Investment & Investing

I want to distinguish between 'investments' which are not guaranteed to bring in a return, and fixed rate products which are.
With my mortgage rate, and savings rates as they are, overpaying my mortgage will cost me more money than buying fixed rate products for the next few years.

Fair.

10 years ago the fixed rate stuff was paying fuck all. It's different now with the higher rates.

Yes and I think there's a delay for those that are still lucky enough to be on a low % fixed rate mortgage while interest rates have gone up for saving products.

I'm going to continue as is with the money I'll need in the next few years in premium bonds.

We’re all different but this is what I’ve done what I would do. Fixed rate savers and regular savers are by far your safest places to put the money where you’ll get a guaranteed, known return. Over three years you’ll probably make a couple of hundred difference between saving and paying off the mortgage in overpayments. When the end of your mortgage term comes, I’d then slam it all into the mortgage and reduce the term down until you reach your affordable monthly amount. This will reduce the proportion of interest you’re paying on the mortgage compared to capital and will help offset the fact that the rates will almost certainly be a lot higher than your 1.5%. Your mortgage actually gets paid down really quickly at that point because of the amount of capital your paying, then when you do it again after say another fixed that process accelerates again.

Reducing the term and overpaying (the same amount) have the same result, as long as you make sure the overpayments are used to reduce the capital.

Therefore overpayment would give you more flexibility if your circumstances changed, but with the same result financially.

I thought I replied to this, but maybe not.

Anyway, it's a 15% employer contribution scheme. I don't need to contribute.

But it seems adding my own contributions is basically like taking money that was going to HMRC every month in tax and putting it in a pension fund instead.

Why didn't someone spell it out like that to me years ago?

https://www.thesalarycalculator.co.uk/ was useful for working out take-home pay after changing contributions or whatever.

Thanks all.

Why didn't someone spell it out like that to me years ago?

Concern over reducing your beer budget?

Is it difficult to get fixed return investments in a SIPP? A cursory look suggests it's mostly at risk investments.

Anyway, it's a 15% employer contribution scheme. I don't need to contribute.

That's a beaut of a scheme

Yeah, I could be working somewhere else earning more though but when you factor in all the perks I'm doing ok here.

Back to piss lager for me. Bye bye £15 cans of imperial stouts... :(

You can't buy standard fixed rate/fixed term bonds through a SIPP.

You can invest in government bonds funds or other bond funds. There are other low risk low return funds you can invest in.

Or you can just buy fixed rate bonds until your retirement - but then you don't get the benefit of SIPP tax back rules.

do they match anything too?
My last place would do 10%, but then match up to a further 3%
so the minimum sensible choice was to contribute 3% so that you'd get the 13% 'free'

There are a number of other benefits.
No tax within the pension, so no tax on interest, dividends and capital gains.
This can extend to other countries because of tax treaties if the pension plan makes use of it, e.g. investing in the US as a UK pension.
If you die before 75 your beneficiaries receive your pension inheritance tax free (this one may be scrapped).

Edit: plus no need to track and calculate for annual tax self assessment.

I think it was up thread a bit. Not really, but they give back half the NI or something that they save. I opted for 25% SS and will see how that works for a year.

Thank you, confirms what I had so far understood. Having to figure if it's worth it as I'm not a massive number of years from retirement age. Not sure I'm going to save enough tax now to make it worth paying the tax later. Of course the tax free interest side of it changes the calc a bit.

Time to look at ISA this year for both myself and my wife. Fixed-rate ISA or stocks and shares? @Tenderloin ? No need to access the money on a 1 year horizon and the intent is long term investment.

I'm wondering this too, S&S ISA is basically flat after 3 years vs 5.5% guaranteed...

who are you with? Nutmeg?

Growth story for S&S is hard to fathom at the moment.

But then, I don't believe in timing the market...

Yep

I think given you can get 5.7% on a fixed rate with min 1 year commit that has got to be pretty appealing. Assuming you're paying into pension which will be invested in a reasonable chunk of S&S anyway. Then depending on how much tax you're paying and how much you're putting away there is also savings accounts which are at or around 5% which could also be worth looking at. You should also open a jnr isa (if you have children) and invested in long term - which is a further £9k.

What I'm currently doing: 15% pension (which I currently have set to a fairly high risk mix of funds), fixed isa and jnr isa.

A first for me with the PBs

6.2% available from NS&I (fixed 1 year) right now. I hadn't seen rates increasing this fast at the start of the year.

Any recommendations for an independent financial advisor, specifically in relation to investment/trust for a child who has just been born?