Split of investments/capital

brainiack

Simple question, how or what is your split of wealth/capital/investments, and do you change this regularly or change depending on age/salary?

I ask as someone in early 30s, higher rate tax payer, company pension (30%) including my contribution, and own a mortgaged property (flat).

Currently I hold:
Premium bonds - storing emergency fund and surplus cash/savings, almost at full £50 allowance
Mortgage - less than 50% remaining, option to overpay 10% per year
SIPP - less than £30k currently
Stocks & Shares ISA - less than £30k, mainly funds.
Minimal debt on credit cards, all 0% purchases.

I'm at a conundrum of what split or how much to essentially invest of the cash currently in premium bonds into either stocks & shares ISA or SIPP. How much is average to invest on the markets or in a pension at my age? Premium bonds is safe but lousy as a return, and I was therefore considering once hitting the £50k mark to push any further cash into mortgage overpayments.

Within the next 12-18 months would like to move to a house, selling flat and use some (up to £25k) of my cash towards new home.  

Any tips or how you'd manage the above greatly appreciated!

george4064

I’m also in early thirties, whilst there isn’t a perfect way of doing anything here are a few basic things you should be doing (you may or may not be doing these already):

• Ensure that you are contributing enough % to your workplace pension so that you make the most of your employer matched contributions.
• If you are a higher rate tax payer and your employer allows salary sacrifice, consider increasing your pension contributions further so that you ‘sacrifice’ all of your earnings above £50k per annum into your pension. You will be saving 40% tax on those earnings above £50k.
• Keep 3-6 months expenditure in a instant or easy access savings account, this is your emergency fund. (Only keep more savings in cash if you have a specific reason to keep it as cash, such as a big planned purchase in the future)
• Make regular monthly contributions to your S&S ISA.
• Consider opening a S&S LISA as a back-up/side pension pot, tax benefits may be better for a pension but S&S LISA is not subject to the lifetime allowance so bear that in mind.
• Think twice before overpaying your mortgage as you will most likely earn a much better return investing that cash in your ISA or pension rather than reducing your mortgage

Want to check if your pension is on track? https://www.vanguardinvestor.co.uk/what-we-offer/personal-pension/pension-calculator

brainiack

Thanks that's really useful, hadn't looked at S&S LISA properly and the pension tool is particularly useful! 

Thrugelmir

Premium bonds might provide a lousy return. But the cash is there should you need it. Never a need to borrow and pay interest (bar the mortgage).  If you plan on moving and upsizing. Then building equity makes sense. 

El_Torro

Basically for someone who is planning to work for the foreseeable future (I guess you don’t plan to retire in the next 20 years) then I don’t see much reason to hold more than 6 months worth of cash. If you are saving up for a deposit on a bigger place then this money is extra, on top of the 6 months.

Any spare cash can go into ISAs, pension or LISAs to get longer term returns from investing.

Once you are 10 years away from retiring you might want to revisit this split.

bostonerimus

Keep 6 month's to 1 year's cash for emergencies.
If you have a DC pension put as much as you can into index trackers or a multi-asset fund to get the tax advantage
Then think about funding an ISA
Then make extra mortgage payments.

Adyinvestment

If the OP has 50K in Premium Bonds then why the advice to build up an emergency cash fund?

I treat Premium Bonds as my emergency fund.

Albermarle

Not sure why you have a SIPP , in addition to your company pension ?

As you are putting a lot into your company pension , it might be better to look at a Lisa and increase investments in the S& S ISA , rather than adding more to a SIPP. 

Eco_Miser

Adyinvestment said:

If the OP has 50K in Premium Bonds then why the advice to build up an emergency cash fund?

I treat Premium Bonds as my emergency fund.

Standard advice, as one of the posters said

(you may or may not be doing these already)

In this case they are. Still helps to include all the advice,