Mid 30s Advice

Oswaldtwistle

Afternoon all, I'd be grateful for some general advice on the position I'm in.

Turn 36 in August.

Recently became mortgage free.

Only "debt" I have is c.£20k for Plan 1 student debt; in theory that gets wiped in 10 years. There's no salary sacrifice at my work to lower my monthly payment.

• £130k in a SIPP
• £10k in a S&S ISA
• £5k emergency fund in an ISA

I have about £1k a month free to invest, one way or another.

Wondering which is better: put more in the SIPP or more in the ISA.

There's a reasonable chance I'll soon have an additional income through freelancing. I haven't set up a business account or limited company etc yet though.

Thanks a lot for your time

NoMore

It not necessarily one or the other you can split the money and do both.

Decide your goals and then save/invest in the appropriate vehicle to achieve them, bearing in mind tax efficiency and age restricted access.

dunstonh

Wondering which is better: put more in the SIPP or more in the ISA.

It depends on the objectives. Which you haven't mentioned

Oswaldtwistle

Cheers both. I don't have a set £x a year in mind for a pension. Who knows what things will cost. My objective is to build a lump sum to live on in 25-30 years.

Isthisforreal99

I'd be maxing out this years ISA allowance, whether that be S&S or ISA. I'd have done that before paying off mortgage. Is the amounts you currently have in ISA's from this years allowance.

You do really need to have a think about how your future looks before making future decisions. Marriage, kids ?? and the costs they bring.

What type of lifestyle would you like to have?

friolento

https://forums.moneysavingexpert.com/discussion/comment/82040742#Comment_82040742

how much, in today’s money, would you like to get?

How many years would you like the lump sum to last?

Do you really mean lump sum, or monthly income?

Albermarle

• £130k in a SIPP

Is the SIPP your workplace pension ( normally they are not SIPPs, but they can be ) ?

If you are saving for retirement, pension beats ISA due to the tax benefits. If you are saving long term but you will need money before the pension access age, then S&S ISA is better. Some combination of both can be good in that respect.

Who knows what things will cost

Normally you look at how much things cost now, and assume over the long term that investments ( in an ISA or pension) will at least keep up with inflation with some growth added on top .

El_Torro

Do you pay 40% income tax? If so it would make sense to contribute more to your pension, to get down to 20% income tax if possible.

If you plan to retire at 56 then almost all of your retirement money can be in pensions. You probably won’t be able to access your pension until 58 (or later) so a few years worth of expenditure in a S&S ISA would be a good idea too.

DRS1

Is £5k enough of an emergency fund? I think people say you should have x months income in your emergency fund. What x is is up to you. What emergency are you covering? Needing a new boiler? Or losing your job and taking x months to find a new one?

I know that is not very pensiony or investmenty and storing up more cash goes against the usual counsel on this board but I think it is something to consider.

From a tax point of view putting the money in a pension beats putting it in an ISA but do remember you can't touch the pension until you are 57 (and preferably shouldn't touch it until later) whereas the ISA will always be accessible. So I think it should be a bit mix and match. Obviously if you are (or may become) a higher rate taxpayer it makes a lot of sense to contribute enough so you don't pay higher rate tax. Same if you are getting near the £100k trap. Try to get below it.

NoMore

The UK Personal Finance Flowchart - UKPersonalFinance Wiki

Try working through thi, it could help you decide your goals and priorities

masonic

You haven't mentioned your income, but SIPP definitely wins to the extent you can avoid paying higher rate tax on your income. Below that, the main benefit of the ISA is that you can access it whenever you like, so if you wanted the option to retire before you will be able to access your SIPP (or access a larger sum for other reasons), then it may be worth putting more into that.