Debt free. Now what?

Bigwheels1111 · 24 June 2023 at 6:14AM

My life expectancy is down 20 years due to absent mindedly agreeing the wife’s bum did look big in this.
I’m a pacifist and she’s a trained killer.

mattywallace121 · 24 June 2023 at 7:04AM

No point putting cash in an ISA due to low returns when savings accounts are paying the highest they have been in a decade? Is this a troll post?

Bigwheels1111 · 24 June 2023 at 8:21AM

mattywallace121 said:

No point putting cash in an ISA due to low returns when savings accounts are paying the highest they have been in a decade? Is this a troll post?

I can think of two reasons, Tax and for me I want a good rate Virgin at 5% 120 days loss of interest.

I will fund with my emergency fund, that I should not need. But if I do The access cost is not to high.

5% is better than 4.1% easy access.

Upbeat_84 · 24 June 2023 at 8:51AM

mattywallace121 said:

No point putting cash in an ISA due to low returns when savings accounts are paying the highest they have been in a decade? Is this a troll post?

Not a troll post. Just looking for advice on what may perform best over the long term. I can only stick 20k a year into an ISA. The one I have now is getting circa £65 a month interest. Just wanted to see if there are ways I can make the money work harder for me from people who may know more. For instance, pound cost averaging into broad index funds over the long term tends to average 8% PA or thereabouts. Over the 20 year time frame since records began that seems to be the case. I'm open to risk for the possibility of better gains.

Albermarle · 24 June 2023 at 9:29AM

Upbeat_84 said:

mattywallace121 said:

No point putting cash in an ISA due to low returns when savings accounts are paying the highest they have been in a decade? Is this a troll post?

Not a troll post. Just looking for advice on what may perform best over the long term. I can only stick 20k a year into an ISA. The one I have now is getting circa £65 a month interest. Just wanted to see if there are ways I can make the money work harder for me from people who may know more. For instance, pound cost averaging into broad index funds over the long term tends to average 8% PA or thereabouts. Over the 20 year time frame since records began that seems to be the case. I'm open to risk for the possibility of better gains.

Normally you are correct in that stock market returns beat cash savings long term, however the future is unpredictable.
In the last 18 months investments have largely had a negative return, the actual minus % depending on what you were invested in, but typically around 5 to 10% . Recently markets have been rather flat and no obvious signs of any upturn in the immediate offing. At the same time you can get 5% guaranteed on savings. You are getting 4% in your ISA, and personally I would not be too sniffy about that.
Probably best to take a short and long term view at the same time. For the long term investing via a pension is usually better due to the tax relief.( although you have not clarified your exact pension situation, which was not totally clear in your OP)

Upbeat_84 · 24 June 2023 at 10:00AM

Albermarle said:

I'm sticking about £200 a month into my workplace pension (local government, employer adds circa 9%)
Normally a local government pension is a Defined Benefit ( DB) type scheme ( whereas the PensionBee is a Defined Contribution (DC) scheme) . Is yours a DB scheme ?
Pension basics | Help with pension basics | MoneyHelper
With a DB scheme, the pension you build up is related to how long you work there and how much you earn. Your contribution is just an arbitrary minimum amount to be a member of the scheme. DB schemes are normally much better than DC schemes.
Whereas a DC scheme is more like a glorified savings/investment account with tax breaks.

I've just checked and it's a defined benefit scheme via this place:

https://www.cheshirepensionfund.org/members/paying-in/my-pension/scheme-guide/

My PensionBee one is a tailored plan that is currently on the higher end of the risk profile (by choice) largely in equitied and the risk reduces as you near retirement age.

Qyburn · 24 June 2023 at 10:58AM

rabbit87 said:

I think pensions are now risky as life expectency is down 2 years due to covid.

I think that's probably a misunderstanding of various statistical studies, which showed that at one point life expectancy in the US fell by two years (only one in the UK). But that's an overall statistic taken in 2021 or 22, it's not the same as saying a particular person's LE is reduced by having had Covid.

Albermarle · 24 June 2023 at 2:44PM

Upbeat_84 said:

Albermarle said:

I'm sticking about £200 a month into my workplace pension (local government, employer adds circa 9%)
Normally a local government pension is a Defined Benefit ( DB) type scheme ( whereas the PensionBee is a Defined Contribution (DC) scheme) . Is yours a DB scheme ?
Pension basics | Help with pension basics | MoneyHelper
With a DB scheme, the pension you build up is related to how long you work there and how much you earn. Your contribution is just an arbitrary minimum amount to be a member of the scheme. DB schemes are normally much better than DC schemes.
Whereas a DC scheme is more like a glorified savings/investment account with tax breaks.

I've just checked and it's a defined benefit scheme via this place:

https://www.cheshirepensionfund.org/members/paying-in/my-pension/scheme-guide/

My PensionBee one is a tailored plan that is currently on the higher end of the risk profile (by choice) largely in equitied and the risk reduces as you near retirement age.

Rather than adding to a SIPP, you may be better off buying more of the guaranteed LGPS DB pensions with APC's
Or redirecting your SIPP contributions to the AVC linked to the LGPS DB pension.

How do I increase my pension? | Members (cheshirepensionfund.org)

There are some LGPS experts on the forum and they will hopefully comment.

LoopySnooker · 24 June 2023 at 5:19PM

Not sure if I have missed it but do you have a SIPP already with any money in ? If so, and you have only just joined the LGPS, I would recommend getting a transfer in quotation to see how much it would give you in the LGPS. It will also ensure that you are vested should you not stay there for the normal minimum 2 years.

Dansmam · 25 June 2023 at 8:03AM

As Albemarle suggests, I'd look into an AVC linked to your LGPS pension. You choose your own risk level for that, though limited to the options offered by whoever provides it. Even if you move away from local government you probably won't want to move pension out of the DB. The AVC can be accessed tax free within the 25% lump sum when you choose to take the pension.