Investment advice - 10 year horizon

Bostonerimus1

cmonwigan said:

Thanks you Boston. I do have a small DB pension which may provide me @£5k,  and a rental property which if I manage to pay the mortgage off will provide £10k. Unfortunately I still owe £100k..

OK, so when you retire (in 10 years) you might be guaranteed ~20k from DB pension and SP. Then you have the rental property which should provide income and also is a store of capital. I would include a plan to pay off any mortgages before you retire as taking mortgage payments off the balance sheet really takes the pressure off your other finances. This depends to some extent on your mortgage rate, but people who advocate keeping a mortgage in retirement tend to assume rosy investment returns and without any mortgages you are in an excellent position to ride out any market turmoil and I think it makes it psychologically easier to stick with a high equity allocation.

FYI I also have a rental property. It is mortgage free and my DB pension and the rent cover my expenses so I sleep well even when the markets are down.

cmonwigan

Thank you for being candid.  I need to get a move on with paying off the capital. I was planning to use 25% of my pension pot to pay off the mortgage, but agree I need to more proactive.  Twenty years left on the mortgage, currently on 3.79% for the next 9 years.   I clear £400 pcm after mortgage interest and expenses, and stash it in an easy access savings account. Plan was to put it in a S+S ISA, but again timing the market has led to procastination.  Should I look to make capital payments, or should I invest?

Bostonerimus1

cmonwigan said:

Thank you for being candid.  I need to get a move on with paying off the capital. I was planning to use 25% of my pension pot to pay off the mortgage, but agree I need to more proactive.  Twenty years left on the mortgage, currently on 3.79% for the next 9 years.   I clear £400 pcm after mortgage interest and expenses, and stash it in an easy access savings account. Plan was to put it in a S+S ISA, but again timing the market has led to procastination.  Should I look to make capital payments, or should I invest?

I made extra mortgage payments and invested. It doesn't need to be an either or decision. I would try to pay the mortgage off while you are working as losing 25% of your pot when you retire to pay off the mortgage will immediately reduce the amount of income you can sustainably generate. It might be that investing more will give you a bigger pot so that when you eventually pay the mortgage off in a lump sum you will be better off, but then again it might not. Paying off the mortgage is a conservative strategy which is why I would balance it by investing in the markets as well. Eventually interest rates will fall and 3.79% won't be a bad return and you'll also have the house's probable capital gain.

I worry that your actions all seem to be in the future. Doing things now and continuing to do them for the next 10 years and beyond will end up being a lot easier.

cmonwigan

Thanks Boston, great advice. Now to act on it.