Investment advice needed please

misss1234

Hello everyone,

 Just wondered if I could pick people's brains around a few financial matters 😊 I currently have a lump sum of about £15K and I'm wondering what the best options are for it as interest rates for savers aren't great at the moment. Each month going forward, I will also have an additional £1000 left over after bills and I'm deliberating what to do with this too. In my head, the options I've got are:

 A) Put more money into our mortgage. Our mortgage interest rate is currently fixed at 1.9% for another 4 years. I could overpay this, as I can only assume interest rates will be much higher when we come out of our current deal? We may also consider moving to a bigger property in the next few years so overpaying now could also aid our ability to afford a more expensive house. (Or if we don't move, it will help us pay off our mortgage quicker).

Put more money into my company pension. I am already receiving the maximum employer contribution so I have nothing else to gain there, but if I increase my own contribution by a few percent, I'd save in tax? Is this worthwhile or is it better to open a LISA?

 C) Open a Lifetime ISA. Put £4K in this financial year, then another £4K next year for a future 25% bonus, but cannot draw it out again until 60 without paying a penalty and losing some money?

 D) Open a stocks and shares ISA. A bit of a gamble as it could go up or down. I'm assuming this would be a long term investment over a minimum of a few years? How easy is this to learn about and control yourself as I currently know very little and wouldn't want to mess it up?

 E) Invest in my company's stocks and shares as I would get 1 free for every 10 I'd buy and I believe they are tax free. However they are currently at about £3 and are on the decline...

Which of these would have the most financial gain do you think in your opinion? I'm guessing it's between either overpaying the mortgage or saving more towards my pension?

 What would you do in this situation?

Thanks in advance 😊 

Thrugelmir

Spread your money across the various options. Then adjust as your objectives change. Not all about maximising financial gain. Money tied up in your pension isn't going to be any use if you lose your job for example. Being mortgage free is a life changer. As likely to be your largest single outgoing. 

SMcGill

There are many helpful experts on this and I’m sure one will be along shortly, but they might find it helpful to know your age and if you’re a higher rate tax payer. Good luck!

misss1234

Thanks for your responses so far 😊
I'm 33 and currently pay 20% tax 👍😊

Albermarle

) Open a stocks and shares ISA. A bit of a gamble as it could go up or down

Your pension will also be invested in stocks and shares, and as you are looking at a LISA for retirement purposes, then this should be a S&S LISA.

So all three are places where you invest in Stocks and shares, and therefore they can all go down as well as up . So you need to gain some basic knowledge about investing for your pension, S&S ISA and LISA and not just one in isolation.

The difference between them is the tax treatment and how much you can add and when you can withdraw.

The main point about a S&S ISA , is that you can access the money at any time but it is not recommended that you do so for many years , to give the investments chance to ride out market ups and downs.

Here are some MSE links .

Investing in stocks for beginners: how to get started - MSE (moneysavingexpert.com)

Stocks & shares ISAs: find the best platform - MSE (moneysavingexpert.com)

Lifetime ISA (LISA): how they work & best buys - Money Saving Expert

Pensions: Everything you need to know for retirement - MSE (moneysavingexpert.com)

Finally before any of this , do you have some cash savings as an emergency fund in case you lost your job , needed a new car etc ?

Notepad_Phil

A +1 for Thrugelmir's suggestion of putting some money into them all rather than just one of them.

Though do remember that investing in many people's view should only be for money that you won't need access to for preferably at least 10 years to give you the best chance of making a gain at the end. This time period isn't necessarily the same for your company shares as it will depend on the scheme used to buy the shares (but regardless of scheme used, I'd always suggest that you sell the company shares as soon as you are able to, so that you're not reliant on your company for both your salary and a chunk of your saved wealth).

misss1234

Thanks for all the links and extra info, it's something I definitely need to learn more about! That's a good point Phil about relying on my company for my salary and having lots of money tied up in their shares! Hadn't thought of it that way.
I've got another cash ISA set aside as my rainy day, emergency fund so no problems there.
I'm leaning towards the idea of paying an extra £500 a month off the mortgage, opening a LISA this year with £1000 (will contribute more as and when in the future) and then investing maybe £5K in a stocks and shares ISA to begin with? I might enlist the help of a financial advisor to get me started though, as I've now realised how little I currently know 😬

DireEmblem

Rather than open a LISA, can you not top up your contributions to your company pension as that should have some NI benefits too?

Thrugelmir

misss1234 said:

 I might enlist the help of a financial advisor to get me started though, as I've now realised how little I currently know 😬

Until you've a portfolio of some value. The fees charged will be disportionate. Keep asking questions. Learn the basics. Over time you'll gain experience and knowledge. The investment world is broad and diverse. Also more complex once you dive beneath the surface. Initially aim to keep your investments simple , diversified and low cost. 

grumiofoundation

DireEmblem said:

Rather than open a LISA, can you not top up your contributions to your company pension as that should have some NI benefits too?

Only if pension is via salary sacrifice.

If pension is not Sal sac no NI savings. 

If you are just looking at tax relief (for basic rate tax payer) vs bonus then a LISA is same as/better as additional pension contributions. 

Whether same/better depends on if will pay tax in retirement. 

LISA same if pay no tax in Retirement, better if pay tax in retirement. (All based on current tax rates which obviously may change)

cloud_dog

misss1234 said:

Thanks for your responses so far 😊
I'm 33 and currently pay 20% tax 👍😊

Are you paid under a Salary Sacrifice arrangement?