Is now a bad time to invest?

[BarbaraofSeville]

I know no-one knows the answer, and I also understand that investing is a risk, and am kicking myself that I've only just got my head (partly) around this investing lark over the last few months after dithering for about 5-10 years (I know!) but my current dilemma is thus...

£22k owing on a lifetime tracker mortgage currently costing 2.6% after last week's interest rate rise.
Some interest free debt but will just let it run it's course as it's not costing anything and is making money due to interest earned on savings.
About £30k in cash/PBs
£15k ish in Vanguard S&S ISAs in my name
Self employed DP needs to put money into his pension but I have a good public sector pension that will pay out a small amount at age 60 and a decent amount at SRA.
We both earn around £40k and are around age 50, child free and have a very good disposable income.

We have no plans to move house or make other large purchases like car/home improvements.

I'm thinking we should pay the mortgage off as it's starting to cost more than can be earned in savings interest/premium bond prizes, which in the past I've always viewed as a sort of 'DIY offset' exercise.

But I'm also thinking we'll likely make more in investments over the long term (but maybe not if interest rates keep increasing) but concerned about poor economic growth/recession meaning we're investing at the wrong time. Especially as DPs job is physically demanding so we can't rely on him being able to do it forever, so might not be able to keep on saving/investing.

To clarify, we're not married and I don't think I'll benefit from us doing so as I have the better pension and more of the savings etc are in my name, so that's not something I'm concerned about.

For the last few months, I've more or less split the money into mortgage overpayments and investments and DP is currently paying £500 pm into his pension, but I'd welcome any comments or insights as to whether this strategy has any downsides. I've read the thread about declining investment values and understand how it should be viewed as a 'money off sale' to invest now if you're looking long term, but I'm still twitchy about 'what if this is the crash/recession of all time and after 10 years our money will be worthless'?

I'd clear down any debts as much as possible as financing is going to get worse
The stock market is going to be jittery for a while, so no to that
If you can, pay as much off your mortgage as you can, and/or add to pension fund

At 2.6% i’d leave the mortgage alone.

Get as much cash together in your ISA’s and SIPP’s, but without locking in any losses or dips.

We are at the start of a 2 year global recession, US Economy will be first to recover (it always is) and when the equity crash (we are in the middle of one now) is bottomed, then that’s the time to invest.

The big issue is the GBP/USD rate…. Ideally we would all have r accumulated USD when it was around 1.40 and that would be a huge gain already for just sitting in cash, never mind any Covid gains you made. However, the issue we face now, is that the £ has been in decline since 2007/2008, and most currencies against the dollar at eve faltering, but how long it will continue is the big question. If you think this is a turning point (i don’t) then keep you GBP if not then convert it to USD. When the US equity dip is over, pick a few US equities and sit tight for 5-10 years.

But everything is a risk and all of the above is just legalised gambling.

Thanks for the replies, which seem to contradict each other

None of the debt needs refinancing and is currently costing nothing/in profit/just about offset by savings, so I'm less minded to pay off the mortgage, but will keep an eye on future interest rate rises. Although since I first posted, the payout rate on premium bonds has increased significantly so I'm more comfortable about keeping them for now.

I think as a household we will carry on with sharing out our money between mortgage overpayment, ISAs, DP pension and some cash savings and then it's all diversified.

Agree with @Bard6817

Make sure you have enough liquidity to get you out of any unexpected wobbles. And then I'd trickle the rest into investments and plan on holding for a minimum of 5 years.

As your mortgage is at a low rate and small enough for you to absorb any impacts I would focus on investing too. I've just increased the monthly amount I am putting into my Vanguard S&S ISA by diverting money away from my Cash ISA (its got enough in it now as a decent EF - I am an additional rate tax payer so needed the interest shielded). I am in my early 50's so can ride out a couple of tough years putting money into the market without seeing any real return, to take advantage of the low prices.

Your public sector pension very likely isn't going to pay out to your partner in the event of your death as you are not married, as your spouse he would be entitiled to a sposal payment (likely 50%) He needs very much to make his own pension provision in that case as that leaves him very vulnerable. Also do keep in mind in the event of one of your deaths if your estate is valaued over £325,000 (including your half share of the property life insurance, savings and investments) there would be inheritance tax to pay on that (there would not be in the event of you being married).So if you are leaving everything to each other and your estate is over that amount then just to remain in your property inheritance tax would be due. As we acumulate more assets in life, there can indeed be benefits in marriage (though of course also issues should you divorce!)