Working out a plan

ostaragirl

Myself and oh have 30k not earning anything and have just finished overpaying mortgage so want to carry on putting that away plus the money we were saving each month to get the 30k so 2k a month to carry on with. I was thinking something along the lines of 10k in a 2 year fix, 8k in stocks and shares and 12k in another fix, maybe a year. Then what to do with monthly 2k? I'm not very experienced with any of this but am good at saving, just not making it work for us so would appreciate input please.

Albermarle

To get any sensible feedback , you need to supply more details about your selves , eg
How old are you both and are you both working ? What pension arrangements do you have ?
What about future plans ? Do you have children or plan to ?

Linton

First step is to establish an emergency fund in an instant access cash account. This should be enough to last you something like 6 months, so if you lose your job or have a major unplanned expense you dont have to raid your longer term savings/investments.


How much are you putting in your pensions? Are you at least maximising your employer's contributions? Are either of you higher rate tax payers? If so pension contributions are particularly valuable.



Once you have your emergency fund and pensions sorted...
- Do you have any major expenses in the next 5 or so years If so the money should be held as cash, perhaps in fixed term accounts.
- So what is left is for the long term. The only way to be fairly confident of returns exceeding inflation is to invest in stocks&shares through funds which spread your risk over 100's if not 1000's of individual invetsments. It could make sense to start with an S&S ISA holding a moderately cautious multi-asset fund.

ostaragirl

Albermarle wrote: »

To get any sensible feedback , you need to supply more details about your selves , eg
How old are you both and are you both working ? What pension arrangements do you have ?
What about future plans ? Do you have children or plan to ?

Yes of course, it a bit complicated. We both work and have pensions, one civil service and one local government. I'm 49,partner 62 and he will probably retire next couple of years, we have both paid into these pensions most of our working lives. His pension is in a good state, not so sure about mine as it started out LGPS, then moved to Strathclyde fund and I worked part time for first few years so I probably need to look into it. Grown up and away children. We have just paid of the house. He will get a large lump sum plus a pretty good monthly amount when he retires. I want to retire as soon as I can without it affecting my pension too much.

ostaragirl

Linton wrote: »

First step is to establish an emergency fund in an instant access cash account. This should be enough to last you something like 6 months, so if you lose your job or have a major unplanned expense you dont have to raid your longer term savings/investments.


How much are you putting in your pensions? Are you at least maximising your employer's contributions? Are either of you higher rate tax payers? If so pension contributions are particularly valuable.



Once you have your emergency fund and pensions sorted...
- Do you have any major expenses in the next 5 or so years If so the money should be held as cash, perhaps in fixed term accounts.
- So what is left is for the long term. The only way to be fairly confident of returns exceeding inflation is to invest in stocks&shares through funds which spread your risk over 100's if not 1000's of individual invetsments. It could make sense to start with an S&S ISA holding a moderately cautious multi-asset fund.

I'm basic rate, he is higher rate. I have been wondering about pension contributions. We both work ft and contribute max. We have no major expenses planned. I definitely want to have an emergency fund just for things like if I need a new car or such like.

Albermarle

Although your OH has a good pension lined up , probably the best place for him to invest is in a separate private pension . This is because pensions are very tax beneficial for higher rate taxpayers. Also as he is over 55 , he has no restrictions on accessing it when he wants . He should at least contribute enough so that he is effectively not paying any higher rate tax anymore.
Within this private pension the money could be kept as cash , if it is likely to be taken within 5 years . If it is likely to be used farther down the line then better to invest it within the pension in a low/medium risk fund(s)
By the way it is very easy to open a new pension online and normally free, although there will be annual charges . For more info on pensions follow this link ( it is a government backed website)https://www.pensionsadvisoryservice.org.uk/
Otherwise what Linton says is the usual advice.

AlanP_2

ostaragirl wrote: »

I'm basic rate, he is higher rate. I have been wondering about pension contributions. We both work ft and contribute max. We have no major expenses planned. I definitely want to have an emergency fund just for things like if I need a new car or such like.

Do you actually contribute the max?

I don't know about CS scheme but I'm in the LGPS and use AVCs to supplement the standard DB scheme. APCs are another option.

What income do you want from what retirement date?

Are you on track to achieve that?

LobsterMemory

Just adding that I don't think you should mix your emergency fund with a new car fund.

I treat an emergency fund as to be used for unplanned expenses. You should be able to plan for a new car purchase barring errr an emergency and can save accordingly

ostaragirl

Yes the 2k a month I will split and put 1k into emergency with instant access. We are not saving for anything in particular, have no debt and pretty minimal expenses but I do want money there if we need a car, house repairs, bills for a few months. I'm glad you both mentioned pensions as this could well be a way forward for us. I'm almost certain I looked at this before and his pension he can only take out 25% of avc as a lump sum, would that be right?

ostaragirl

Albermarle wrote: »

Although your OH has a good pension lined up , probably the best place for him to invest is in a separate private pension . This is because pensions are very tax beneficial for higher rate taxpayers. Also as he is over 55 , he has no restrictions on accessing it when he wants . He should at least contribute enough so that he is effectively not paying any higher rate tax anymore.
Within this private pension the money could be kept as cash , if it is likely to be taken within 5 years . If it is likely to be used farther down the line then better to invest it within the pension in a low/medium risk fund(s)
By the way it is very easy to open a new pension online and normally free, although there will be annual charges . For more info on pensions follow this link ( it is a government backed website)https://www.pensionsadvisoryservice.org.uk/
Otherwise what Linton says is the usual advice.

Thanks, can you please explain a bit more where you say he should at least contribute enough that he is effectively not paying higher tax anymore?

ostaragirl

Also can you get tax relief on two schemes at once? Sorry don't want to ask stupid questions but I'm not very knowledgeable ��