Best way to Invest/Save to pay off help to buy

L82theparty

I’m late to the party and have never invested but looking for some advice as I’m finding it a bit overwhelming. I will try and give as much information as possible but if there’s anything that’s not clear I’m sure I can elaborate in the comments. 

I’m 41, spent last year reducing bills and clearing car/loans/ credit cards. If I lost my job my husbands salary will cover bills/ living expenses off his income and if he lost his job, same. 6.5 years left on mortgage (it was a 27 year mortgage taken out in 2015 but we dropped 10 years from it a few years back with shortening term). It was a help to buy mortgage (Scotland) so we owe 20% back when we sell or whenever we want to clear. There’s no monthly fee’s tied to help to buy. So, technically I don’t need to save/invest to pay help to buy back but I would like to get the money together and pay it back/ have it sitting. As the mortgage only has 6.5 years left, paying it off early by overpaying would only save around £1800 in intrest so don’t see the benefit in that. 

I’ve got £1350 a month to put into investing and £500 a month to put into  normal savings for Emergancy. I’ve got separate envelopes for all the usual car/DIY/ days out/ fun money and so on. My loose plan was to invest the £1350 a month for the next 6.5years mortgage term and then cash out and pay off help to buy which is roughly £65k. But, looking into this a bit further I’m going to invest the £1350 a month for longer term, 20 years. Once mortgage is paid off in 6.5years, I can invest mortgage payments ( which is £1351 a month coincidentally) and get the help together from that. This way, I can invest longer term for retirement. 

I started looking at cash isa’s last year but wanted to clear everything first. But then came across S&S during research and it’s just been so much information. I know I’m late to this but better late than never I guess. It’s been a slog of a year to clear the debt and get outgoing down and now I’m just trying to keep the momentum going and build something from it if that makes sense? 

Sorry it’s long winded but any help and advise on where best to start would be much appreciated. 

El_Torro

It's not clear what you're asking for? Guidance on where to invest? How best to pay off the mortgage in 6.5 years time? Which savings accounts to use? Something else? 

L82theparty

Sorry. I don’t see the benefit of paying off mortgage early so it would be best place to start investing. 

El_Torro

For investing Stocks & Shares ISAs and pensions are suitable for most people. Generally speaking a pension is more tax efficient than an ISA, though an ISA is more flexible in terms of when and how to take money out of it. 

Once you have decided whether to use a pension or an S&S ISA you need to decide in which fund / funds you want to invest. A global tracker or multi asset fund works best for most people. 

EDIT: Forgot to mention: You don't have to choose an ISA or a pension, most people use both. How much you put in each depends on your individual circumstances.

Emmia

L82theparty said:

Sorry. I don’t see the benefit of paying off mortgage early so it would be best place to start investing. 

Pick a S&S provider, work out your risk appetite (low, medium or high) and just start...

I dipped my toe in the S&S waters a few years ago and picked a medium risk ISA with Moneybox - when doing this you are at the mercy of the stock markets, so the value of your investments can drop... The trick is to just ignore the drops and just keep paying in.

Panicking and withdrawing when it drops just crystallises your losses.

L82theparty

El_Torro said:

For investing Stocks & Shares ISAs and pensions are suitable for most people. Generally speaking a pension is more tax efficient than an ISA, though an ISA is more flexible in terms of when and how to take money out of it. 

Once you have decided whether to use a pension or an S&S ISA you need to decide in which fund / funds you want to invest. A global tracker or multi asset fund works best for most people. 

EDIT: Forgot to mention: You don't have to choose an ISA or a pension, most people use both. How much you put in each depends on your individual circumstances.

I’ve got a work based pension( again, was late  joining that) but have been looking at increasing my contribution. Taking £12k a year from my salary and paying that directly into pension before tax. That would take me back into 20% tax and if the online calculator is correct, £500 a month less in take home pay but £1000 a month ( roughly) into pension. 

I don't know anybody who invests. We had low paying jobs but both studied that increased our income. Then we went crazy thinking we had money and lived above what we probably could. Only good thing we’ve done is managed to get mortgage reduced pretty quickly and now that’s our only debt, I would like to try and see if I could swing this around and invest for future. 

L82theparty

Emmia said:

L82theparty said:

Sorry. I don’t see the benefit of paying off mortgage early so it would be best place to start investing. 

Pick a S&S provider, work out your risk appetite (low, medium or high) and just start...

I dipped my toe in the S&S waters a few years ago and picked a medium risk ISA with Moneybox - when doing this you are at the mercy of the stock markets, so the value of your investments can drop... The trick is to just ignore the drops and just keep paying in.

Panicking and withdrawing when it drops just crystallises your losses.

Thank you, it’s just the leap into the unknown I guess. The information online has been taking me all over the place in the last year but I’m just overthinking it now. 

El_Torro

L82theparty said:

El_Torro said:

For investing Stocks & Shares ISAs and pensions are suitable for most people. Generally speaking a pension is more tax efficient than an ISA, though an ISA is more flexible in terms of when and how to take money out of it. 

Once you have decided whether to use a pension or an S&S ISA you need to decide in which fund / funds you want to invest. A global tracker or multi asset fund works best for most people. 

EDIT: Forgot to mention: You don't have to choose an ISA or a pension, most people use both. How much you put in each depends on your individual circumstances.

I’ve got a work based pension( again, was late  joining that) but have been looking at increasing my contribution. Taking £12k a year from my salary and paying that directly into pension before tax. That would take me back into 20% tax and if the online calculator is correct, £500 a month less in take home pay but £1000 a month ( roughly) into pension. 

I don't know anybody who invests. We had low paying jobs but both studied that increased our income. Then we went crazy thinking we had money and lived above what we probably could. Only good thing we’ve done is managed to get mortgage reduced pretty quickly and now that’s our only debt, I would like to try and see if I could swing this around and invest for future. 

Investing more into your workplace pension is a good way to invest. A couple of points:

It's worth knowing what fund you are invested in and what the options are. Workplace pensions tend to be quite limited in choice, which isn't a bad thing necessarily. If you didn't choose a fund when you joined the workplace pension you will be in the default fund. This will probably be serviceable enough but it's worth knowing what the options are and if you're in the right fund. 

Putting £12k into a pension yourself will be topped up to £15k by tax relief. Usually it's better to ask your employer to increase the pension contribution than to do it yourself manually. This is especially true if your employer is running a salary sacrifice scheme, there are tax benefits involved. 

Emmia

L82theparty said:

Emmia said:

L82theparty said:

Sorry. I don’t see the benefit of paying off mortgage early so it would be best place to start investing. 

Pick a S&S provider, work out your risk appetite (low, medium or high) and just start...

I dipped my toe in the S&S waters a few years ago and picked a medium risk ISA with Moneybox - when doing this you are at the mercy of the stock markets, so the value of your investments can drop... The trick is to just ignore the drops and just keep paying in.

Panicking and withdrawing when it drops just crystallises your losses.

Thank you, it’s just the leap into the unknown I guess. The information online has been taking me all over the place in the last year but I’m just overthinking it now. 

If you pick a provider and you're not happy, you can always transfer your ISA - stop overthinking/procrastinating, the sooner you start the better.

L82theparty

El_Torro said:

L82theparty said:

El_Torro said:

For investing Stocks & Shares ISAs and pensions are suitable for most people. Generally speaking a pension is more tax efficient than an ISA, though an ISA is more flexible in terms of when and how to take money out of it. 

Once you have decided whether to use a pension or an S&S ISA you need to decide in which fund / funds you want to invest. A global tracker or multi asset fund works best for most people. 

EDIT: Forgot to mention: You don't have to choose an ISA or a pension, most people use both. How much you put in each depends on your individual circumstances.

I’ve got a work based pension( again, was late  joining that) but have been looking at increasing my contribution. Taking £12k a year from my salary and paying that directly into pension before tax. That would take me back into 20% tax and if the online calculator is correct, £500 a month less in take home pay but £1000 a month ( roughly) into pension. 

I don't know anybody who invests. We had low paying jobs but both studied that increased our income. Then we went crazy thinking we had money and lived above what we probably could. Only good thing we’ve done is managed to get mortgage reduced pretty quickly and now that’s our only debt, I would like to try and see if I could swing this around and invest for futur

Investing more into your workplace pension is a good way to invest. A couple of points:

It's worth knowing what fund you are invested in and what the options are. Workplace pensions tend to be quite limited in choice, which isn't a bad thing necessarily. If you didn't choose a fund when you joined the workplace pension you will be in the default fund. This will probably be serviceable enough but it's worth knowing what the options are and if you're in the right fund. 

Putting £12k into a pension yourself will be topped up to £15k by tax relief. Usually it's better to ask your employer to increase the pension contribution than to do it yourself manually. This is especially true if your employer is running a salary sacrifice scheme, there are tax benefits involved. 

My employer can put the wage deduction in before tax, National insurance and so on. I work for a small business and I asked for some info/ said I would get back to them once I get everything in a row.  It’s with Aviva and risk assessment of 5 out of 7 just now because of age to retirement. I’ve only been puting in the minimum/ same with employer (5% and 3%) as that’s what was standard. 

L82theparty

Emmia said:

L82theparty said:

Emmia said:

L82theparty said:

Sorry. I don’t see the benefit of paying off mortgage early so it would be best place to start investing. 

Pick a S&S provider, work out your risk appetite (low, medium or high) and just start...

I dipped my toe in the S&S waters a few years ago and picked a medium risk ISA with Moneybox - when doing this you are at the mercy of the stock markets, so the value of your investments can drop... The trick is to just ignore the drops and just keep paying in.

Panicking and withdrawing when it drops just crystallises your losses.

Thank you, it’s just the leap into the unknown I guess. The information online has been taking me all over the place in the last year but I’m just overthinking it now. 

If you pick a provider and you're not happy, you can always transfer your ISA - stop overthinking/procrastinating, the sooner you start the better.

You’re right. The last year has been spent paying everything off/ reducing outgoings and now that’s done and decisions have to be made for moving forward I’m just bamboozled. I will look at S&S along with increasing pension contributions.