New to this so support needed

[Chicothecat]

Hi all
I found this forum after watching a Netflix series and it’s been great to read but as a real green, new user of the site I would like a little help so I can get a handle on some stuff.
I am 48 and single with a toddler. Independent and always tried to manage money well. Struggled when I got divorced at 28 but held onto the house and it paid off as increased in value and enabled me to buy again and then extend it with a view to it being an investment which I would eventually sell and downsize again. That date is around in about 3 years time.
I reckon it is worth around £500k and I have a £190k mortgage £1200 a month. I am overpaying at the rate of £2050 a month and have 16years on it. I think I should keep chucking money at this to make me more financially secure as I have a 1.34 fixed rate for 5 years so it could increase a lot in future. But would love other thoughts on this.

I do also save to the workplace pension at 13% of my salary of £68k. Realise salary sacrifice is a good idea just nervous to do too much as got made redundant following maternity leave (shock horror) and it made me want at least 12 months fallback fund. Which I have already got. I am a bit unsure where to stop when it comes to saving into cash Isas and when to do more into the pension or mortgage or stocks and shares ISA.

 I only recently got a stocks and shares isa. I don’t have a clue what to choose and that goes for my pension investments too. I literally have just picked some funds out of the air in my Fidelity pension (old workplace one) and used the HL wealth shortlist for the current workplace one. But I don’t really understand the choices, I just know I should risk a bit as I am youngish! 19 years till NRD. I asked a financial advisor from unbiased.com to help but after providing the info he then ghosted me so I didn’t fancy doing that again.

I have read a bit in here but it’s really too technical for someone who isn’t savvy in this. I do know that the charges on the pensions are high compared to other workplace pensions. One is a Sipp and the other a stakeholder but my work might move to master trust next year and bin the Sipp. Is that something I should consider in future as a reason to consolidate them in a scheme with lower charges? Total in pensions is £200k. Split £65, £115, £20 in three providers.
I also got a JISA set up and already got a little savings account with my bank for little Chico should I be doing a JISA for the lot really? Or does it make sense not to risk all the money in one JISA? I literally copied what my brother set up for his kids and didn’t take any advice on it!
It really is investments that bamboozle me as you can tell. I feel I should be doing them and understanding it but I am struggling and hoping I don’t mess up.
Would love any thoughts as like many people I don’t have anyone to talk money to!

[Malossi792]

Welcome!
Always good to have new 'converts'. :)
I would recommend the excellent Monevator blog for you, they have 'hold-your-hand' style posts too with providers and cheap etf's etc. listed.

[bownyboy]

Also recommend the UKPersonalFinance reddit sub https://www.reddit.com/r/UKPersonalFinance/ especially the flowchart which is linked on the right hand side (desktop view only).

It takes you through all the steps to help get yourself sorted.

[MisterA]

The people on here are very wary about giving 'advice', for obvious reasons, which makes it difficult for inexperienced people.

It sounds like you're heading in the right direction, and much of what you describe is really good. You haven't really given any goals in your message, which is something to give some thought to (maybe have a 10 year plan?). At your age, you could potentially access pension savings in 7 years, which will influence your decision about investing either through stocks and shares ISA's or through a pension scheme (which gives you 25+% extra through the income tax relief).

What has been suggested are a good start. Specifically I'd suggest that you read about passive investing, through the already mentioned Monevator website. Here are a couple of links to get you started with your research. Monevator is excellent, and once you get into this, the website can become quite addictive. Sign up on their mailing list.

This article introduces passive investing:
https://monevator.com/category/investing/passive-investing-investing/

And this article reviews one of the more popular passive investing index funds, which simplifies things considerably:
https://monevator.com/vanguard-lifestrategy/

We're all different, have different starting points and goals. The advice from financial advisors is quite limited, and most people on here wouldn't go near them, but that means you have to do it yourself. But, there are lots of resources, and Monevator is one of the best.

[Chicothecat]

Thanks all for recommendations based off my ramble! That’s great, it can be rather difficult to know where to start based on your personal circumstances so that’s lovely of you all to take the time to recommend the links. Cheers.

[daverobev]

Salary sacrifice is really really reallllly good just so you know. Especially if the company gives their NI savings as well. Stupidly good.

You need an ISA bridge from FIRE to pension unlock. Anything above that should go into your pension.

[Chicothecat]

The people on here are very wary about giving 'advice', for obvious reasons, which makes it difficult for inexperienced people.

It sounds like you're heading in the right direction, and much of what you describe is really good. You haven't really given any goals in your message, which is something to give some thought to (maybe have a 10 year plan?). At your age, you could potentially access pension savings in 7 years, which will influence your decision about investing either through stocks and shares ISA's or through a pension scheme (which gives you 25+% extra through the income tax relief).

What has been suggested are a good start. Specifically I'd suggest that you read about passive investing, through the already mentioned Monevator website. Here are a couple of links to get you started with your research. Monevator is excellent, and once you get into this, the website can become quite addictive. Sign up on their mailing list.

This article introduces passive investing:
https://monevator.com/category/investing/passive-investing-investing/

And this article reviews one of the more popular passive investing index funds, which simplifies things considerably:
https://monevator.com/vanguard-lifestrategy/

We're all different, have different starting points and goals. The advice from financial advisors is quite limited, and most people on here wouldn't go near them, but that means you have to do it yourself. But, there are lots of resources, and Monevator is one of the best.

Thanks for this I have had a quick look and it’s very appealing to me to have some help with investing. Just need to understand how to go about it, perhaps by moving the SIPP and stakeholder to Vanguard. I suppose I need to consider early retirement too, I have never done that purely because I always thought I didn’t earn enough and have long enough to do it. You are right I have a plan of sorts and I’d really love to work in a term time job so I could enjoy being with my little one and not be paying others to take care of her. Term time jobs are paid diddly squat though so I would save nothing toward retirement and would need to downsize to make living costs affordable or maybe find a place where you can rent a part of it out. Perhaps if I found a consulting role I might have a chance. It’s one reason I am shovelling any spare cash at savings and mortgage in a desperate bid to have more time with my kid. I have always worked for corporates so no experience in doing it differently. Can anyone relate?

[Chicothecat]

Salary sacrifice is really really reallllly good just so you know. Especially if the company gives their NI savings as well. Stupidly good.

You need an ISA bridge from FIRE to pension unlock. Anything above that should go into your pension.

Thanks! Totally agree and I fiddle around in net pay calculator sites working out different levels! Is there any guide on balance of normal savings to pension? I am doing more to the pension and mortgage than ISAs so I hope I am not missing a trick.

[daverobev]

Overpaying the mortgage is usually, generally not a financially great idea. The debt is cheap, and far below the long term stock market gain.

I would take as much salary sacrifice as sane, do some maths and work out how much bridge you need to get you from FIRE to unlock and stick that into the ISA (and general investing account if the ISA isn't going to be enough), and only use cash after that for the mortage. If your pension unlock is 7-9 years that really isn't that far away and the uplift from sal sac... I mean, you'll still *have* the mortgage at that point right, so you can just take the money back out with the tax free allowance.

Do a JSIPP as well as JISA! Even if you only max it once or twice (£2880 max each year) it'll basically pay for the retirement in 60 years... full market ETF!

(Sorry I'm end of day fatigued here, if any of that doesn't make sense I can try to expand).

[Chicothecat]

Overpaying the mortgage is usually, generally not a financially great idea. The debt is cheap, and far below the long term stock market gain.

I would take as much salary sacrifice as sane, do some maths and work out how much bridge you need to get you from FIRE to unlock and stick that into the ISA (and general investing account if the ISA isn't going to be enough), and only use cash after that for the mortage. If your pension unlock is 7-9 years that really isn't that far away and the uplift from sal sac... I mean, you'll still *have* the mortgage at that point right, so you can just take the money back out with the tax free allowance.

Do a JSIPP as well as JISA! Even if you only max it once or twice (£2880 max each year) it'll basically pay for the retirement in 60 years... full market ETF!

(Sorry I'm end of day fatigued here, if any of that doesn't make sense I can try to expand).

Thanks what you say makes total sense. I actually had a total rethink when I considered the low interest rate on the mortgage and I can just swap the overpayment to the pension. I guess I really should make the most of the investment time I have and the tax saving of course. I looked at the JSIPP idea and didn’t get anywhere mainly as I didn’t know which provider to go with and the thought of comparing their fees filled me with dread! I need to bite the bullet and trawl through the websites.
Can I ask another question? What is the bridge that you mention as I haven’t  grasped that concept.
Truly appreciate your words of wisdom so thank you.

[daverobev]

Bridge to pension unlock = money you need between whenever you FIRE, and when you can get money out of your personal pension.

So the 4% rule is an overall rule of thumb -> if you need £20k a year, you will want to have £500k invested.

However, if you're 40 and can't get to your pension money until you hit 57, you need enough money not in the pension - so you have 17 years you need to 'bridge'. No use trying to FIRE if you have £500k in your pension but can't touch it! It makes the calculations more annoying, you have to trade the much better payoff of putting cash into the pension for a lot of situations, vs the fact that money is locked up. Literally, £1 now or £1.60 later (plus tax sheltered growth of course, and less tax if any due, etc).

JSIPP - if you want a 'ok good enough' AJBell YouInvest is the cheapest I found when looking - there is a yearly charge but, if you buy just ETFs, it caps out when you have £40k invested, at £100 a year. Above that there is no additional charge. Obviously if you're only putting the minimum in you're not going to reach that £40k cap soon - it's much better for a medium+ sized SIPP! But still - 0.25% isn't bad. Especially when the govt immediately tops your contribution up by 25% (£2880 -> £3600).

[Chicothecat]

Bridge to pension unlock = money you need between whenever you FIRE, and when you can get money out of your personal pension.

So the 4% rule is an overall rule of thumb -> if you need £20k a year, you will want to have £500k invested.

However, if you're 40 and can't get to your pension money until you hit 57, you need enough money not in the pension - so you have 17 years you need to 'bridge'. No use trying to FIRE if you have £500k in your pension but can't touch it! It makes the calculations more annoying, you have to trade the much better payoff of putting cash into the pension for a lot of situations, vs the fact that money is locked up. Literally, £1 now or £1.60 later (plus tax sheltered growth of course, and less tax if any due, etc).

JSIPP - if you want a 'ok good enough' AJBell YouInvest is the cheapest I found when looking - there is a yearly charge but, if you buy just ETFs, it caps out when you have £40k invested, at £100 a year. Above that there is no additional charge. Obviously if you're only putting the minimum in you're not going to reach that £40k cap soon - it's much better for a medium+ sized SIPP! But still - 0.25% isn't bad. Especially when the govt immediately tops your contribution up by 25% (£2880 -> £3600).

Ahh awesome, thanks for the bridge explanation. I see. Will have to put thought into that aspect then. I was fiddling around on net pay calculators a minute ago and I realised that should mean I can also claim child benefit that I couldn’t before which would be a great way to fund her JSIPP. Appreciate you helping with a provider vote too as I have not heard of AJBell so that would have made me nervous! I literally need a weeks holiday to sort all my new tasks!

[PhilB]

I would say that it is probably an absolute no brainer for you to use salary sacrifice to get your taxable salary down to £50k pa because you currently have a big slug of income effectively taxed at 53%.  It's not clear from your original post how much of the current 13% is employee's contributions - I'm going to guess 8% in the following calculation. That would mean sacrificing £12.6k pa of income.  If your employer shares their NI savings, then you get even more than that in your pension, although you'll eventually pay around 15% tax on this when you withdraw it.  The kicker though is that it only actually costs you £6.2 k to do this because you are saving around £5.2k of tax and NI and you will also no longer be losing £1.1k a year of child benefit - hence the reason to target the £50k mark. 53%  = 40% tax + 2% NI + 11% Child Benefit clawback.

It may well be worth sacrificing down even further with a view to taking a tax free lump sum (but definitely not anything beyond that or your Annual Allowance will drop to £4k pa) as soon as you reach pension access age and using that to pay off the mortgage, but you'd need to do the sums carefully on that one.

[Chicothecat]

Thanks PhilB I have made some significant changes thanks to input here and reading around. I cancelled overpayments on the mortgage which were £950 a month and cancelled the SAYE which I might take up next year depending on the stock price but this years I don’t think will pay anything much ina few years so I will use it in an Isa. I changed my pension contributions to 41% of salary which puts about £27k into my pension per year, my employer does an extra 6% so that’s a big hit into the pension. Reason behind it is I feel like how’s the time to inject some money while I can as who knows what the future holds. I then claimed the child benefit as I will stay under £50k in the tax year. That money will then pay into my daughters newly opened SIPP. 

I am not massively happy with the JISA with LionTrust I don’t like knowing what the performance looks like as there is no online access and I haven’t got time to fiddle around working stuff out. I also don’t really like the HL Stocks and Shares Isa I have got as I think the fees will be high. Any thoughts on better products gratefully received as this is something I know I am not great at.

Both my pensions are at .45 fees as well and I paid loads in fees on the Fidelity one as I invested in some expensive funds. This is because I have no clue about investing really but I have always tinkered about, dangerous I know. It’s a reason I am mostly in equities as well. Probably not a great time right now to fiddle about with it either so I will be patient and make changes once things are not as crazy out there.

Moved my smaller Cash Isa to a better 4% rate from .75% so that’s another positive. Next step is to make sure I do the same with the larger one next year. I couldn’t figure out if I could transfer it over in time for the maturity of the other. So must check that out next time!

So a lot of changes done and I feel like I have made some headway. My biggest flaws are pension and Isa investments being a bit random and not based in any knowledge.

I have had a few retirement thoughts that perhaps 62 is doable as my daughter would be 17. Depends on a million factors though, work, house, education, aging parents. I just can’t plan but I feel the best thing to do is use my pension savings. Turn down the heating and keep fingers crossed for company bonuses and pay rises in 2023.

[Affable Bear]

Do a JSIPP as well as JISA! Even if you only max it once or twice (£2880 max each year) it'll basically pay for the retirement in 60 years... full market ETF!

(Sorry I'm end of day fatigued here, if any of that doesn't make sense I can try to expand).

I have never heard of JSIPP before, sorry a bit of a tangent on the thread, from what little I have found online it seems very attractive. Do you know any useful links so I can read up about it?

(Sorry bit of a tangent there!)

[Chicothecat]

Hi Affable I opened one with Fidelity so you could look at their website. As I already have a pension myself with them I can see both in the same portal. So that’s cool. There is a max you can pay each year and the government put some in if you do. I think I also read a Monevator article on it so you could Google that too. Hope that helps!

[daverobev]

Do a JSIPP as well as JISA! Even if you only max it once or twice (£2880 max each year) it'll basically pay for the retirement in 60 years... full market ETF!

(Sorry I'm end of day fatigued here, if any of that doesn't make sense I can try to expand).

I have never heard of JSIPP before, sorry a bit of a tangent on the thread, from what little I have found online it seems very attractive. Do you know any useful links so I can read up about it?

(Sorry bit of a tangent there!)

It's just a SIPP, but for a minor. Everyone, even with no earnings, is allowed to put £2880 -> plus free money from govt = £3600 into a pension plan a year, I guess the difference is just that it's in trust until majority (when it converts into a normal SIPP? Dunno).

https://www.youinvest.co.uk/investing-for-children/junior-sipp

IMHO it's stupidly good with the compounding. AJBell charge 0.25% management fee IIRC, but only up to the first £40k if you use ETFs. Not sure about how fixed that amount is etc, can it go up, I assume not really. Who knows what tax relief will look like in 60 years. What anything will look like in 60 years. But still, for the cost of admission - literally just pay into it for two, three years - it should pay for retirement.

Side thought is like... jesus why doesn't the government just do this, put £2000 into a centralised pension plan at birth so we don't need to worry about any of this.

[Manchester]

Do a JSIPP as well as JISA! Even if you only max it once or twice (£2880 max each year) it'll basically pay for the retirement in 60 years... full market ETF!

(Sorry I'm end of day fatigued here, if any of that doesn't make sense I can try to expand).

I have never heard of JSIPP before, sorry a bit of a tangent on the thread, from what little I have found online it seems very attractive. Do you know any useful links so I can read up about it?

(Sorry bit of a tangent there!)

It's just a SIPP, but for a minor. Everyone, even with no earnings, is allowed to put £2880 -> plus free money from govt = £3600 into a pension plan a year, I guess the difference is just that it's in trust until majority (when it converts into a normal SIPP? Dunno).

https://www.youinvest.co.uk/investing-for-children/junior-sipp

IMHO it's stupidly good with the compounding. AJBell charge 0.25% management fee IIRC, but only up to the first £40k if you use ETFs. Not sure about how fixed that amount is etc, can it go up, I assume not really. Who knows what tax relief will look like in 60 years. What anything will look like in 60 years. But still, for the cost of admission - literally just pay into it for two, three years - it should pay for retirement.

Side thought is like... jesus why doesn't the government just do this, put £2000 into a centralised pension plan at birth so we don't need to worry about any of this.

I actually think this as a policy would work.  It could be used to (eventually) phase out the state pension.

[PhilB]

I think you are being more than a little ambitious with your expected investment returns on a JSIPP.  £2000 lump sum @5% pa real return compounded for 67 years is still <£53k.  Not exactly a replacement for the state pension.

[daverobev]

I think you are being more than a little ambitious with your expected investment returns on a JSIPP.  £2000 lump sum @5% pa real return compounded for 67 years is still <£53k.  Not exactly a replacement for the state pension.

I thought the long term average was 7% after inflation? Which gives about 200k I think. Doubles every 10 years via rule of 72 anyway. I wasn't trying to be exact with my numbers.

Point stands, sort of - funded pensions are so much better than unfunded. Take some money, stick it in a pot with everyone else's, and let it do its thing. For example Canada has the Canada Pension Plan... my beef with that is that they have about a 1% management fee IIRC.

[PhilB]

I think you are being more than a little ambitious with your expected investment returns on a JSIPP.  £2000 lump sum @5% pa real return compounded for 67 years is still <£53k.  Not exactly a replacement for the state pension.

I thought the long term average was 7% after inflation? Which gives about 200k I think. Doubles every 10 years via rule of 72 anyway. I wasn't trying to be exact with my numbers.

Point stands, sort of - funded pensions are so much better than unfunded. Take some money, stick it in a pot with everyone else's, and let it do its thing. For example Canada has the Canada Pension Plan... my beef with that is that they have about a 1% management fee IIRC.

Global is more like 5 and a bit.  US has been 6 to 7, but questionable how long that can continue. Many countries much lower.  UK 5 and a bit.

Funded pensions are great - if you can afford them.  You have the problem of funding two generations at once for many decades until fully established though.   In a perfect world. we'd have invested our oil revenues like Norway did, but that requires your politicians (and the people who vote for them) not to want jam today instead.

[PhilB]

More generally, I'm not a big fan of pensions for kids, unless you are worried about being able to instill fiscal responsibility in them. 

If we assume that they will already have enough pension income from work and state pensions to use up their personal allowance in retirement, then they are only getting a 6.25% boost from the taxman, in return for locking the money up for about 60 years.  If income tax rates are higher in the future, or they are higher rate taxpayers in retirement, then they may well lose money on the deal compared to investing in an ISA.  An ISA also gives them the flexibility to use it for other purposes such as house deposits (recycling it through a LISA to get a tax break) or to fund pension contributions later in life - possibly with a higher rate of tax relief.

[Chicothecat]

I thought about the JSIPP for a while then decided that as a woman we lose out so much in pensions through taking time out of work for children and I haven’t been able to afford to do that, much as I wanted to have more time with my toddler but would love my daughter to potentially not have to worry about it and an easy way is to use her child benefit for a few years then leave it to grow.

[Affable Bear]

Thanks Chicothecat and everypne! I'm defintitely interested in setting one up, we dont have any little ones yet but when we do I think its definitely worth it. I think it will definitely be a nice gesture if nothing else but the compounding will be insane and thats whats so attractive, especially when the Government are pitching in too, it seems like a win-win.

I get that it might not be suitable for all though, if you want to give money earlier on such as help onto the ladder but im hoping our own investments should easily be enough to help if we need too.

I cant believe I havent come across it sooner if im honest!

[Chicothecat]

Can I check my understanding on the pension charges with you lovely people as I am just starting to try and get this clear. My pension of £117k had a 744 quid charge for that year. I looked at the Vanguard Sipp page and that says there are various charges that apply. The charges though seem lower than the annual management fee on my frozen stakeholder pension. So that’s one reason to move and I would guess another is the simplicity in that you can just choose a lifestyle fund or retirement dated one. It sounds like moving between funds is easy too. Any other things I should consider though?

[daverobev]

Can I check my understanding on the pension charges with you lovely people as I am just starting to try and get this clear. My pension of £117k had a 744 quid charge for that year. I looked at the Vanguard Sipp page and that says there are various charges that apply. The charges though seem lower than the annual management fee on my frozen stakeholder pension. So that’s one reason to move and I would guess another is the simplicity in that you can just choose a lifestyle fund or retirement dated one. It sounds like moving between funds is easy too. Any other things I should consider though?

For whatever reason, it seems generally cheaper to have ETFs than funds.

Take a look at AJ Bell - they charge 0.25% on the first £40k of ETFs and nothing above. So if you pick a Vanguard ETF, you end up paying (visibly, not including the ETF's MER) £100. That's it.

As an aside, they do have a recommend a friend thing, so if you do end up transferring and want £100 in gift vouchers (used to be cash a couple of years ago) let me know...

[Chicothecat]

Very interesting do you find the administration okay with that provider? Good website etc? I will definitely take a look at that.

[daverobev]

Very interesting do you find the administration okay with that provider? Good website etc? I will definitely take a look at that.

Administration... it's fairly basic, I can't see any problems with it particularly once you know what menu takes you where and so on.

You can do regular (monthly) investments for a reduced trading fee, it's simple to turn that on and off. They've switched to taking the management fee monthly (used to be quarterly) so you just need to make sure you leave enough in there til the next dividend comes in, assuming you're going to buy something that pays one.

Bear in mind I make websites and databases, so my ability to make things work or navigate through things is often better than most - but also that my tolerance for junk is lower - meaning that I'm not the right person to ask this question of. From my perspective simple is best, there isn't much fluff once you're logged in. But then literally all I want to do is log in, add cash, set up a regular investment. So it works for me!

I wouldn't use them for investment advice - not that they are necessarily bad per se, but of course they want you to trade more in theory. Or maybe they just want more money to manage, I don't know.

One other good thing is that they don't email you. I've no doubt opted out of everything, but since whenever that was - I don't remember getting any junk from them whatsoever.

NB the regular investment doesn't have to be regular, you can just use it once and disable it, change the amounts, etc. Basically it's just a batch buy to save on the trading fee.