Bit of help would be great.

fletcher1985

Hello, I’m 40 years old and would like some advice on whether I’m doing things right or wrong.

I have a mortgage and a workplace pension, which I currently contribute 7% to, with my employer contributing up to 5%. I’m planning to increase my contribution to 10%.

I also have £18,000 in a Prosper ISA and no other debt apart from my mortgage.

I really want to start saving more for the future, but I’m not sure where to begin, and I don’t want to lose it. Any tips on what I should be doing would be greatly appreciated.

Albermarle

https://forums.moneysavingexpert.com/discussion/6663718/bit-of-help-would-be-great

As always with these types of questions, you need to supply more detail to get a sensible answer.

Such as;

Salary level ; family situation; size of mortgage and interest rate etc

Vitor

>I don’t want to lose it< I you want zero risk then only cash ISA, savings or Premium Bonds will never lose capital but buying power from inflation will be hit. Without knowing more, at age 40 most people can take some risk with a lo-cost tracker fund in an S&S ISA like Vanguard FTSE Global All Cap Index Fund. Top-up month after month rather than go all in on 6th April.

fletcher1985

Salary level:
£28,600 per year

Family situation:
Living with partner, no children. Joint mortgage.

Mortgage details:

• Total mortgage: £117,000
• £80,000 ported mortgage at 2.7% fixed until 2027
• Remaining balance at 4.12% fixed until 2027

Other debt:
None

Savings capacity:

• Minimum: £500 per month
• Typically: around £700 per month

cc123mm456

Your planned increase to the pension contribution will be worthwhile. It is always a good deal, due to the tax relief.

Also, you should investigate how the pension is invested. Most occupational schemes will be invested in a default fund, which will be a fairly safe option, but might not produce the best outcome at retirement.

If you are about 20 years from retirement, you could probably choose a slightly higher risk level than the default. My suggestion would be to consider investing a significant proportion of the pension in a global tracker fund.

Aminatidi

Is the Prosper ISA what it looks like which is a cash ISA and instant access if you needed it?

i.e. it's an £18K instantly accessible emergency fund if you unexpectedly found yourself out of work tomorrow?

Pensions are great but there's always the balance between the tax benefits v locking your money away for at least 17 years and unfortunately possibly more at your age.

cc123mm456

It could be beneficial to overpay the mortgage where possible. Most providers allow the over payment of about 10% of the outstanding balance.

Some would say why do that when savings rates are higher than your current mortgage deal rate? Well, your mortgage deal expires in about 1 year. While it is not known what rates will be available in 2027, I think it's probably unlikely that the rates you currently are on will still be around.

The overpayment can be particularly valuable if you can reduce the Loan to Value (LTV) below one of the thresholds before a remortgage.

Look at the MSE guide:

https://www.moneysavingexpert.com/mortgages/mortgages-vs-savings/

Yorkie1

If you did decide to make overpayments, you can probably choose which part the o/p go towards - if so, put them towards the part with the higher interest rate