Financial planning assistance required
Discussion
Warning, very long, waffly post ahead…
Apologies for new login, but hopefully it’s pretty obvious why
Current situation;
42yrs old, no kids, living with partner (been together around 20yrs, not married). House owned outright, no plans to move, happy to live here until im carried out in a box (hopefully not for a while!)
Currently work as a manager in an engineering shop (been here about 20yrs), dont hate the job particularly, but its quite stressful, quite long hours, and not especially well paid. Historically, the overall ‘package’ has been quite decent, I like to play with cars, and work have been extremely tolerant of my having stuff in the yard, and using it as my personal playground at the weekends, hence ive stayed so long. Pay is about 38k, but I do still get paid for overtime, so I usually end up with around 50k-ish.
I also have a couple of BTL properties (typical PH fashion, I know), one of which I own outright, and one of which I own half of (my sister owning the other half, again no mortgage) these generate approx 40k after expenses (I should know this exact figure, because I should have already done my tax return for this year, which I really must get around to). These are both student lets, in a prime location of a university town (where both my sister and I went to uni oddly enough), and with the exception of covid, have always been let with ease. Broadly speaking, I would expect these to continue to let, with the rental figure broadly increasing with inflation as the years go by. I have always viewed these as my ‘pension’ (although I didnt expect to pay them off quite this early, which kinda leads me towards, do I want to carry on working?).
Current financial situation is fairly basic, I have approx 50k in cash savings, spread across a few accounts, including a small amount in premium bonds. None in ISA's currently, this will be rectified shortly.
I have a workplace pension, with very little in it, about £28k, and this is just in the basic legal and general default setting…. I strongly suspect this needs attention, both in amount going in, and what ‘setting’ its in?
Having recently paid off my mortgages, I find myself with a little left over cash each month, to the tune of approx 3k (round numbers, I keep a very dull spreadsheet, and this seems to be the average) which I need to do something with.
Looking forward, Im seriously considering the possibility of becoming ‘semi retired’ in the next few years, ideally, working a couple of days a week, either at my current job, (or another, dont really care) or possibly setting up some sort of vehicle restoration ‘business’, I cant see it making any money, but I do it for nothing at the moment as a hobby, so if I do it for very little as a job, then im still up on the deal. This would likely be me being extremely fussy with my customers, and only taking on the jobs that I actually want to do, rather than worrying about having to have work constantly to keep the bills paid. I have a small unit where this could take place already sorted, currently being used as a store for my future projects/worthless junk.
Id like to make some sort of plan with what to do with the excess cash I have each month, and as attractive as ‘coke and hookers’ is, im tending towards something a little more ‘long term’. This is very much NOT my field of expertise, hence this post really. Im aware, that from a taxation point of view, the pension is the best place to dump some of the cash, and that salary sacrifice would be the best way to do this. I have run the idea past work, and whilst it hasn't been approved, im rather hoping that I can convince them to both allow me to do this, and possibly increase their contribution slightly as well. Im thinking that around 1k/pm would be a sensible amount to do with this? Obviously this really only is an option whilst I remain employed…..?
The remaining couple of grand, Id like to do something a bit more ‘active’ with. Ive been looking at stocks and shares, and various other options, both in isa wrappers, and out of them, and frankly, havent got the foggiest idea where to start.
Im extremely aware that this is very much a ‘first world problem’, hence the new login, as I have several friends on here (at least one of whom will likely read this and figure out who I am anyway, but him I trust!) and dont really want to be seen as ‘bragging’ whilst other people are struggling.
Im aware that I really should see a proper financial advisor, and in due course, I most definitely will, but Id really like to go into that meeting with a decent idea of the options available, and the benefits/downsides of them all, but starting from scratch, I could do with some help of where to look to make a start on learning a bit more. Happy to read whatever, or watch videos on YT etc, but its sorting the good stuff from the junk?
So, essential, the questions. What options would be sensible for me to look at with my pension? What options should I look towards with other investments? Where can I learn more about this stuff??
TL:DR version; Ive got some left over money at the end of each month, and would like some ideas of where I can learn more about what to do with it…...
Cheers all
Apologies for new login, but hopefully it’s pretty obvious why
Current situation;
42yrs old, no kids, living with partner (been together around 20yrs, not married). House owned outright, no plans to move, happy to live here until im carried out in a box (hopefully not for a while!)
Currently work as a manager in an engineering shop (been here about 20yrs), dont hate the job particularly, but its quite stressful, quite long hours, and not especially well paid. Historically, the overall ‘package’ has been quite decent, I like to play with cars, and work have been extremely tolerant of my having stuff in the yard, and using it as my personal playground at the weekends, hence ive stayed so long. Pay is about 38k, but I do still get paid for overtime, so I usually end up with around 50k-ish.
I also have a couple of BTL properties (typical PH fashion, I know), one of which I own outright, and one of which I own half of (my sister owning the other half, again no mortgage) these generate approx 40k after expenses (I should know this exact figure, because I should have already done my tax return for this year, which I really must get around to). These are both student lets, in a prime location of a university town (where both my sister and I went to uni oddly enough), and with the exception of covid, have always been let with ease. Broadly speaking, I would expect these to continue to let, with the rental figure broadly increasing with inflation as the years go by. I have always viewed these as my ‘pension’ (although I didnt expect to pay them off quite this early, which kinda leads me towards, do I want to carry on working?).
Current financial situation is fairly basic, I have approx 50k in cash savings, spread across a few accounts, including a small amount in premium bonds. None in ISA's currently, this will be rectified shortly.
I have a workplace pension, with very little in it, about £28k, and this is just in the basic legal and general default setting…. I strongly suspect this needs attention, both in amount going in, and what ‘setting’ its in?
Having recently paid off my mortgages, I find myself with a little left over cash each month, to the tune of approx 3k (round numbers, I keep a very dull spreadsheet, and this seems to be the average) which I need to do something with.
Looking forward, Im seriously considering the possibility of becoming ‘semi retired’ in the next few years, ideally, working a couple of days a week, either at my current job, (or another, dont really care) or possibly setting up some sort of vehicle restoration ‘business’, I cant see it making any money, but I do it for nothing at the moment as a hobby, so if I do it for very little as a job, then im still up on the deal. This would likely be me being extremely fussy with my customers, and only taking on the jobs that I actually want to do, rather than worrying about having to have work constantly to keep the bills paid. I have a small unit where this could take place already sorted, currently being used as a store for my future projects/worthless junk.
Id like to make some sort of plan with what to do with the excess cash I have each month, and as attractive as ‘coke and hookers’ is, im tending towards something a little more ‘long term’. This is very much NOT my field of expertise, hence this post really. Im aware, that from a taxation point of view, the pension is the best place to dump some of the cash, and that salary sacrifice would be the best way to do this. I have run the idea past work, and whilst it hasn't been approved, im rather hoping that I can convince them to both allow me to do this, and possibly increase their contribution slightly as well. Im thinking that around 1k/pm would be a sensible amount to do with this? Obviously this really only is an option whilst I remain employed…..?
The remaining couple of grand, Id like to do something a bit more ‘active’ with. Ive been looking at stocks and shares, and various other options, both in isa wrappers, and out of them, and frankly, havent got the foggiest idea where to start.
Im extremely aware that this is very much a ‘first world problem’, hence the new login, as I have several friends on here (at least one of whom will likely read this and figure out who I am anyway, but him I trust!) and dont really want to be seen as ‘bragging’ whilst other people are struggling.
Im aware that I really should see a proper financial advisor, and in due course, I most definitely will, but Id really like to go into that meeting with a decent idea of the options available, and the benefits/downsides of them all, but starting from scratch, I could do with some help of where to look to make a start on learning a bit more. Happy to read whatever, or watch videos on YT etc, but its sorting the good stuff from the junk?
So, essential, the questions. What options would be sensible for me to look at with my pension? What options should I look towards with other investments? Where can I learn more about this stuff??
TL:DR version; Ive got some left over money at the end of each month, and would like some ideas of where I can learn more about what to do with it…...
Cheers all
nickfrog said:
You can learn so much first before seeing an "adviser".
First, understand how you can save a lot of tax through pension tax relief (unless you already know of course).
Pension seems to be the first thing to look atFirst, understand how you can save a lot of tax through pension tax relief (unless you already know of course).
There's a lot of unused tax relief from the last 3 years there.
These threads keep coming up (this isn’t a bad thing) so well worth reading all the other ones because there’s a lot of information in them.
Random thoughts for OP in no particular order -
1. Yes, pump up the pension but don’t forget you will not be able to access it for a number of years so if you plan to retire very early you need to allow for having money elsewhere.
2. ISA allowances should be made the most of, you are suggesting you have around £36k pa spare so £20k in an ISA seems realistic.
3. The wrapper is actually less important than the investment! Even with no tax protection you are only paying tax on the gains.
4. There are lots of low cost funds available that are either a combination of various stocks/bonds etc or that track some of the major stock markets. Also a good range of more targeted managed funds. In either case take a look at fees and how they have previously performed.
5. Advice from an IFA may be useful but be aware that they love to charge 1% of your total savings, that may not be too bad for you right now but they charge it every year they have you signed up for so a fixed fee for the advice you need to get you started may still be better (if you need it at all at this stage).
Final one, have a look here - https://www.guiide.co.uk/ - it allows you to map out retirement incomes based on a bunch of variables, quite handy to see what can be done.
Random thoughts for OP in no particular order -
1. Yes, pump up the pension but don’t forget you will not be able to access it for a number of years so if you plan to retire very early you need to allow for having money elsewhere.
2. ISA allowances should be made the most of, you are suggesting you have around £36k pa spare so £20k in an ISA seems realistic.
3. The wrapper is actually less important than the investment! Even with no tax protection you are only paying tax on the gains.
4. There are lots of low cost funds available that are either a combination of various stocks/bonds etc or that track some of the major stock markets. Also a good range of more targeted managed funds. In either case take a look at fees and how they have previously performed.
5. Advice from an IFA may be useful but be aware that they love to charge 1% of your total savings, that may not be too bad for you right now but they charge it every year they have you signed up for so a fixed fee for the advice you need to get you started may still be better (if you need it at all at this stage).
Final one, have a look here - https://www.guiide.co.uk/ - it allows you to map out retirement incomes based on a bunch of variables, quite handy to see what can be done.
Moderator edit: no advertising
OP, have a look at the Meaningful Money site & the associated YT videos:
https://meaningfulmoney.tv/
https://meaningfulmoney.tv/video/
https://meaningfulmoney.tv/
https://meaningfulmoney.tv/video/
Mr Pointy said:
OP, have a look at the Meaningful Money site & the associated YT videos:
https://meaningfulmoney.tv/
https://meaningfulmoney.tv/video/
A great suggestion. Pete is a legend.https://meaningfulmoney.tv/
https://meaningfulmoney.tv/video/
Many people confuse financial planning with investments/products when they are two completely different parts of the process. Until you have a robust financial plan in place, it's tricky/impossible to begin thinking about solutions.
TownIdiot said:
nickfrog said:
You can learn so much first before seeing an "adviser".
First, understand how you can save a lot of tax through pension tax relief (unless you already know of course).
First, understand how you can save a lot of tax through pension tax relief (unless you already know of course).
Personally I would also open an ISA account with someone like Vanguard and put in the £20K a year into something like an LS80 or S&P500 tracker and try and not watch it.
ThingsBehindTheSun said:
Sounds like you are already doing well to be honest, a great position to be in at your age. As a 20% tax payer is a pension the best approach, only because you will have to pay 20% tax when you withdraw the money. I assume you will be over the £12500 threshold because of your BTLs.
.
You still get 25% of a pension tax free up to £268,275, so effectively 15% on withdrawal? I'd split between pension and ISA with the ratio depending on when exactly I expected to stop, and hence if I wanted money before age 57..
I don't suppose the employer offers salary sacrifice pension contributions? If so, that makes pensions relatively more attractive.
ThingsBehindTheSun said:
Sounds like you are already doing well to be honest, a great position to be in at your age. As a 20% tax payer is a pension the best approach, only because you will have to pay 20% tax when you withdraw the money. I assume you will be over the £12500 threshold because of your BTLs.
Personally I would also open an ISA account with someone like Vanguard and put in the £20K a year into something like an LS80 or S&P500 tracker and try and not watch it.
At £50k work income plus probably £30k BTL the OP is most likely paying 40% on some of his income. Personally I would also open an ISA account with someone like Vanguard and put in the £20K a year into something like an LS80 or S&P500 tracker and try and not watch it.
idiotthedave said:
Cheers chaps, exactly what i was hoping for, a little guidance on where to start reading and watching, ill have a look over the next few days, and start trying to get some sort of plan together.
Yep, wise to spend some time padding out your plan with life / financial goals etc... then the investment strategy follows (quite a few tips above).Also, if you decide you need help with your financial planning, be wary there are paid financial planners, and there are investment firms purporting to offer free financial planning. I had the opportunity to use both services a few years back for a back-to-back comparison. Old saying, you get what you pay for!
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