Agreed.
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How much do you put in your pension?
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Originally posted by DonkeyRhubarb View PostWHS. Best "investment" we ever made. Owning your own home, outright, gives you a lot of freedom.Comment
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Originally posted by WordIsBond View PostIt is rarely unwise to pay off a mortgage.
As far as paying off your mortgage giving financial freedom, my sums don't bear that out. I think we pay ~£500 on our mortgage but our total monthly outgoings are more like ~£2k... so if we had no mortgage it doesn't dramatically affect anything.
This worries me because I'd always assumed when you got old and had paid off your house, you could live on very littleOriginally posted by MaryPoppinsI'd still not breastfeed a naziOriginally posted by vetranUrine is quite nourishingComment
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Originally posted by d000hg View PostIt's not unwise, but it's a bit conservative. For instance we have a mortgage of about £175k. If we bought a house for £175 cash rather than paying off the mortgage, we could make 5% on that a year before any appreciation is considered.
As far as paying off your mortgage giving financial freedom, my sums don't bear that out. I think we pay ~£500 on our mortgage but our total monthly outgoings are more like ~£2k... so if we had no mortgage it doesn't dramatically affect anything.
This worries me because I'd always assumed when you got old and had paid off your house, you could live on very littleWHS. Best "investment" we ever made. Owning your own home, outright, gives you a lot of freedom.
Also your outgoings would reduce by 25% is a significant drop even if it doesn't feel like it at first.Comment
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A few years ago before going permie where I am now, I had about 80/90k in my pension. As a contractor I was paying 500 per month, but when I'd converted to permie, an extra 8/9 years ago I topped it up one year to get tax relief.
In the last few years, I've had to take a company pension which is around 1100 per month, plus topped up contributions retrospectively to get to a pot of 300k today, and I'll add another 40k next month as relief is still there.
Personally I think it's worth it for higher rate tax relief, when contracting I'm not so sure.
Also topped up around 125k in ISAs between me and the wife. We still have an average of just over 4% overall return on that, but in June a 5 year 5% fixed deal ends, and so that's going to drop to some pitiful rate. Cash ISAs appear dead now.
My view had been Pensions(ruined by George) should be used in conjunction with cash ISAs (ruined by George), share ISAs(ruined by Bankers), BTL (ruined by George), cash savings (Ruined by Banks) and a little commercial property (ruined by Amazon.Com)
Now I'm not sure going forward.What happens in General, stays in General.You know what they say about assumptions!Comment
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Originally posted by d000hg View PostIt's not unwise, but it's a bit conservative. For instance we have a mortgage of about £175k. If we bought a house for £175 cash rather than paying off the mortgage, we could make 5% on that a year before any appreciation is considered.
As far as paying off your mortgage giving financial freedom, my sums don't bear that out. I think we pay ~£500 on our mortgage but our total monthly outgoings are more like ~£2k... so if we had no mortgage it doesn't dramatically affect anything.
This worries me because I'd always assumed when you got old and had paid off your house, you could live on very littleComment
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Originally posted by d000hg View PostI'd always assumed when you got old and had paid off your house, you could live on very little
It's an eye-opener to imagine scraping along on a pension instead of contractor's income. I suppose when we're old and riddled with arthritis we will just sit in the house cowering beneath the quilt listening to the radio and complaining about the neighbours.Comment
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Originally posted by d000hg View PostThis worries me because I'd always assumed when you got old and had paid off your house, you could live on very little
Now people retire and live for over 10 years while some live 30-40 years. If you are healthy you tend to spend more money on doing things unless you deliberately make a choice not to."You’re just a bad memory who doesn’t know when to go away" JRComment
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Originally posted by d000hg View PostIt's not unwise, but it's a bit conservative. For instance we have a mortgage of about £175k. If we bought a house for £175 cash rather than paying off the mortgage, we could make 5% on that a year before any appreciation is considered.
As far as paying off your mortgage giving financial freedom, my sums don't bear that out. I think we pay ~£500 on our mortgage but our total monthly outgoings are more like ~£2k... so if we had no mortgage it doesn't dramatically affect anything.
This worries me because I'd always assumed when you got old and had paid off your house, you could live on very little
So, currently, you are not paying anything off the capital. It will still be £175k in 20 years time.
£500/month on £175k equates to 3.4% interest. Low rates like this might not be around forever.
Paying off the mortgage is just one option and, yes, it is conservative.Comment
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Originally posted by d000hg View PostSo my situation is:
- my wife earns an OK salary (~32k) as a teacher and is on the teaching pension scheme, which as I understand it though not as gold-plated as it once was still beats any private pension.
- I tend to work (by choice) part time, say 3 days a week, at slightly over £300/day, so I don't have the situation I can max out my lower-rate tax allowance and still have loads left over in the company that I need to do something with. Roughly speaking, I have to choose whether to put money in a pension or take it out as dividends
- I have company funded pension with about £5k in - I set it up and never really used it
- We have collective savings of ~£40k (we're both in our mid-thirties)
- I've recently come into all the inheritance I'm ever going to receive, since my ancestors are all now deceased. About £500k (it's going to be a few months at least for probate)
I'm trying to figure out how this might be best played out investment-wise. We're able to plough ~£20k into savings each year IIRC but the lump-sum we've received potentially turns everything on its head... should we invest that and carry on as if it's not there, or radically change our pension/saving strategy since we've effectively now got a substantial ready-made savings pot?
We will discuss this with a trusted IFA but since we're on the subject of pensions I wondered what anyone thought?
2. Overpay offset mortgage per month to a sum you're happy with. For me, if I had a £175k mortgage, I would want it paid off by 4 or 5 years and set the monthly mortgage amount to equate to that.
3. Invest £15k share isa for yourself and your wife - just stick it in vanguard...
4. Buy two residential properties for cash. Approx £240k
5. remaining £65k saved for a rainy day.Comment
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