A little bit of guidance

jeannot18

I have just sold just over 4K worth of premium bonds and I would like to invest them probably in an ISA (I have still got some allocation for this tax year). You may read my other post, but i am not that far from retiring (hopefully) probably between 2 to 5 years maximum (initial plan was 2 years but i really think that it won't be sustainable financially). What would be a good avenue to follow. I was looking at Vanguard Life Strategy Fund. What do you think? Thank you
J

Ceme3000

If you need the 4k in 2 to 5 years then you are best keeping the money in a savings account. 
If you are willing to gamble on the markets (and you are gambling over a 2-5 year period) then Vanguard would be OK.   Understand though that you could lose money.  
Do you have other savings you could access so that you do no crystallize a loss by selling your investments when the markets are unfavourable?

DiggerUK

I have looked at your other posts, what I am going to say will appear harsh, but I do feel you  need to get grounded.

With savings rates so dire why did you not leave the PB's as they were. To propose putting the £4K in to an S&S ISA for such a short time frame seems a bit strange given that you are heading towards retirement with an abundance of mortgage debt. 

On top of that you have what I see as an over ambitious plan to move. Get the mortgage paid off, or at least reduce it as much as you can. 

You seem to want savings, investments and a new home, something has to go. You may like cake, but there isn't enough cake in your cake tin for your appetite..._

Prism

Why are people assuming this is only a 2-5 year investment period. Thats the start of hopefully a very long retirement period. I plan to be almost fully invested by the time I retire.

cloud_dog

Unless you have reached your contribution limit, why wouldn't you put it in to your pension?  I am assuming that as you mentioned S&S ISA you wouldn't need immediate access, and or have access to other savings.  

You would gain a 25% increase,  virtually immediately (20% tax relief), and depending on your retirement situation might be able to withdraw it with no or ow taxation on any drawn amount.

jeannot18

DiggerUK said:

I have looked at your other posts, what I am going to say will appear harsh, but I do feel you  need to get grounded.

With savings rates so dire why did you not leave the PB's as they were. To propose putting the £4K in to an S&S ISA for such a short time frame seems a bit strange given that you are heading towards retirement with an abundance of mortgage debt. 

On top of that you have what I see as an over ambitious plan to move. Get the mortgage paid off, or at least reduce it as much as you can. 

You seem to want savings, investments and a new home, something has to go. You may like cake, but there isn't enough cake in your cake tin for your appetite..._

Thanks DiggerUK, you are not being harsh at all, it's a new thing for me this saving thing, and I wish i started looking into it a long time ago. Well if my calculation are right, we should be mortgage free this time next year or maybe up to April 2021 (if nothing drastic happens). I am taking on board what you are saying about wanting too much, but i am just trying to maximise what i have, and the PB have been so dire (we haven't had a win since last October i think) that i thought i could switch it to something else.We have other provisions so it's not like i would have to withdraw the money right away and actually we could leave it in an ISA for as long as we need to. The plan is also that once we are mortgage free we should be able to save £400 to £500 per month (cloud_dog i will query about topping up my private pension), but if we start another ISA i could start adding to it from next year on a regular basis. I am planning from now to save around £50 monthly on whatever product i decide to take.

steampowered

Surely making the most of tax relief on pensions is the smartest thing to do, given you'll be able to access your pension shortly.

DiggerUK

jeannot I didn't pick up on the fact that you will likely be mortgage free by next year. You should be ok in that case. 

If you are going the S&S route with finances for a move, it may be best to consider the more liquid cash option, or both.

No need to rush, it's Saturday, get a bottle or two in and have a crazy "what if we do this" brainstormer..._

jeannot18

DiggerUK said:

jeannot I didn't pick up on the fact that you will likely be mortgage free by next year. You should be ok in that case. 

If you are going the S&S route with finances for a move, it may be best to consider the more liquid cash option, or both.

No need to rush, it's Saturday, get a bottle or two in and have a crazy "what if we do this" brainstormer..._

DiggerUK, excuse my lack of knowledge, can you explain S&S and "the more liquid cash option", thank you

ace_of_spades

Digger is trying to get you drunk, in the hope that you will then spontaneously come up with the idea of using all your free cash to buy gold. He doesn't want to suggest the idea himself, because lots of other posters would then explain why it's such a bad idea. And he'd like you to keep it in cash, rather than buying anything else, before you come to that spontaneous decision.

Staying in cash is great if you're going to spend it soon, or even if you might want to spend it within the next 5 years. Because cash more-or-less keeps its value in the short term (though the interest on cash is generally a bit less than inflation, so it's probably losing purchasing power, very slowly).

OTOH, if you won't spend it for 10 years or more, then S&S (stocks & shares / investments — e.g. Vanguard Lifestrategy) is more likely to keep up with — and to more than keep up with — inflation.

Which is more sensible does depend on how this fits into your overall financial position: i.e. assets, liabilities (hopefully just the remainder of your mortgage?), annual income, annual expenditure, and how all those things are likely to change in the foreseeable future. I haven't got a sense of the full picture, so I have no idea what might be sensible. Feel free to supply more info on your overall financial position (if you're happy to, which I realise you may not be), so other posters can make more informed comments.