Investment & Investing

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  • Somehow I don’t feel comfortable taking financial advice from a man walking along a canal in a dirty coat.

  • Banks always ask you what you want the money for when you try and withdraw a large sum. This moron should have spent 30 seconds on Google before posting a fucking 16 minute video

  • Which they have to do in order to comply with anti-money laundering regulations.Saying "it's none of your business, it's my money" isn't going to satisfy them.

  • Anti money laundering regulations which they had imposed on themselves, having spent decades laundering money..

  • I rarely pop my head into this thread, but I have a pot of money that is earning interest, the pot will be used to pay off more of the mortgage, but I have paid the max off without triggering early repayment charges, and I will carry this pot for 1 more year before throwing it on the mortgage.

    It seems silly to just leave it in the bank, earn 4-5% interest, and then to be taxed at higher rate on the interest.

    It seems more obvious to just track the S&P 500 for a year, accept the risk of losses, but gamble that the S&P + capital gains tax outperforms interest + income tax (probably likely).

    In which case... how to do this? What's the lowest fee platform that enables investing in tracking the S&P 500?

    I'm aware only that I can't directly do this, and it's about investing in a fund that does this... that's kinda the question.

  • InvestEngine is good for this.

  • (not financial advice, etc)

    Something something Vanguard S&P 500 ETF something something.

    How much is the ERC on the mortgage and what is your current mortgage rate?

    If it's something like 2% ERC on a ~4.9% mortgage then it may just be worth sucking it up and just paying the ERC.

    When I did the calculations for my situation I found that investing the money elsewhere, paying taxes, etc was a lot more hassle than just throwing it at the mortgage and not having to pay interest on that chunk any more.

    e.g. picking some round numbers

    • £200k outstanding balance
    • This is ~£1k/mo interest-only at ~4.9%.
    • ERC of 2% on £200k = £4k
    • £4k is 4 months interest-only mortgage on £200k

    That's a lot easier than sticking that £200k away for a year and hoping to make £12k (AFTER TAX) to cover 12 months of interest-only payments until you can pay it off avoiding ERC.

    • £12k after 40% tax means £20k before tax
    • so you need to make 10% before tax on the lump sum to be able to even stand still w.r.t. the interest-only part

    If your ERC is much higher than 2% then it swings more towards investing
    If your mortgage rate is lower than 5% then it swings more towards investing as the returns (even after tax) should be competitive as you're paying less to "borrow" your play money.
    etc.

  • ERCs:

    • 4.25% applicable until 30-06-2025
    • 4% applicable until 30-06-2026
    • 2.5% applicable until 30-06-2027
    • 1% applicable until 30-06-2028

    Mortgage is 4.13%.

    I've no overpayment allowance left... anything I now pay is subject to the ERC.

    All the overpayment calculators basically say "pay it off now"... but none account for ERCs.

    I also don't have enough to pay the whole thing off... hence trying to just minimise charges, but maximise the amount saved on interest, by paying it off as fast as possible without incurring charges... at least until the ERC drops to 2.5%.

  • Not financial advice.....but....4.13 is a pretty decent rate. Worth considering if you can fill up your pension allowances with the excess funds and just pay off the mortgage over time

  • I'm not stressed about pensions, I may not last that long. But I'll last long enough to be stressed by the mortgage.

  • Maybe worth just taking the hit on the tax on interest or just paying off what you can if it’s going to reduce stress. Investing in the stock market for a year is generally seen to be a high risk strategy. You could also try speaking to the bank they may not enforce the charges it if you ask them nicely

  • only took 4 mins for him to shill a course

  • 4.13 is way too high for what we are used to pre liz truss no?

    I am getting 4.18 for 3 years for remortgage queued up in June 2025.

    Bank is offering 5 years at 4.11, 3 at 4.18 and 2 at 4.26. All below current base rate which can only mean they anticipate rates coming down?

  • pre liz truss no?

    6 months post-Liz Truss.

  • yeah we are in same boat :(

  • OK, you can still SPREADSHEET ALL THE THINGS though.

    I've not checked these figures but...

    Let's pretend it's a nominal £100k outstanding balance (I don't need to know your specific outstanding balance, the numbers are all proportional to this figure anyway).

    You've got ~18 months until it drops to 2.5%

    So £100k at 4.13% means you're paying £4130/year interest-only to stand still.

    If you pay it off now you pay £4250 in ERC charges.
    If you wait ~6 months you pay £4000 in ERC charges, but you pay an extra ~£2065 in interest in that time. Total £6065.
    If you wait ~18 months you only pay £2500 in ERC charges, but you pay an extra £6195 in interest in that time. Total £8695.
    If you wait ~30 months you only pay £1000 in ERC charges, but you pay an extra £10325 in interest in that time. Total £11325.
    If you wait ~42 months you pay £0 in ERC charges, but you pay an extra £14455 in interest in that time. Total £14455.

    So, four options:

    • In 6 months can you make > £6065 AFTER TAX with £100k
    • In 18 months can you make > £8695 AFTER TAX with £100k
    • In 30 months can you make > £11325 AFTER TAX with £100k
    • In 42 months can you make > £14455 AFTER TAX with £100k

    Plugging those into a quick spreadsheet and assuming you'll be paying 40% anything you need

    • For 6 months to make £10108 (£6065 / 0.6) you need to find 21.2% per year
    • For 18 months to make £14492 (£8695 / 0.6 ) you need to find 9.44% per year
    • For 30 months to make £18875 (£11325 / 0.6) you need to find 7.16% per year
    • For 42 months to make £24091 (£14455 / 0.6) you need to find 6.36% per year

    So, all things being equal, and not taking into account the capital repayments that I assume you are making in the mean time, for an outstanding balance of £100k you either need some quite good returns pre-tax or hold out for the ERC to drop to 0% (30-06-2028).

    Taking that best option (e.g. only needing to find 6.36% per year). Let's say you can only find 5% per year after tax.

    5% per year is roughly 0.408% per month. (1.00408^12 = 1.050073742).

    So after 42 months on £100k at 5% you have £118650 (short of the £24091 you'd need in that time). With this sum it would have just been better to pay the ~£4250 to pay it off straight away.

    Again, really haven't checked these figures.

  • That just kinds of tells me that it's too close to call, may as well sit on it and pay the mortgage as each ERC deadline rolls around, until such a time that I'm back to just paying it monthly.

  • 6 months post-Liz Truss.

    My sympathies. We got our 5 year deal, 4 weeks before her 'mini budget'. Utter stroke of luck. Just goes to show there only so much financial planning you can do if someone in power comes along and fucks everything up.

  • Investing in the stock market for a year is generally seen to be a high risk strategy.

    This.
    The stock market is widely seen to be an AI bubble that will most likely pop at some point with a crash. It could certainly be in the next year.

  • I’d be very surprised if this happened this year. 2026/7 however…

  • I hate everything that's happening in the USA, but I don't doubt that the swathes of de-regulation that are about to happen will create a very frothy market in the next year or two, and that I am willing to place a big bet on the upside from that.

  • a big bet

    That's fine as long as you are happy that it is a bit and are aware of the risks - as I expect you are.

    I certainly don't have anything against the idea of making big bets with investments and take risks most people wouldn't myself.

    The Trump deregulationfest, and the tech bros all lining up at his inauguration, is the most compelling argument I 've heard as to why a crash might not be imminent. But even so, there are factors outside his control. eg this morning I saw a news item about a Chinese company launching an AI that the article said was comparable in capability to OpenAI and that was open source. The article concluded that Chinese open source tech had the potential to wipe billions off the US stock market.

    If you know the risks and can afford the potential loss its not a problem - and 9 years out of 10 you will do better from being in equities for a year than in the bank.

  • Best isas at the moment then for 20K ? Or a good saving account?

  • I've got a meeting with an IFA next week, but thought I'd see what you lot think too...
    In a hypothetical situation; I've been left a sum of money that coincidentally is the exact same amount I have left on my mortgage, which itself is going to go up when our deal ends shortly. I also don't currently have a pension plan.
    Am I better to max out an ISA every year for as long as possible, or pay off the maximum possible on mortgage every year? Sorry, broad question.

  • For clarification; I am completely number dyslexic, and money has never been important to me, but I've got a family now and should be sensible for once

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Investment & Investing

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