with finances and I want to make sure we're doing the right things.


I'm assuming the main piece of advice will be to slap more into the pension (thus avoiding tax), but what % should I be looking to up this to? More into the S&S ISA?



All ideas/suggestions/comments/abuse welcome!


Many thanks,
Dan

There are a number of different elements to this post but, they probably come down to two primary questions:

• What to do now
• Why, for what reason

It is probably worth considering the second question first; why, what for. Assuming your daily needs are met then you need to consider what else, bigger/better house, and retirement planning.

It makes sense to consider retirement planning as there are some simple calculations that can be done to assist you in understanding where you are and what you might need to do.

Firstly you need to have an understanding of what your retirement income requirements might look like, how much do you need/want to live on in retirement. A very, very simplistic rule is the rule of 25. Take your required retirement income, lets say £40k per annum and multiply it by 25, giving you £1,000,000. You would need a pot of money £1m to provide that sort of income.

If any of your pensions a DB / final salary schemes then you can deduct the annual payment from the example £40k number before your calculations.

What's your number and where do you think you are on the road to achieving this? How many years do you have to achieve this?

The second element should probably be driven by the one above, and that is how to achieve this in the most tax advantageous way. Pensions are the obvious choice. Does your company pay you via Salary Sacrifice?

AnotherJoe

For a start put much more into your pensions because the 40% tax break won't last forever.
I'd also just pay off your mortgage there seems no point keeping it.