investing for beginner

eskbanker

Agusya said:

sevenhills said:

What are you saving for, how old are you, have you considered saving inside a pension to reclaim the 25% pension allowance?

Shares carry more risk, some people prefer low risk.

Im 40. Im saving up for early retirement. what 25% pension allowance?? Tell me more I do have nhs pension (but only been paying into it for 4 years or so)

It's not an 'allowance' as such - it's basic rate tax relief, so if you pay into a pension with money that's already been taxed, then you effectively get that back, i.e. if you were paid £100 gross, that would typically be £80 after deduction of 20% basic rate tax, but if you pay that £80 into a pension, it's grossed back up to £100 again. 

Having said that, you'd probably pay tax again on 75% of what you ultimately draw down from a pension, so the net gain is likely to be closer to 6.25% overall, although this is dependent on whether you're paying tax at basic or higher rates now and after retirement....

Albermarle

Agusya said:

sevenhills said:

What are you saving for, how old are you, have you considered saving inside a pension to reclaim the 25% pension allowance?

Shares carry more risk, some people prefer low risk.

Im 40. Im saving up for early retirement. what 25% pension allowance?? Tell me more I do have nhs pension (but only been paying into it for 4 years or so)

Your NHS pension is a DB ( Defined Benefit ) pension . For every year you work , you build up an entitlement to a guaranteed pension income when you retire . These types of schemes are pretty generous and one of the plus points for working in the public sector.
Most workers are in Defined Contribution ( DC)  pension schemes where a pot of invested money is built up that can be used to provide an income later in life . These are generally inferior to a DB scheme .
What is being suggested is that you open a DC pension separate from your NHS pension and invest your money in this .
There is a tax benefit with these schemes but you can not access any money from them until your late Fifties.

If you want to access the money before then you would be better to invest in a Stocks and shares isa. There is no direct tax benefit but you can access it when you like . Having said that investing is a long term gain so a S&S ISA would be too risky if you think you might need to access it within a few years . Investing for > 10 years gives a much better chance of success.

maxsteam

My opinion, which I hinted at earlier, is that you should not look for "the one and only" investment that will satisfy all your needs. A sensible approach might be to put something in an ISA, something into a pension, something into shares (inside or outside a wrapper) and something into a plain, ordinary savings account. How much to put into each should be your decision. You should certainly not get drawn into the argument about whether an ISA or a SIPP is better when you have the option to put a small amount in each if you so wish.

Thrugelmir

In addition to what @maxsteam eam has suggested. There's nothing lost by overpaying your mortgage. Life is full of twists and turns.  A bit of everything. Covers all eventualities. 

Nurse2047

This is useful to help understand 
https://youtu.be/yG5plUMBtzQ

Nurse2047

Are you aware you can increase your nhs pension? 

https://www.nhsbsa.nhs.uk/member-hub/increasing-your-pension

bostonerimus

You have a good pension so I would not complicate things by opening a private pension as well, just use the DB NHS pension to the max, make sure you have a good amount of cash for emergency and you can put anything you have left into an S&S ISA where you can hope for some tax free growth and will have easy access to your money.

1) Save at least 6 months cash spending in the bank.
2) Pay off all high interest debt.
3) Put as much as you can into your NHS DB pension.
4) Open an S&S ISA with one of the big platforms (Vanguard, H&L etc..) and regularly buy a global stock tracker fund like Vanguard Global Equity Fund or the HSBC, iShares equivalents. This has risk, but you are guaranteed a life time pension from the NHS so you can take more risk in your ISA than a lot of people. When it goes up don't get cocky and when it goes down don't panic. 

Agusya

eskbanker said:

Agusya said:

sevenhills said:

What are you saving for, how old are you, have you considered saving inside a pension to reclaim the 25% pension allowance?

Shares carry more risk, some people prefer low risk.

Im 40. Im saving up for early retirement. what 25% pension allowance?? Tell me more I do have nhs pension (but only been paying into it for 4 years or so)

It's not an 'allowance' as such - it's basic rate tax relief, so if you pay into a pension with money that's already been taxed, then you effectively get that back, i.e. if you were paid £100 gross, that would typically be £80 after deduction of 20% basic rate tax, but if you pay that £80 into a pension, it's grossed back up to £100 again. 

Having said that, you'd probably pay tax again on 75% of what you ultimately draw down from a pension, so the net gain is likely to be closer to 6.25% overall, although this is dependent on whether you're paying tax at basic or higher rates now and after retirement....

I dont understand anything of it . I looked into the website about NHS pension and literally its like its in a foreign language ,so I asked my smarter friend to check it out. Also no idea what they are talking about

Agusya

maxsteam said:

My opinion, which I hinted at earlier, is that you should not look for "the one and only" investment that will satisfy all your needs. A sensible approach might be to put something in an ISA, something into a pension, something into shares (inside or outside a wrapper) and something into a plain, ordinary savings account. How much to put into each should be your decision. You should certainly not get drawn into the argument about whether an ISA or a SIPP is better when you have the option to put a small amount in each if you so wish.

Ive just put some money into 5 year bond 2%, some in 2 year bond 1.70% and rest (half of all) is in ISA but isa has really bad % so are regular saving accounts. But since I dont really understand all the pension saving and shares and investing, I guess that is all I can do.

Agusya

MFW2026 said:

This is useful to help understand 
https://youtu.be/yG5plUMBtzQ

thanks!!