Funding home improvements

marty2121

Hi MSE Community,

I’m looking for your wisdom/thoughts please!

 I’m looking to carry out some home improvements that will cost around £14,000.   I’m unsure how best to fund this.  I could tap into my ISA stocks & shares investment or access the tax free cash in my DC pension (I’m over 55).  I also have some cash savings.  

Accessing the funds from my S&S ISA would use about 20% of it but I’m a little unsure as the market seems to be doing pretty well at the moment.  My pension tax free amount would also cover the £14k easily as well but again it’s linked to the market and doing well also.

The alternative is to get a loan but appreciate there will be interest on that (the builder won’t take all of the payment  via credit card).

Any feedback appreciated! 

Marty21 🙂🙏

Nasqueron

Timing the market is the eternal problem. Market is up, might as well sell now and buy more if it crashes, else the remainder will still grow, hence I'd use the S&S personally, unless you had it there for something specific? 

Taking out of pension - do you have the qualifying criteria for state pension such that were the worst to happen you'd be ok on just your DC plus less than full state pension? Have you looked at your forecast income with and without the money out? 

marty2121

Nasqueron said:

Timing the market is the eternal problem. Market is up, might as well sell now and buy more if it crashes, else the remainder will still grow, hence I'd use the S&S personally, unless you had it there for something specific? 

Taking out of pension - do you have the qualifying criteria for state pension such that were the worst to happen you'd be ok on just your DC plus less than full state pension? Have you looked at your forecast income with and without the money out? 

Thanks Nasqueron,  really appreciate your insights and the comments about the market are very true!  I qualify for the full state pension when the time comes but wouldn’t like to rely on it solely.  Thanks again, Marty21

HobgoblinBT

Agree with Nashqueron.  Stock market is close to an all time high so a good time to take some of your profits from your ISA.  Taking tax free cash from a pension takes time and can also restrict what you can invest in the future that may or may not be an issue depending on your earnings/ pension contributions. Repaying borrowing will reduce your disposable income and in my view should likely only be considered after using savings/investments.

marty2121

HobgoblinBT said:

Agree with Nashqueron.  Stock market is close to an all time high so a good time to take some of your profits from your ISA.  Taking tax free cash from a pension takes time and can also restrict what you can invest in the future that may or may not be an issue depending on your earnings/ pension contributions. Repaying borrowing will reduce your disposable income and in my view should likely only be considered after using savings/investments.

Thanks HobgoblinBT!  Like Nashqueron’s post that is such a good perspective.  Your point about about taking profits when the market is close to an all time high as well is such a good one!  That point has really stuck with me and is so important.  What is the point in investing in S&Ss, funds etc if you don’t take profits when it’s a bullish market.  Also your comment re repaying borrowing is excellent and sticks with me too.  It diverts income that could have been reinvested and the interest is a double whammy as well.  Thank you ! :-)