Reluctance to tie-in savings

norrisg24

After divorce ten years ago, i've been on a finance health kick. Sold the former family home, paid off mortgage, downsized, no debts, £280 pr mon regular bills, controlled spending etc. I  have my toys and holidays but can comfortably pay for my life (and save) on the 2k take home current salary from my current stress free - good benefts job.

Pension arrangements look secure. I also have 115k in a mixture of 0.5% accounts and cash ISA's (plus 5k in premium bonds). I have no immediate use for this lump sum and will probably use it to boost income if i decide to retire early (i'm 51), but it needs to perform better!!

I'm interested in investment options however im strangely holding this cash close to chest. Its mine, i want it, if i decde to sack work tomorrow i can, type of mentality. Its almost a crutch for my freedom, if i want it at any point.

Does anyone have any good options that might help get this cash performing better, but still allow me to feel the notion of "ive escaped the rat race" it gives me !!

MX5huggy

I would bump up the premium bonds no point holding 0.5% savings when PB’s pay 0.9% on average (with 50k you’ll get close to average).

Then review your pension, could you pay all your salary in to this for the next 4 years, live off savings and retire. If not what’s the retirement plan? 

Thrugelmir

To perform better you will need to be prepared to take a degree of risk. While your pension looks secure. Could it be enhanced. Is early retirement a possibility? 

Albermarle

For safe savings and easy access , as already suggested Premium Bonds are good ( maximum £50K) 
Then you have safe fixed term savings accounts that pay more than easy access.
Compare The Best UK Savings Accounts | moneyfacts.co.uk
All the savings providers listed in this link are covered by the £85K compensation scheme , even if you have never heard of them.

To be sure to beat inflation though , you need to move away from savings to investments ( or partly move) .

Before going any further though, can you supply details of the pension ? Is it a Defined Benefits scheme ( final salary type ) by any chance?

norrisg24

Pension is in limbo. Ive got 90k in one dc scheme and 330k in another. Ive also just started cs alpha with new employer and am getting a quote to transfer the 90k into it - just as a home banker.

After getting the quote im thinking of seeing an ifa to review the investment choices in the schemes and play witht the numbers a bit. Ive got 60k in a Cash isa which id consider moving to managed stocks and shares.

Albermarle

You need to see your financial position in the round . Not to wonder about cash or investments, and then the pension separate.

For example if the £330K DC pension is aggressively invested in say 100% equities or thereabouts , then having >£100K cash is maybe a good balance to that . Considering your age and possible early retirement before the pension can start to be taken.
If your DC pension has a low % of equities and is medium /low risk then investing some of the cash could be a good idea. 
There are no hard and fast rules but I think you will see what I am getting at.

I am not an expert on the CS alpha scheme but usually transferring into public sector schemes is a good idea , No doubt someone more knowledgeable will be along shortly to comment.

norrisg24

Yes i think the alpha will be a good way to spread the load, its not viable to transfer the 330k as alpha limits transfer benefits to 50% of your salary i recall. Lets see what they quote...

All in all i think taking redundancy at my time, taking a lower spec job for a few years in the cs and making use of the pension options, seems like a winner. And it is so woke and unionised etc its pretty easy to tick along in a non stressful environment, got to be honest the flexitime makes me feel semi retired anyway!! 

csgohan4

put what you need for emergency savings into PB or high savings account and the rest into long term investment.

Investing is not 0 risk, only you will know your risk appetite/profile. If you do not want to lose any money, bare in mind your money is being eroded every year by inflation in a 0.5% account

The Monevator website is a good start for passive investing. 

Investing is taking a giant leap into the unknown, but with more reading and finding lower risk funds you will do better than a ultra low interest rate account. 

Investment is over 10 years really and there will be dips and then ups. Look at the last 3 years, dips and then up. Do not invest in individual shares if you want to sleep well at night.

Passive Index trackers do quite well over 10+ years, probably at least 5% gain a year, which is tax free in an ISA.  On my more adventurous funds i've had around 16% in a year, but the higher the gains, the higher the risk. 

strawb_shortcake

Don't forget that Alpha is tied to SPA so anything you transfer in will presumably be tied in to this point too

MX5huggy

annabanana82 said:

Don't forget that Alpha is tied to SPA so anything you transfer in will presumably be tied in to this point too

But you can take the retirement early at a reduced rate https://www.civilservicepensionscheme.org.uk/media/538002/csops_erf-and-lrf-factors-and-guidance-01082019.pdf

norrisg24

3.5 year plan i think. About 15k premium bonds, 12 month holiday \ emeregncy money in cash, selection in fixed annual accounts (2  to 3 years) and split isa 50\50 i to stocks and share isa.

Get to 55, reevaluate. ☺☺