Should I begin investing?

callumchip

Hi, 

Kind of general financial advice I am after - this may not be the best place - my apologies.

I am in a position where I can make a few £100 extra a month and have enough savings for an emergency fund. I am now wanting to see if I can make this extra money work for me, but am having difficulty in working out what is the best option for me. 

My current situation is the following, for context;

I have a mortgage. Currently owing around £110,000 at 2.8% and around £400 a month. I have 3 years left on this fixed rate. At the end of this I intend to move, likely to a more expensive home. 
Should I overpay my mortgage, increase my equity and give me more buying power in the future? But this is likely a lower interest rate than *most* investments. Should I be taking advantage of this low rate by throwing as much money at this as possible?

I also have a car loan. £16,500 left at 3.8% and 3.5 years left. Also around £400 monthly. Should I overpay this loan instead? It's my most expensive debt but it still lower than lots of investment options. This would also mean I could have this paid off prior to re-mortgage which may give me more options. Savings from interest from this would be minimal, though. 

Or, should I start some kind of investment in one of the huge variety of incredibly confusing and overwhelming accounts that every company and their dog seem to offer. (Any suggestions on these would also be amazing.) Just seems weird to me to start investing while having debts that are fairly low monthly payments. 

Any advice would be very welcome!

Thanks!

Coffeekup

Where are you with pensions?

amanda1024

As well as making sure you’re paying enough into your pension, it sounds like a regular savings account would be a good fit, if you have a few £100 a month to save - these generally have the highest interest rates (higher than you’re paying on both debts). Then when the regular savings account matures, a fixed term ISA to last until the mortgage ends will help minimise tax on savings interest. You talk about investing but I wasn’t sure if you were including savings accounts in this too.

Janie2008

You can make more money from savings than either overpaying your mortgage or loan. I wouldn't look at investments as it looks like you might need the money in a few years.  As you are looking at a  few extra hundred a month a regular saver or two would be a good option as interest rates are good.  Some are only available if you have a current account so look at what's available at your bank but others such as Principality,  £250 a month at 5.5% fixed for a year are available for all. You can save the money than use it to pay some of your loan or mortgage. 

Albermarle

callumchip said:

Hi, 

Kind of general financial advice I am after - this may not be the best place - my apologies.

I am in a position where I can make a few £100 extra a month and have enough savings for an emergency fund. I am now wanting to see if I can make this extra money work for me, but am having difficulty in working out what is the best option for me. 

My current situation is the following, for context;

I have a mortgage. Currently owing around £110,000 at 2.8% and around £400 a month. I have 3 years left on this fixed rate. At the end of this I intend to move, likely to a more expensive home. 
Should I overpay my mortgage, increase my equity and give me more buying power in the future? But this is likely a lower interest rate than *most* investments. Should I be taking advantage of this low rate by throwing as much money at this as possible?

I also have a car loan. £16,500 left at 3.8% and 3.5 years left. Also around £400 monthly. Should I overpay this loan instead? It's my most expensive debt but it still lower than lots of investment options. This would also mean I could have this paid off prior to re-mortgage which may give me more options. Savings from interest from this would be minimal, though. 

Or, should I start some kind of investment in one of the huge variety of incredibly confusing and overwhelming accounts that every company and their dog seem to offer. (Any suggestions on these would also be amazing.) Just seems weird to me to start investing while having debts that are fairly low monthly payments. 

Any advice would be very welcome!

Thanks!

I have highlighted two parts of your post in bold.

There is no guarantee that any investment will bring a positive return, and may in fact lose money.

However historical evidence is that a mainstream diversified investment in stocks and shares would normally be expected to produce a positive return ( more than inflation) in the long term. It is reasonable to assume that this trend will continue. So the key is 'long term' when it comes to investing. Ideally > 10 years.

j_netprofit

If by investing the OP perhaps means a fixed rate cash isa, echoing the other comments I'd go for that given the better rather than paying off the other two options. Or if he means a S&S ISA or just a general investment account that's just a gamble only you can decide on making.

https://open.spotify.com/episode/7C4cLv4rH0J0zE3Vp8h6UU?si=622dfdda2c104f21
This recent podcast episode, talks about pretty much the exact same scenario. Question is covered from 10:30mins in, worth a listen.

g6440869

Hi, Which is the best investment option for beginners

LHW99

g6440869 said:

Hi, Which is the best investment option for beginners

Go with one of the main providers (HL, AJBell, II) and make a small (ish) monthly payment into a multi-asset fund, or Global tracker if you can stand the ups & downs.

% charging is best if you are starting from scratch, as poundwise it's not too much.

You can always start a virtual portfolio for a while to see how you feel about the volatility of what you choose.

Beddie

callumchip said:

Or, should I start some kind of investment in one of the huge variety of incredibly confusing and overwhelming accounts that every company and their dog seem to offer. (Any suggestions on these would also be amazing.) Just seems weird to me to start investing while having debts that are fairly low monthly payments. 

Any advice would be very welcome!

Thanks!

There are lots of places you can go for investing, but keep it simple and just start one. If you like apps, maybe Trading 212, a more traditional one would be Hargreaves Lansdown. Pay regularly into a global tracker (ISA if not already used allowance) and see how you get on. There's loads more to learn, but getting started is the most important thing.

One example of many:

https://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/f/fidelity-index-world-class-p-accumulation

enthusiasticsaver

Of course you can begin investing but remember that performance is not   guaranteed so  there is no certainty that your investments will outperform the interest rates on your mortgage and loan. If you intend getting a bigger mortgage soon I would pay down the car loan as any debt will impact your mortgage application on affordability. 

callumchip

Coffeekup said:

Where are you with pensions?

I am a teacher - and so have a pretty decent pension package building up.