Hedgecutter Posted July 5, 2019 Share Posted July 5, 2019 7 hours ago, the jambo-rocker said: I used to be great at saving. Managed to save up a deposit for flat and now I've never been more skint. If I had any cash spare to save, I'd be chucking it into a diversified low-index fund and let the interest compound until retirement. At a time that interest rates are so low just now, I've been overpaying the mortgage with spare cash rather than investing it anywhere. Knocked off around £22k in interest over the course of the mortgage so far, which is effectively giving an extra ~£1000 of savings per year over the duration of the mortgage. 3 Quote Link to comment Share on other sites More sharing options...
Netan Sansara Posted July 5, 2019 Share Posted July 5, 2019 21 minutes ago, Ross. said: I'm more meaning that if the company goes tits up and does an HBOS or Northern Rock. Job gone along with pretty much the entire value of the shares. I work with a lot of people who keep all their vested stocks. It seems to click with most people when they realise they have a double exposure to their job, but I think the information just isn’t thought about for most. We get RSU bonuses and the common financial advice with them, if you do research, is sell them as soon as they vest, as you say. The only small benefit to holding is on tax (depending on country) but even then the risks outweigh the upsides in my opinion. 2 Quote Link to comment Share on other sites More sharing options...
Raidernation Posted July 5, 2019 Share Posted July 5, 2019 I have approximately 15 years of SPPA pension waiting for my retirement plus whatever I can accrue here.Still looking for some daft rich bint to marry me though 1 Quote Link to comment Share on other sites More sharing options...
hk blues Posted July 5, 2019 Share Posted July 5, 2019 13 minutes ago, Hedgecutter said: At a time that interest rates are so low just now, I've been overpaying the mortgage with spare cash rather than investing it anywhere. Knocked off around £22k in interest over the course of the mortgage so far, which is effectively giving an extra ~£1000 of savings per year over the duration of the mortgage. Not knocking what you are doing, but when interest rates are low is it worth paying off the mortgage - it's a cheap loan and more so if interest rates are low. I guess the ideal is to find something that pays a higher interest rate than your mortgage and invest the spare cash in that instead. 0 Quote Link to comment Share on other sites More sharing options...
invergowrie arab Posted July 5, 2019 Share Posted July 5, 2019 I started putting money into the credit union. The interest was non-existant but it came straight off my pay and its a really stupid old fashioned bureaucratic exercise to get it out again so it worked for me. In about 3 years we had the house deposit. My advise would be do something that is automatic like that. You soon learn to live without it. 0 Quote Link to comment Share on other sites More sharing options...
invergowrie arab Posted July 5, 2019 Share Posted July 5, 2019 I started putting money into the credit union. The interest was non-existant but it came straight off my pay and its a really stupid old fashioned bureaucratic exercise to get it out again so it worked for me. In about 3 years we had the house deposit. My advise would be do something that is automatic like that. You soon learn to live without it. 2 Quote Link to comment Share on other sites More sharing options...
Ross. Posted July 5, 2019 Share Posted July 5, 2019 4 minutes ago, hk blues said: Not knocking what you are doing, but when interest rates are low is it worth paying off the mortgage - it's a cheap loan and more so if interest rates are low. I guess the ideal is to find something that pays a higher interest rate than your mortgage and invest the spare cash in that instead. I'd say it depends on the value of the mortgage and how you think the interest rate is going to move. Potentially you are losing out on a return on investment elsewhere, but if the interest rate goes up a couple of % in a few years and you have a substantially lower balance than you would otherwise have had, it could easily save you far more than you would gain by investing elsewhere now. 0 Quote Link to comment Share on other sites More sharing options...
hk blues Posted July 5, 2019 Share Posted July 5, 2019 2 minutes ago, Ross. said: I'd say it depends on the value of the mortgage and how you think the interest rate is going to move. Potentially you are losing out on a return on investment elsewhere, but if the interest rate goes up a couple of % in a few years and you have a substantially lower balance than you would otherwise have had, it could easily save you far more than you would gain by investing elsewhere now. Yep, with the benefit of a crystal ball we'd be able to make the perfect decision now but we don't. I'd only add that you could use the money you'd invested elsewhere to pay off a lump sum on the mortgage if and when interest rates began to creep up - best of both worlds in a sense. 0 Quote Link to comment Share on other sites More sharing options...
Ross. Posted July 5, 2019 Share Posted July 5, 2019 2 minutes ago, hk blues said: Yep, with the benefit of a crystal ball we'd be able to make the perfect decision now but we don't. I'd only add that you could use the money you'd invested elsewhere to pay off a lump sum on the mortgage if and when interest rates began to creep up - best of both worlds in a sense. Or if you are anything like my SIPP, lose money on the investment and have less to pay towards the mortgage when the rates go up! 1 Quote Link to comment Share on other sites More sharing options...
Hedgecutter Posted July 5, 2019 Share Posted July 5, 2019 (edited) 21 minutes ago, Ross. said: I'd say it depends on the value of the mortgage and how you think the interest rate is going to move. Potentially you are losing out on a return on investment elsewhere, but if the interest rate goes up a couple of % in a few years and you have a substantially lower balance than you would otherwise have had, it could easily save you far more than you would gain by investing elsewhere now. Exactly this. Mortgage rates are only going to go up. I just finished a fixed rate deal and going onto the default variable rate (which could easily be the best deal in a few years time) would have added £120 p/m, which is £1440 p/a. The way I see it, it's guaranteed savings with peace of mind (and who doesn't feel good when they see a reduced bill month on month?!) rather than running what could be seen as a lottery. I'm fairly happy with that. Edited July 5, 2019 by Hedgecutter 1 Quote Link to comment Share on other sites More sharing options...
Granny Danger Posted July 5, 2019 Share Posted July 5, 2019 11 minutes ago, Ross. said: Or if you are anything like my SIPP, lose money on the investment and have less to pay towards the mortgage when the rates go up! We’re have been going through an extensive bull market and there’s no sign of it abating.* It shouldn’t be too difficult to pick ‘safe’ funds with returns that are in excess of mortgage interest rates. Of course investors in Neil Woodford’s fund may take issue with that. * This makes me sound like I am far more knowledgable than I really am. 0 Quote Link to comment Share on other sites More sharing options...
Ross. Posted July 5, 2019 Share Posted July 5, 2019 (edited) 3 minutes ago, Granny Danger said: We’re have been going through an extensive bull market and there’s no sign of it abating.* It shouldn’t be too difficult to pick ‘safe’ funds with returns that are in excess of mortgage interest rates. Of course investors in Neil Woodford’s fund may take issue with that. * This makes me sound like I am far more knowledgable than I really am. My SIPP had a fairly small company pension in it that would have required substantial year on year returns to make it worth more than a couple of quid a month by the time I was drawing it down. I decided to leave half of it in "safe" funds and go very risky with the other half. End result was going from being about 400% up to 90% down on the risky half. We'll see where it goes next! Edited July 5, 2019 by Ross. 0 Quote Link to comment Share on other sites More sharing options...
Hedgecutter Posted July 5, 2019 Share Posted July 5, 2019 (edited) 1 hour ago, invergowrie arab said: I started putting money into the credit union. The interest was non-existant but it came straight off my pay and its a really stupid old fashioned bureaucratic exercise to get it out again so it worked for me. In about 3 years we had the house deposit. My advise would be do something that is automatic like that. You soon learn to live without it. I'm surprised more people don't do this tbh, but I can understand seeing as I couldn't be arsed seeing as setting one up sounds like effort. The fact I'm responsible* with my money (very different to being Tam-esque-level cheap I might add ) means I don't spend it on utter crap so manage to keep it in the account. I'll then just add some to my piss-poor interest ISA as I can move money between that and the current account with ease online if I feel the need to withdraw anything. For me that's enough to make the differentiation between current account for shite like away days, and 'savings' which I feel guilty about touching without good reason (e.g. mortgage). *not buying overpriced things just because I have the funds at the time. When I was growing up, anything new had to come as either a birthday or Christmas present and being happy with the status quo until such times is a habit that I've never really shaken off tbh. Edited July 5, 2019 by Hedgecutter 1 Quote Link to comment Share on other sites More sharing options...
Granny Danger Posted July 5, 2019 Share Posted July 5, 2019 1 minute ago, Ross. said: My SIPP had a fairly small company pension in it that would have required substantial year on year returns to make it work more than a couple of quid a month by the time I was drawing it down. I decided to leave half of it in "safe" funds and go very risky with the other half. End result was going from being about 400% up to 90% down on the risky half. We'll see where it goes next! Christ that sounds brutal! When I started 4 years ago I was a total novice and made some really bad mistake over the first 18 months. Despite that my current annual compounded return is over 9%. Take into account inflation over that period and it works out at a real return of over 7%. If I can continue with that into and beyond drawdown I will be delighted; tbh 5% real return in drawdown would suffice. 1 Quote Link to comment Share on other sites More sharing options...
Dindeleux Posted July 5, 2019 Share Posted July 5, 2019 24 minutes ago, Hedgecutter said: Exactly this. Mortgage rates are only going to go up. I just finished a fixed rate deal and going onto the default variable rate (which could easily be the best deal in a few years time) would have added £120 p/m, which is £1440 p/a. The way I see it, it's guaranteed savings with peace of mind (and who doesn't feel good when they see a reduced bill month on month?!) rather than running what could be seen as a lottery. I'm fairly happy with that. Just to confirm, are you saying in my situation I should cash in my work shares and use the money to pay off a bit of my mortgage. -1 Quote Link to comment Share on other sites More sharing options...
Dindeleux Posted July 5, 2019 Share Posted July 5, 2019 Good advertising algorithm on this site 1 Quote Link to comment Share on other sites More sharing options...
Ross. Posted July 5, 2019 Share Posted July 5, 2019 4 minutes ago, Granny Danger said: Christ that sounds brutal! When I started 4 years ago I was a total novice and made some really bad mistake over the first 18 months. Despite that my current annual compounded return is over 9%. Take into account inflation over that period and it works out at a real return of over 7%. If I can continue with that into and beyond drawdown I will be delighted; tbh 5% real return in drawdown would suffice. Joys of the AIM market. Got into Sound Energy at the right time, didn't quite get round to getting out before it crashed. Now just hoping that they fluke something and I get some kind of recovery on that part of it. 0 Quote Link to comment Share on other sites More sharing options...
Granny Danger Posted July 5, 2019 Share Posted July 5, 2019 4 minutes ago, Ross. said: Joys of the AIM market. Got into Sound Energy at the right time, didn't quite get round to getting out before it crashed. Now just hoping that they fluke something and I get some kind of recovery on that part of it. Sore one! I honestly don’t have the bottle/knowledge for that. That’s why I stick to funds. I’d probably have got my money out after it had doubled then would have had remorse as it continued to rocket. 0 Quote Link to comment Share on other sites More sharing options...
strichener Posted July 5, 2019 Share Posted July 5, 2019 7 minutes ago, Ross. said: Joys of the AIM market. Got into Sound Energy at the right time, didn't quite get round to getting out before it crashed. Now just hoping that they fluke something and I get some kind of recovery on that part of it. Mods this is as bad as pin number. Get him binned. 1 Quote Link to comment Share on other sites More sharing options...
Ross. Posted July 5, 2019 Share Posted July 5, 2019 Just now, strichener said: Mods this is as bad as pin number. Get him binned. I hope you choke on the superfluous M and then it's points rip your arsehole to shreds on the way back out. 0 Quote Link to comment Share on other sites More sharing options...
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