Pension planning - investing

[jaychops]

DH and I are mid 30s. I work in the NHS and have the associated pension. DH earns significantly more than me and his company pension is smaller. We currently have £10000 in savings towards another 'pension' of some sort and will continue to save £500 per month. Looking for suggestions on what to do with this in a way that reduces the effects of inflation. Current mortgage due to be paid off at around age 58.

We don't want to move house as we love where we live and have already extended. We've considered buying to let and not ruled that out but that will take a few more years to save enough for a deposit and not really wanting to pay a mortgage past 60. We both don't know much about private pensions so need to research that more.

Are you maxing out pension contributions and 20k annually into ISA for max tax efficiency?

Not at the moment, just starting to look at these things. Would having cash in an ISA long term negate the effects of inflation as much as property would?

Please do correct me on anything I say though as I am really not clued up on this at all.

I’d also be interested to know how people invest

If I were you I would start by reading up a bit/listening to podcasts on personal finance and investing. For example https://meaningfulmoney.tv/learning-centre/ is a great start (he has a podcast and you tube videos that are very helpful). It seems daunting at first but it really isn't once you get started. Once you understand the options it will be easier to plan and make decisions.

PS I think the PP was referring to a stocks and shares ISA rather than cash. OF course they can go down in value too but over a long enough period are likely to beat inflation.

Have a look at the Meaningful Money site/YouTube or sites like https://www.boringmoney.co.uk/learn/investing-guides/ which give very helpful explanations.

If you want to start small to get an idea of how it works then there are good platforms like Vanguard or Fidelity that allow you to start will small amounts like £25 a month and charge very low fees. If you pick a very diversified fund like Vanguard's Global All Cap you will be essentially investing in the whole world so don't have to worry about having special knowledge or predicting which area will do well.

Now that mortgage rates have gone up there is an arguement that says overpaying the mortgage is a good option; interest avoided is as good as investment growth of the same percentage.

Of course you can expect stock market returns to be higher still over the long term so it’s generally seen as sensible to not put all your eggs in one (home) basket. Then there is the leg-up that Tax Relief on pension contributions bring, an immediate 25% boost in return for locking it away until your pension freedom age (57?).

When it comes to what best to invest in then the best thing for most people is to buy a cheap stock market tracker (e.g. S&P500 tracker) in a SIPP - but platforms like Vanguard make it slightly easier albeit they are not as good for those of us who prefer to have more precise control.

Sensible stock market investments always beat housing over the medium to long-term and don’t have pesky tenants that wreck the place. I don’t think BTL adds up any more for most people.

If you like to read then: https://www.tonyrobbins.com/wealth-lifestyle/master-the-game-of-money/

Saving up for retirement doesn’t always mean you need a “pension.” I may be a sceptic but the removal of the pensions lifetime allowance in the Spring budget makes me think there will be a future raid on pensions of some kind. Especially with a smaller working population, ageing population and increase in social care budgets etc etc. I would start maxing out a SS ISA first, then think about a private pension with any monies left over. Read How to Own the World by Andrew Craig. Get yourself clued up on basic finance concepts. You ideally wanted a mixed portfolio of shares, cash, property, bonds, maybe some gold/silver. Shares- look at index fund to start with as they are low cost and some are low risk. When you understand it better, you can move your money into other shares/funds. That’s a start but learning about financial investments and economics is not something you do once. You continually need to educate yourself and be proactive