I've been looking at this and have concluded that it's all shite. Honestly, there are no good rates. Even ISAs pay out sod all. You may as well just leave it in your current account. RPI is higher than most interest rates so the value of that saved money will fall in real terms. My thinking is that the priorities are:
The jury seems to be out on whether any spare cash should be thrown at the mortgage or put in the rainy day pot. As the rainy day pot pays feck all interest then it may as well go on the mortgage, which incurs a cost.
- Some kind of pension. Could be an actual pension or enough liquidity to ride out a retirement
- Pay off all debts in descending order of interest rate
- Enough money in the war-chest to cope with xx months or not generating any income
- Blow it on cars.
But that's a layman's opinion. Greater minds know far more about all this fun stuff than I do.
Suspect you’re right Adam... but it will be interesting to see if anyone on here has an alternate view. I‘ve only started to think about it recently, and suspect there may be others on here who have gone through a similar thought process.
As the resident Fossil on this forum I have indeed been through this thought process in earlier days.
I am now revisiting in order to guide my 2 boys.
1 Pay off all debts including mortgage and credit cards, (keep a credit card if you wish in order to get financial protection on big spends that may go wrong but pay it off asap).
I did some working out a while back and although interest rates are low it seemed better to pay a chunk off the mortgage to get the biggest gain/VFM.
I just didn't want to do anything so permanent and wanted something with some flexibility and more liquid. I've got a fair size mortgage....well to me anyway so it makes sense.
The issue is we will push on now with the planning application to build a new house. If I try to keep the existing house and rent it on a BTL I will need to remortgage to the hilt to rip enough asset value out that should fund the new house build. Then means that it would be very tight to rent it for enough to pay the BTL mortgage on it.
It may make more sense to build the house then sell the old one as it will leave us under much less stress/pressure. Also sitting in a nice house, mortgage free and worth maybe £1.5m-£2m depending on what we get to build. Then you get that age old problem that many previous generations have of having no cash or liquid investments but all your cash tied up in one big asset. It all depends what the existing house will sell for if we sold it. I suspect it may sell for much more than I have conservatively earmarked thus leaving us with a few hundred k left to invest and build a pension from.
Then we would need to work out how much you need invested in a pension to be able to live of it. With rates of returns and yields being pants therein lies an issue of returns on that sh1te investment. It is a real difficuklt one to know what best to do medium to long term. However if you are in good enough health maybe just switch to a job you really like for much less money and that gets you somewhere in between.
Who knows? I welcome any thoughts feeding into all this
I've been looking at this and have concluded that it's all shite. Honestly, there are no good rates. Even ISAs pay out sod all. You may as well just leave it in your current account. RPI is higher than most interest rates so the value of that saved money will fall in real terms. My thinking is that the priorities are:
- Some kind of pension. Could be an actual pension or enough liquidity to ride out a retirement
- Pay off all debts in descending order of interest rate
- Enough money in the war-chest to cope with xx months or not generating any income
- Blow it on cars.
The jury seems to be out on whether any spare cash should be thrown at the mortgage or put in the rainy day pot. As the rainy day pot pays feck all interest then it may as well go on the mortgage, which incurs a cost.
But that's a layman's opinion. Greater minds know far more about all this fun stuff than I do.
I did some working out a while back and although interest rates are low it seemed better to pay a chunk off the mortgage to get the biggest gain/VFM. ........
......... Who knows? I welcome any thoughts feeding into all this
Heck you could buy and flip a car to earn the interest you'd get on most accounts if you have a spare day or so.
The alternative view to this is that there is little benefit to paying off a mortgage.
£100,000 of mortgage (interest only) at 2% is going to cost you £166 a month.
If you have saved £100,000 the chances are that £166 per month is not going to be a struggle financially and knowing you have a good lump sum behind you if the sh!t hits the fan can be comforting.
I used the HSBC app today to pay in a cheque so thanks Catman for that.I can't set up new DDs but can transfer to either existing or new payees. With the cheque you take a photo with the app (at least with the HSBC)
C
I used the HSBC app today to pay in a cheque so thanks Cayman for that.
Slight fly in the ointment being there is a max daily amount of cheques you can pay in this way......£750. Chocolate teapot springs to mind.
I used the HSBC app today to pay in a cheque so thanks Cayman for that.
Slight fly in the ointment being there is a max daily amount of cheques you can pay in this way......£750. Chocolate teapot springs to mind.
I guess I'll take a special unnecessary trip to the Potters Bar Post Office. Can't go to HSBC as they closed it down
Surely if you're baking in the Caymans, they come to you?
I've not seen £750 in cheques in the last 5 years!
C
As the resident Fossil on this forum I have indeed been through this thought process in earlier days.
I am now revisiting in order to guide my 2 boys.
1 Pay off all debts including mortgage and credit cards, (keep a credit card if you wish in order to get financial protection on big spends that may go wrong but pay it off asap).
2 Provide money for old age, usually a pension but maybe property or other investments (Wattie?). Start this provision no later than 40 ish years of age. Future pensions will be vastly different for my sons compared to what I get. It is simply not sustainable. This would also include a regular monthly income.
3 Launder money to prevent SS (Social Services) getting their mits on it before you go gaga
4 Consider putting your home in Trust and consider Power of Attorney health and financial (I am doing this now - LPoA via HMRC and costs about £80)
5 Arrange payment for your funeral (and wife)
6 Enjoy what you have accrued!
The nature of this forum means generally we the members have not made a bad fist of life so the above may not be right for everyone. I am not even sure it is right for me but decisions have to be made and I submit it as a guide only. I am happy to discuss more openly or via PM should anyone wish to add anything.
Good luck