Pension/ISA/Savings

Nurselayer

Hi folks,
I'm a 46 year old self employed man with no cash savings, and only the tiniest of pensions (I invested in a pension fund 20 years ago for a year - I think the holding is now worth about £14,000 in total). I've got about £4,000 in a shares ISA that I put in to shares and forgot about for 10 years. I've just found out that the company holding the ISA is charging me £10 per month administration for holding these shares.
I feel that I can at the moment afford to pay some money (perhaps £30 per month) into an investment, whether that's an ISA, a pension, or a savings scheme. However, because I'm self employed my income can vary a lot and so whilst I think I can managed £30 per month for the next 12 months, there's no guarantee that I would be able to do that the following year.  I've got quite a risk tolerant attitude to investment and am happy to buy/sell shares myself.
Things I've thought of are either a pension fund, a lifetime ISA or just a monthly savings fund - however I'm open to all suggestions.
Any advice would be gratefully received.

Albermarle

You are probably aware that with no cash savings , and very small investment pot/pension at age 46 , you are in a vulnerable position . Your priority should be  to build up an emergency cash savings fund for a rainy day. A minimum amount should be enough for you to live off for 3 months in case you lose your source of income. After that you can think about building up your pension etc.
I've got quite a risk tolerant attitude to investment and am happy to buy/sell shares myself.
With the amounts you are talking about you should forget about this idea. Dealing charges would wipe out any gains ( if there was any )

Nurselayer

Thanks Albermarle, let's just assume that I'm ok for the 3 months that you suggested - which option should I be looking at?
As for dealing charges, I've not used the site in a while but I believe they were only about £7 per deal when I was doing it, which I think was quite coverable. Buying unit shares might be a more economical way of doing this though.

ColdIron

Even if you only bought shares in a single company, an ultra high risk strategy at the best of times, the £7 transaction fee on £30 is totally unsustainable. Your investment would need to grow by 30% just to stand still. And then you have to sell it, another fee. Stick to collective schemes or even better a pension and take advantage of the tax rebate. Unfortunately you have missed the boat for a LISA

dunstonh

There is no point buying shares with £30pm.   Plus, if you are not an experienced investor, you should not buy shares.   You should stick with funds instead.

Currently, you are on track to get a state pension in the region of £175pw.  That is £9,100 a year.  Can you afford to live on £9,100 a year?  How does that compare to your current earnings?  

£30pm is a contribution that is considered too small for an 18 year old.  At age 46 it is derisory.     Yes it is better than nothing and we dont know your circumstances but are you just doing this to tick the pension box or have you actually thought it through as to what you really need to be paying?

steampowered

Based on a quick play around with the pensions calculator at https://www.moneyadviceservice.org.uk/, contributions of £30 a month into a pension at age 44, retiring at age 65, might generate income of £435 per year in retirement.

You should absolutely move your ISA to a low cost provider, and put your money into a low cost balanced fund (such as a Vanguard fund). 

However, saving costs on your ISA does not fundamentally address the issue that you are looking at a very low income in retirement due to having hardly any pension. 

Fundamentally, it's now a good time to sit down and try to map out the next 20 years. So that you make the most of what you earn and know what to expect when you retire.

Zanderman

£30 isn't much, but is vastly better than nothing.  But you should be aiming at much more.

And I'd vote pension, as you're seriously in need of one.  And it will gain tax relief so will become more (fairly) instantly.  And it will be invested for at least 10 years (you won't be able to touch it until age 55 at least)

So it will do better than just investing (and, re investing don't, whatever you do, buy shares yourself - buy funds).

And it will do better than savings - interest rates are fairly pathetic right now and are likely to remain so for some time yet.

Pension, pension, pension....

(PS you're too old to start a lifetime ISA)

Albermarle

Pension, pension, pension....

https://www.vanguardinvestor.co.uk/what-we-offer/personal-pension/personal-pension-account

https://www.cavendishonline.co.uk/stakeholder-pension

Nurselayer

£30 Isn't much, but it's what I can afford. 
Thank you all so much for your help I shall have a look at the options I have available and probably come back with further questions.

Nurselayer

Thanks for your help on this so far.  I have some further questions. Looking at my National Insurance records, I've got 23 years of full contributions. I've got 21 years left to contribute before I retire (god that seems like a long time) and I've got 7 years where I did not contribute enough.
Here's an example of what it says on a year where I've not contributed enough:
"Pay a voluntary contribution of £73.25 by 5 April 2025. This shortfall may increase after 5 April 2021."
The amounts that I am short vary year by year, in one year it's £500, in another it's £30.  Should I be making these voluntary contributions to top up the years? If so, can I make voluntary contributions to top up specific years? So for example, could I choose to top up years where there is less than £100 shortfall, but not top up those that have £300 shortfall?
I would imagine that over the next 21 years, I will make full contributions in at least 14 years, and so is there any point in making any voluntary contributions?

Dazed_and_C0nfused

Impossible to say until you tell us what you have accrued so far (usually shown to 5 April 2020).

It's not the £175.20 it's the next figure.

Chances are you'd be wasting your money but without that info who knows.