The MF pipe dream

• You're very young but what are your retirement plans? What's your current state retirement age - you can probably add a few years onto that by the time you reach it. Do you really want to work that long? Is your main work pension a defined benefit or defined contribution one? How are your AVC's invested - can you control that? Pension contributions are the most efficient way to save for the future as you get tax relief added on, so your £30 will become £37.50 - a good instant return, so worth thinking about.
• Assuming you want to retire say 10 years before the state retirement age. How are you going to fill the gap? Stocks and Shares ISA's are one of the best ways as all your gains are tax free. Again, worth thinking about.
• Why do you want to be MF by 50? Do you actually want to be MF, or just not have to fork out on mortgage payments? If you invested your overpayments in a S&S ISA you could accumulate enough to pay it off then, or even withdraw enough every month to pay the mortgage. It only needs to grow at a rate higher than your mortgage rate to be worthwhile and that is easily achievable over the long-term, moving into safer options the last few years to lock in your gains.
• I'm assuming you'll read the above, nod your head and agree with the maths, but decide you want to overpay anyway as you want the security of owning your home. Especially as a single parent, putting a roof over your heads is a big responsibility and you can't put a price over security. So, on that basis, you need to get every penny working for you:
• Your mortgage is a decent rate, but you can get better elsewhere with regular savers - 5% with First Direct, 3% with others. Look at opening a current account with FD - you have to pay in £1,000 a month but you can do that then transfer it out the next day. Then set up a regular saver with them. At the very least, divert the £150 mortgage overpayment into there. You won't earn a massive amount of interest but it's over double what you're saving on mortgage interest at present. At the end of the year, when the regular saver matures, use the cash to make a one-off overpayment to the mortgage, set up a new regular saver and repeat.
• I'd be surprised if your cash ISA is as high as '0.5% or thereabouts'! Investigate it as a matter of urgency. You're using it as short term savings and the first £1,000 of interest in ordinary accounts is now tax-free so you're gaining nothing now by holding it in an ISA. RCI offer a 1.3% instant access account - easy to use online, the only downfall is it takes a few days for payments in and out. Or the AA also have one over 1%. We're not talking vast amounts but make those little green soldiers work hard for you!

Youthgonewild wrote: »

Thanks Gallygirl. Im really not sure I do. I could probably be doing any number of things better and making my money work harder for me and probably should look at upping my AVCs. I think Im just trying to cover all bases lol.