investing/saving

bowlhead99

Deleted_User said:

I've upped my salary sacrifice pension contribution to 17% (from 10%) - just now. I'm on a relatively low wage so we're not talking mega bucks, but its more  than it was   I was also thinking that popping about £300.00 a month into something which isnt a savings account ( as I have lots of those) but i just dont know where to start.

If you are looking to invest (in something that isn't a savings account), and don't have much pension provision, and are already over the age at which you are allowed to draw your pension if you needed to... the obvious thing to do is to simply sacrifice more into your pension, down to minimum wage.

It sounds like you already have £50-100k+ of cash lying around (because interest rates aren't high yet you're earning enough interest income to be paying tax on it). And you have £300 a month spare to invest (not sure if that's new earnings from salary or just what you're considering investing out of your existing cash hoard). So, you could easily afford to take even less salary and 'live off savings', allowing more of your salary to be sacrificed into the pension. 

As a basic rate taxpayer if you take £100 pay you would pay 20% income tax and 12% national insurance so would have lost almost a third of your salary to tax. If you give it up in exchange for pension, you would have £100 in the pension instead of £68 in the bank account.  That's an instant 47% return (although some portion of your pension may be taxed when you draw it out in retirement, depending on what other income you have in the year you take it).  There aren't any other investment options paying 47%.

Once the money is in the pension it will grow over time, so with the combination of it starting off being worth £100 instead of £68, and growing faster from investment growth than a 'risk free' savings account, you will have a much better chance of your money withstanding the ravages of inflation over the coming decades.

[Deleted User]

Yes. I know you're right, Albermarle. Its strange isnt it, how financial risk is everywhere if you choose to look properly, even in ordinary savings accounts.

[Deleted User]

When I read that, bowlhead99, it makes sense but feels scary.

Albermarle

As Bowlhead says - max possible into the pension is a no brainer .
At same time have a look at what investments your money is in within your pension . If you post the details of which pension provider it is your employer and what fund you are invested in you should get some more pointers.

LHW99

You could look at using a small part of your £300pm into a regular purchase of a general unit trust. Most of the main platforms such as hargreaves Lansdown and AJBell and others will let you open an account and will make a lower charge for regular investments (someone here may be able to suggest which would be cheapest / easiest with a low threshold). You could put £50 (say) in per month to a global multi-asset fund and the rest into premium bonds or similar. After a year or so, when you have seen how it goes you could increase the proportion being invested - or not if you prefer.

Aceace

bowlhead99 said:
... There aren't any other investment options paying 47%. ...

Not strictly true, but certainly not within the OP's risk appetite 

[Deleted User]

Gracious. So much information. Thank you all. I can see where you are all at when you say put as much as possible into my pension. It makes sense. I'm not sure why i find the idea scary. Silly really. I suppose seeing my pension (what little there is) plummet when Covid hit the world's finances, scared me...but then, as you say, the same is happening with savings accounts/inflation too.
My pension is with Scottish Widows. Its in their passive interim lifestyle pension fund with the majority of it being invested in SW passive multi assett 111CS3. Does that make sense?

[Deleted User]

LHW99....I used to be with Hargreaves and I liked their service. Everyone seems to be chatting about Vanguard atm and I do like their TV ad

Albermarle

Deleted_User said:

Gracious. So much information. Thank you all. I can see where you are all at when you say put as much as possible into my pension. It makes sense. I'm not sure why i find the idea scary. Silly really. I suppose seeing my pension (what little there is) plummet when Covid hit the world's finances, scared me...but then, as you say, the same is happening with savings accounts/inflation too.
My pension is with Scottish Widows. Its in their passive interim lifestyle pension fund with the majority of it being invested in SW passive multi assett 111CS3. Does that make sense?

For mainstream investment /pensions funds the risk ( and potential reward ), goes up the higher the % of company shares in the fund . Your typical average investor does not like too many big ups and downs in their investments so they invest in medium risk funds that maybe have 40 to 60% shares . That is what approx. the SW passive multi asset 111 is .

The 'lifestyle ' fund means that the risk profile is higher for younger people and slowly reduces as you get near retirement . 
I am thinking your pension fund went down with Covid but did not really 'plummet' .If you get an up to date valuation you should find it has largely if not completely recovered.
In simple terms - Investments can go down as well as up - but history shows that in the long term the trend is always up.
As explained by investing via salary sacrifice into your pension you will have a massive head start anyway .

[Deleted User]

Seriously...how do you people KNOW all this stuff? You're right. It didnt plummet! I'm exaggerating! And really.... with so little in it... 'plummet' is bigging it up
So.... to sum up so far I should put as much as I can into my salary sacrifice SW pension and then consider adding some money each month to some sort of multi assett global fund and maybe dumping a whole lot of my savings into premium bonds.
Such a lot to think about. I'm truly grateful ...and thank you all for taking me seriously and not laughing at me.