Savings/investment sense check

j813ys

I have £25k in cash savings, the plan is to keep adding £200 a month to stop devaluation incase of job loss or other problem.

Then start a S&S ISA from scratch adding £750 a month to global index tracking ETFs to hopefully achieve circa 7% growth PA and be left with £500-600k in 25 years.

Seems simple, makes me think I'm missing something?

NoMore

Pension might be a better option than ISA for a 25 year time frame

Linton

Your plan seems sensibly simple.

You could consider putting some of the money into a pension rather than an S&S ISA.  The tax benefits are slightly higher or very much higher depending on your current tax position. The downside is that you wont be able to access the money until you are 57.

£25K is a reasonable cash emergency pot .  Adding £200/month (10%/year) seems somewhat high just to maintain value against inflation.  At the moment interest rates on their own will do that.

El_Torro

Regarding your emergency fund, I am a big fan of having a suitably sized emergency fund, so it's good that you have one. I wouldn't necessarily add £200 a month to it though. Better to understand how many months worth of expenditure you want to have in your emergency fund (3 months? 6 months? More?) and keep an eye on your spending going forward. Inflation is real of course, though we are all hit by inflation differently, depending on how you spend your money. 

As others have said it would be good to understand why you are going for a S&S ISA rather than a pension. Even if you already have a workplace pension you can always add more. It doesn't even have to be in your employer's scheme, you can open a separate one. 

DjangoUnchained

i assume you will keep your 25k emergency fund in a higher rate instant access account  about 4% aer which will help against inflation too.

Albermarle

Details of your employment and any workplace pension would help.

Catplan

To echo others thoughts on pension, £750 into a pension becomes £937.50.

even £300 becomes £375, so might be an idea to consider increased pension contributions and lower S&S ISA contributions.

j813ys

The reason I have not chosen pensions is the goal posts can be moved with regards to when I can get the money back and although the tax given now it will be taxed anyway on the way back out so not that much better off, plus the tax taken at the other end has a chance of being more than it is now.

ColdIron

j813ys said:

plus the tax taken at the other end has a chance of being more than it is now.

The chances of this are highly unlikely

LHW99

Hopefully you are employed and at least contributing to your workplace pension? That gets a tax refund (free money) and an employer contribution (more free money).

Even if you are not earning, you could still add that £200pm to a pension. You get 25% tax refund from the Government (even if you don't pay tax) and get (at the moment) 25% back free when 55/57 - an immediate gain of around 6%. The pension money then grows tax-free - so 25% of that can also be taken tax-free in the end.

Yes, details may get thrown up in the air in the next (few) Budgets, but that always happens over a lifetime, and it doesn't always get worse. When I started work some 50 years ago, most people weren't offered a pension, and if you were you usually had to work at a company for more than 2 (or even more than 5) years before you were able to join, let alone keep funds above those you actually paid in.

Governments need people to have pensions, so they are not dependent on the state, so IMO they are only going to go so far in taking away the incentives to use them.

Albermarle

Governments need people to have pensions, so they are not dependent on the state, so IMO they are only going to go so far in taking away the incentives to use them.

IIRC the Chancellor at one point said that she is fully in support of more people building up decent pensions, not less.
So as you say the likelihood of any changes that will negatively affect the majority of 'working people' is pretty low.