Agree that you’re young and having access to the money in the next 25 years is important. So taking out another ISA top of the list. However,……
I know Golfie is far more experienced than me, but if your paying 45% tax, then I’d certainly be thinking pension. You don’t say what you’re paying in now, or what your employer contributes. However, you only sacrifice 55p take home pay to get £1 in the pension. So giving up £110 in your take home puts £200 into your pension. At your age that has plenty of time to grow. An you can cut that down or stop that contribution anytime you like, if circumstances change.
I’ve only recently started contributing more into pension. My contribution and employer contribution combined is about £1,500 a month (of which about £1,100 is my part).
Up until a year ago my contribution was much smaller - just the default amount. So part of me feels like I’m playing catch up on that side now.
Ideally I want to be able to tackle both pension (long term plan) and ISA (short term and long term plans) and not miss out on the benefits of either.
I’ve only recently started contributing more into pension. My contribution and employer contribution combined is about £1,500 a month (of which about £1,100 is my part).
Up until a year ago my contribution was much smaller - just the default amount. So part of me feels like I’m playing catch up on that side now.
Ideally I want to be able to tackle both pension (long term plan) and ISA (short term and long term plans) and not miss out on the benefits of either.
Before you read and pay more attention to this than you should, golfie and most of the others on here seem to really know their shit, I can only talk in layman terms I understand.
In your situation, I would be paying more into my pension, let the compound do its thing. Much better to overpay now with more years for those compound seeds to grow into beanstalks and oak trees.
ISAs the money is paid in AFTER you have paid tax on it so whilst I think they are brilliant. if you can pay a decent amount in its win win
I’ve only recently started contributing more into pension. My contribution and employer contribution combined is about £1,500 a month (of which about £1,100 is my part).
Up until a year ago my contribution was much smaller - just the default amount. So part of me feels like I’m playing catch up on that side now.
Ideally I want to be able to tackle both pension (long term plan) and ISA (short term and long term plans) and not miss out on the benefits of either.
Before you read and pay more attention to this than you should, golfie and most of the others on here seem to really know their shit, I can only talk in layman terms I understand.
In your situation, I would be paying more into my pension, let the compound do its thing. Much better to overpay now with more years for those compound seeds to grow into beanstalks and oak trees.
ISAs the money is paid in AFTER you have paid tax on it so whilst I think they are brilliant. if you can pay a decent amount in its win win
Although this is sort of right, it's not quite as simple. If you're a 45% taxpayer, that is the tax relief you are getting on pension contributions. When you come to take it out you will be taxed depending on your tax rates. Also you can get 25% of it tax free, so effectively if you drawdown when you are a 40% taxpayer, effective tax rate is 30%. You can't draw pension money down until you reach a certain age (was 55 although may be a little higher now. Compared to ISA's where the money you pay in after tax and NI, but when you draw it it is tax free. I always think a simple rule can be that if you think you want the money within 5 years a cash ISA may be safer but for more long term a stocks and shares ISA may be better. Personally until you build a pot I would avoid fees and go with an index tracker but I know Golfie (who is an expert) wouldn't agree.
Looking for some general guidance as a bit of a novice in the investing game.
I’ve got myself into what I think is a decent situation for my age (36) where I don’t have any debt outside of mortgage and have been able to save fairly well.
For years I held off on investing as I was saving for as big a deposit as possible for my house, which I now have. Now I want to do a bit more with my savings so it’s not all just sitting there in cash.
I’ve maxed out Premium Bonds and happy to let that sit there without any risk. I’ve just maxed out last years allowance for Cash ISA with my bank. First time I’ve opened one. I did that in bit of a rush just to use up the allowance as I didn’t want to miss out.
Now I’m thinking of how I can invest in a way that’s a bit more ‘advanced’ without doing anything too complicated or too risky. I’ve been a 45% tax payer the last few years and expecting this year could be similar.
My gut feel is saying that a Stocks and Shares ISA is the way to go as a way of getting started. Potentially then with a view to doing a bit more with stocks once I learn the ropes.
Is my thinking along the right lines here, or is there something more obvious I should be looking at (pension for example)?
Any ideas much appreciated.
I've never been tempted to dip into my ISA so I see it similar to my pension, but you are a lot younger than me (56) so this may not apply. For me, pension contributions make sense as there's an instant 'gain' of more than 30% because you don't pay 45% income tax on your contributions.
When you take your private pension at 55 or later you have 25% tax free and the rest you drawdown just enough to keep you under the 40% tax band (~50k a year) if you wanted. I try to put money in my ISA only after I've maxed my pension allowance. If I do, I put it on Exchange Traded Funds, which trade like shares but track indices like the S&P 500 rather than individual companies; I also have funds that pay relatively high dividends, and some bond funds.
I would also recommend repaying your mortgage quickly if the interest rate is high.
And finally consider investing in a second property to rent out if you can handle being a landlord. You get capital appreciation, rental income and leverage e.g. a 25k deposit buys you a 250k property, where the full 250k property appreciates, funded by the interest on the 225k mortgage. House prices in some places have doubled every 10 years or so. The main downside is that you have to pay capital gains tax when you sell the house.
Good luck.
Disclaimer: I'm not a financial, tax or pension advisor.
This might be of interst to some of you.....or to your children depending on age.
Accord have just launched a 99% mortgage. Basically you only need a £5k deposit - maximum loan is £495k. Usual underwriting but they typically lend around 4.5x income. Not available on flats or shared ownership - houses only.
Would suit those on decent incomes but dont have a good deposit (2/3 bed house costing £300k would usually need a 10% deposit = £30k). Lots of lenders do 95% loans but Accord is the first lender I know that is offering just a £5k deposit.
Only available on a 5 year fixed & interest rate is 5.99%.
This might be of interst to some of you.....or to your children depending on age.
Accord have just launched a 99% mortgage. Basically you only need a £5k deposit - maximum loan is £495k. Usual underwriting but they typically lend around 4.5x income. Not available on flats or shared ownership - houses only.
Would suit those on decent incomes but dont have a good deposit (2/3 bed house costing £300k would usually need a 10% deposit = £30k). Lots of lenders do 95% loans but Accord is the first lender I know that is offering just a £5k deposit.
Only available on a 5 year fixed & interest rate is 5.99%.
Sort of related, Golfie, a few of us were having a debate about the impact of rising rates and why we're not necessarily seeing delinquencies rising (I'm sure they are but it's not enough to be news yet and banks' provisions aren't rising massively).
The main theory was that banks are re-mortgaging to 30, 35 years. Is that something you are seeing?
Been a while since I've been in the top 3. FWIW, I think this is a breakout and, whilst they'll be twists and turns, the FTSE will be well up by the end of the year now. I'm still sticking to FTSE250 though.
On another note, I had a nice breakdown of all the costs, fees and charges that hit my SIPP account from Interactive brokers in the last tax year. Even including spreads, the total annual costs, all in were 0.25%. And even that was 80% covered by interest payments. On top of that, I have to pay a flat £400 to a SIPP administrator. All-in that is so, so much cheaper than Hargreaves.
This might be of interst to some of you.....or to your children depending on age.
Accord have just launched a 99% mortgage. Basically you only need a £5k deposit - maximum loan is £495k. Usual underwriting but they typically lend around 4.5x income. Not available on flats or shared ownership - houses only.
Would suit those on decent incomes but dont have a good deposit (2/3 bed house costing £300k would usually need a 10% deposit = £30k). Lots of lenders do 95% loans but Accord is the first lender I know that is offering just a £5k deposit.
Only available on a 5 year fixed & interest rate is 5.99%.
Not bad that. 2 of you on combined income £100k. £450000 mortgage of 35 years £2500 a month
Been a while since I've been in the top 3. FWIW, I think this is a breakout and, whilst they'll be twists and turns, the FTSE will be well up by the end of the year now. I'm still sticking to FTSE250 though.
On another note, I had a nice breakdown of all the costs, fees and charges that hit my SIPP account from Interactive brokers in the last tax year. Even including spreads, the total annual costs, all in were 0.25%. And even that was 80% covered by interest payments. On top of that, I have to pay a flat £400 to a SIPP administrator. All-in that is so, so much cheaper than Hargreaves.
Do you mean Interactive Brokers or Interactive Investors? My SIPP is still being managed through/by the transferring IFA/Standard Life as it couldn't initially be avoided, due to a transfer from my defined benefit pension. The overall charges in total are around 2% pa and the fund is 6.2% down since opening in November 2021, which is partly due to the charges.
This might be of interst to some of you.....or to your children depending on age.
Accord have just launched a 99% mortgage. Basically you only need a £5k deposit - maximum loan is £495k. Usual underwriting but they typically lend around 4.5x income. Not available on flats or shared ownership - houses only.
Would suit those on decent incomes but dont have a good deposit (2/3 bed house costing £300k would usually need a 10% deposit = £30k). Lots of lenders do 95% loans but Accord is the first lender I know that is offering just a £5k deposit.
Only available on a 5 year fixed & interest rate is 5.99%.
Sort of related, Golfie, a few of us were having a debate about the impact of rising rates and why we're not necessarily seeing delinquencies rising (I'm sure they are but it's not enough to be news yet and banks' provisions aren't rising massively).
The main theory was that banks are re-mortgaging to 30, 35 years. Is that something you are seeing?
Yes definitely. Most lenders will go up to age 70 or even 75, so if you are in your mid to late 30's and having to now remortgage from sub 2% to almost 5% then stretching the loan to 30 or even 35 is not uncommon. Most mortgages I've done recently (either new or remortgage) have been for more than 25 years. Typical new loan is 30 years.
Has anyone on here used Zopa for their cash ISA and are they okay? My bank wouldn’t let me transfer money over to them.
Not for a cash ISA but for some cash savings. I've found it really easy to use, and withdrawals are back in my linked account almost instantly - much better than Raisin or HL can manage. Had no problems transferring initial deposits to them either.
Been a while since I've been in the top 3. FWIW, I think this is a breakout and, whilst they'll be twists and turns, the FTSE will be well up by the end of the year now. I'm still sticking to FTSE250 though.
On another note, I had a nice breakdown of all the costs, fees and charges that hit my SIPP account from Interactive brokers in the last tax year. Even including spreads, the total annual costs, all in were 0.25%. And even that was 80% covered by interest payments. On top of that, I have to pay a flat £400 to a SIPP administrator. All-in that is so, so much cheaper than Hargreaves.
Do you mean Interactive Brokers or Interactive Investors? My SIPP is still being managed through/by the transferring IFA/Standard Life as it couldn't initially be avoided, due to a transfer from my defined benefit pension. The overall charges in total are around 2% pa and the fund is 6.2% down since opening in November 2021, which is partly due to the charges.
Interactive Brokers (IBKR). US firm. Now support SIPPs and ISAs. I don't think they do junior ISAs and they definitely don't do LISAs. But only a year ago they didn't do ISAs, so they are expanding. It's execution only. Don't be too put off by the complexity when you see it - it's relatively straightforward if you want it to be.
Has anyone on here used Zopa for their cash ISA and are they okay? My bank wouldn’t let me transfer money over to them.
Yep. Have a cash ISA with them. You open an account and have 1 primary account and then you can open pots (including a Cash ISA pot) and you can move money into the pots. Only opened a few weeks ago but all very easy and app is very good. Would recommend.
Comments
I know Golfie is far more experienced than me, but if your paying 45% tax, then I’d certainly be thinking pension. You don’t say what you’re paying in now, or what your employer contributes. However, you only sacrifice 55p take home pay to get £1 in the pension. So giving up £110 in your take home puts £200 into your pension. At your age that has plenty of time to grow. An you can cut that down or stop that contribution anytime you like, if circumstances change.
Up until a year ago my contribution was much smaller - just the default amount. So part of me feels like I’m playing catch up on that side now.
In your situation, I would be paying more into my pension, let the compound do its thing. Much better to overpay now with more years for those compound seeds to grow into beanstalks and oak trees.
ISAs the money is paid in AFTER you have paid tax on it so whilst I think they are brilliant. if you can pay a decent amount in its win win
Compared to ISA's where the money you pay in after tax and NI, but when you draw it it is tax free. I always think a simple rule can be that if you think you want the money within 5 years a cash ISA may be safer but for more long term a stocks and shares ISA may be better.
Personally until you build a pot I would avoid fees and go with an index tracker but I know Golfie (who is an expert) wouldn't agree.
When you take your private pension at 55 or later you have 25% tax free and the rest you drawdown just enough to keep you under the 40% tax band (~50k a year) if you wanted. I try to put money in my ISA only after I've maxed my pension allowance. If I do, I put it on Exchange Traded Funds, which trade like shares but track indices like the S&P 500 rather than individual companies; I also have funds that pay relatively high dividends, and some bond funds.
I would also recommend repaying your mortgage quickly if the interest rate is high.
And finally consider investing in a second property to rent out if you can handle being a landlord. You get capital appreciation, rental income and leverage e.g. a 25k deposit buys you a 250k property, where the full 250k property appreciates, funded by the interest on the 225k mortgage. House prices in some places have doubled every 10 years or so. The main downside is that you have to pay capital gains tax when you sell the house.
Good luck.
Disclaimer: I'm not a financial, tax or pension advisor.
Accord have just launched a 99% mortgage. Basically you only need a £5k deposit - maximum loan is £495k. Usual underwriting but they typically lend around 4.5x income. Not available on flats or shared ownership - houses only.
Would suit those on decent incomes but dont have a good deposit (2/3 bed house costing £300k would usually need a 10% deposit = £30k). Lots of lenders do 95% loans but Accord is the first lender I know that is offering just a £5k deposit.
Only available on a 5 year fixed & interest rate is 5.99%.
The main theory was that banks are re-mortgaging to 30, 35 years. Is that something you are seeing?
On another note, I had a nice breakdown of all the costs, fees and charges that hit my SIPP account from Interactive brokers in the last tax year. Even including spreads, the total annual costs, all in were 0.25%. And even that was 80% covered by interest payments. On top of that, I have to pay a flat £400 to a SIPP administrator. All-in that is so, so much cheaper than Hargreaves.
2 of you on combined income £100k.
£450000 mortgage of 35 years £2500 a month
My SIPP is still being managed through/by the transferring IFA/Standard Life as it couldn't initially be avoided, due to a transfer from my defined benefit pension.
The overall charges in total are around 2% pa and the fund is 6.2% down since opening in November 2021, which is partly due to the charges.
£50k