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What to do with my money? Please help!

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  • eskbanker
    eskbanker Posts: 37,214 Forumite
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    The Flowchart - UKPersonalFinance Wiki offers a structured approach to deciding what to do with your money....
  • Alexland
    Alexland Posts: 10,183 Forumite
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    edited 4 January at 2:42PM
    NBE97 said:
    If I continue with this I will be mortgage free by 38.
    I used to overpay and was within months of being mortgage free at 34 but it would have been a mistake and I would have been poorer now if that had happened. Having some relatively low cost leverage supporting your growing portfolio of personal assets is a useful wealth multiplier.

    Often on this forum we find that people overpaying their mortgage have been unnecessarily paying high rates of tax that could be avoided if that income had been deferred using a pension until retirement when it can be drawn at a lower rate of tax.
  • Bostonerimus1
    Bostonerimus1 Posts: 1,424 Forumite
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    edited 4 January at 11:22PM
    eskbanker said:
    The Flowchart - UKPersonalFinance Wiki offers a structured approach to deciding what to do with your money....
    More comprehensive than what I always reply to this often repeated question, but very similar in content:

    Do a budget to see how you can control spending so you have even more to invest.
    Make sure you have at least 6 months spending in saving account for emergencies.
    Pay off any high interest debt, that's anything with an interest rate higher than you can get in a long term saving bond.
    Put money into a pension, buy inexpensive index tracker funds.
    Put money into your ISA or LISA, buy inexpensive index tracker funds.
    When pension and ISAs are fully funded, put more into your general investment account, buy inexpensive index tracker funds.
    And so we beat on, boats against the current, borne back ceaselessly into the past.
  • subjecttocontract
    subjecttocontract Posts: 2,746 Forumite
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    Alexland said:
    NBE97 said:
    If I continue with this I will be mortgage free by 38.
    I used to overpay and was within months of being mortgage free at 34 but it would have been a mistake and I would have been poorer now if that had happened. Having some relatively low cost leverage supporting your growing portfolio of personal assets is a useful wealth multiplier.

    Often on this forum we find that people overpaying their mortgage have been unnecessarily paying high rates of tax that could be avoided if that income had been deferred using a pension until retirement when it can be drawn at a lower rate of tax.
    I agree entirely. I took my first mortgage at age of 21 and had mortgages (sometimes lots of mortgages) almost every year for the next 44 years. Using other people's money to build equity was one of the best investment decisions I ever made. 
  • Alexland
    Alexland Posts: 10,183 Forumite
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    I agree entirely. I took my first mortgage at age of 21 and had mortgages (sometimes lots of mortgages) almost every year for the next 44 years. Using other people's money to build equity was one of the best investment decisions I ever made. 
    I often ponder what's the optimal amount of mortgage to run as a proportion of assets and income.

    My mortgage balance is currently around 1/4 of value of my assets, so around 1/3rd of my net worth (assets minus liabilities) yet still it uses around 2/3rd of my net pay each month (which is artificially low due to heavy pension contributions). So around 1/2 my net pay goes to serving interest costs which is onerous yet contributions and investment returns have grown my net worth by around 40% the value of the mortgage the past 12 months so the strategy seems to be working.

    Still leverage works as a multiplier in both directions but then I have been gradually derisking my S&S investments to reflect current market valuations. I figure that as long as the proportion of my S&S accounts in bonds return around the same as the mortgage rate then I'm at least winning from a tax perspective and with the money in S&S accounts it's ready to move into equities if we are lucky enough to have a correction or crash anytime soon.
  • NBE97
    NBE97 Posts: 10 Forumite
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    Hi, 

    sorry for the late replies, to answer some questions I am self employed and my income at present is around £1600 in the north east of england, the only pension scheme I will have is the state pension as I have never paid into a private one as this money was used to overpay the mortgage
  • NBE97
    NBE97 Posts: 10 Forumite
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    wow, I would also like to say thank you to all of the great links and advice, i will be trying to educate myself on investing more and as for my nephew i am thinking of asking my sibling about opening a jisa for him, is this something he can only have at a certain age? sorry for all the questions there is so much out there i dont know where to start

  • elsien
    elsien Posts: 36,058 Forumite
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    edited 7 January at 4:10PM
    Junior Individual Savings Accounts (ISA): Overview - GOV.UK
    Just has to be under 18.  I don't think you can open one for him though, the parents need to do that and then you can add money to it for him. 
    All shall be well, and all shall be well, and all manner of things shall be well.

    Pedant alert - it's could have, not could of.
  • xylophone
    xylophone Posts: 45,622 Forumite
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    my income at present is around £1600 

    A month? After tax?

  • NBE97
    NBE97 Posts: 10 Forumite
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    yes after tax, and thats great I will speak to my sibling about the junior isa for him so at least that will be sorted, what about buying him premium bonds or do you not think much of this??

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