Investing or Pension?
gif1
Posts: 42 Forumite
Hello,
I would like a word of advice from the experts here.
I am 46 with a little pension pot from previous employers, about 42K. Homeowner with a mortgage (19 years to go). I have a good job, and currently paying, via salary sacrifice, in the new workplace pension 10% (8% core, 1% myself, 1% matched). My employer would match up to 4%.
I have also a fair amount of cash left every month and was considering to start investing in the likes of Vanguard, HL (I have been reading a lot in this forum). Drip feed every month, my strategy.
But now I am not sure whether it would make more sense to up my pension contributions first to cash in the extra money from my employer. The cons would be that I won't be able to touch this money until, at least, I turn 55. While if I started investing I would not have such restriction, although I am aware of the long term view to adopt with investment as well. This freedom is very appealing to me.....probably I have been making too much of a deal, not sure.
The pension fund seems to have a 0.13% AMC which seems fairly low.
So what would you suggest as the most sensible option given my circumstances? All I know is that I don't want to leave anymore cash in saving accounts paying a meagre 1% or regular saver you have to start over every year.
Many thanks for any help, much appreciated.
I would like a word of advice from the experts here.
I am 46 with a little pension pot from previous employers, about 42K. Homeowner with a mortgage (19 years to go). I have a good job, and currently paying, via salary sacrifice, in the new workplace pension 10% (8% core, 1% myself, 1% matched). My employer would match up to 4%.
I have also a fair amount of cash left every month and was considering to start investing in the likes of Vanguard, HL (I have been reading a lot in this forum). Drip feed every month, my strategy.
But now I am not sure whether it would make more sense to up my pension contributions first to cash in the extra money from my employer. The cons would be that I won't be able to touch this money until, at least, I turn 55. While if I started investing I would not have such restriction, although I am aware of the long term view to adopt with investment as well. This freedom is very appealing to me.....probably I have been making too much of a deal, not sure.
The pension fund seems to have a 0.13% AMC which seems fairly low.
So what would you suggest as the most sensible option given my circumstances? All I know is that I don't want to leave anymore cash in saving accounts paying a meagre 1% or regular saver you have to start over every year.
Many thanks for any help, much appreciated.
0
Comments
-
As a minimum, I'd suggest you up your pension contributions to 4% to get the most of the free money on offer from your employer.
If I was you I'd also put the rest of my spare money in it, but I'm not you
0 -
Investing or Pension?
Car or petrol?
Tea or cup?
A pension is just a container for investments. You can hold investments in a pension but you cant hold a pension in investments.ut now I am not sure whether it would make more sense to up my pension contributions first to cash in the extra money from my employer.
Well that is a no brainer. You should nearly always get get the maximum matched contribution from the employer. its free money. Nothing beats free money.he cons would be that I won't be able to touch this money until, at least, I turn 55.
Hardly a negative. You are 46 and doing regular contributions. So, you are looking at a 15-20 year timescale for that to be effective anyway.This freedom is very appealing to me.....probably I have been making too much of a deal, not sure.
Your short-term money should be in cash savings. That is to cover your short term needs. Your long term money should be investments. The pension timescale fits that objective.
Bloody low you mean. VLS is 0.33% (including transaction cost) plus 0.45% for HL. 0.13% leaves them standing.he pension fund seems to have a 0.13% AMC which seems fairly low.
Unless you are going to be a higher rate taxpayer in retirement, then pension beats ISA.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
Pension, pension, pension.
Increase your contribution to at least 4% to get the matched employer contribution.
Basically, do what dunstonh says!0 -
Hi dunstonh, thanks so much for such a quick, detailed and convincing reply! I think I will look now at options to consolidate the old pension pots in the current one, unless you advise against :-)
At this point, shall i discard completely the option of investing (after upping the pension)?.
Thanks again.0 -
I don't see the point in you investing in a S&S ISA etc if you can do so much better with making additional workplace pension contributions. Fill your boots with all those salary sacrifice efficient contributions!0
-
As dunstonh indicated, you will be investing with the pension, as the pension is only the wrapper to contain the investments. As you will be able to access a pension in 9 years time, it's probably more advantageous to invest as much as you can within the pension, rather than in an S&S ISA, although best to research a bit more and carefully consider what is best for you.At this point, shall i discard completely the option of investing (after upping the pension)?.
Thanks again.0 -
1% myself, 1% matched). My employer would match up to 4%.
Base level auto enrollment contributions are increasing this April and again in April 2019.
https://www.nowpensions.com/help-centre/faqs/contributions/what-are-auto-enrolment-contribution-rates0 -
Hi dunstonh, thanks so much for such a quick, detailed and convincing reply! I think I will look now at options to consolidate the old pension pots in the current one, unless you advise against :-)
At this point, shall i discard completely the option of investing (after upping the pension)?.
Thanks again.
No dont discard.
Increase your contribution to at least 4% to get the matched employer contribution. Then you can invest- I suggest a S&S isa.0 -
Increase your contribution to at least 4% to get the matched employer contribution. Then you can invest- I suggest a S&S isa.
Why would the OP want a S&S ISA when they only have only accumulated a £42k pension pot so far? We obviously don't know their full circumstances but with such a small pension pot a fair proportion of the additional salary sacrifice pension contributions are likely to be drawn tax free.
In their position I would be putting a lot more than the 4% into the pension pot. I would be behind sofas looking for coins, selling organs and sending our cat to get a job such that I could throw a high proportion of my income at the pension to improve retirement prospects and maximize this tax efficient opportunity.
Alex0
This discussion has been closed.
Categories
- All Categories
- 343.2K Banking & Borrowing
- 250.1K Reduce Debt & Boost Income
- 449.7K Spending & Discounts
- 235.3K Work, Benefits & Business
- 608K Mortgages, Homes & Bills
- 173.1K Life & Family
- 247.9K Travel & Transport
- 1.5M Hobbies & Leisure
- 15.9K Discuss & Feedback
- 15.1K Coronavirus Support Boards