What to do with £700 a month?

[Robin198]

I’m early 40s
£180k in equity in my house
£90k left to pay over 10years (currently 4%)
£11k in long term savings (5%)
£4K in day to day (4%)
Just started an S& S JISA for my son through Nutmeg
Professional pension.

No debt, no car loans or finance of any kind.

Im a single parent and have worked really hard to be financially stable for me and my son. For the next 4 years I should have an extra £650-700 to save. Any suggestions as to the best way to invest? Or should I dump it in my mortgage at the end of every year? I’m not likely to be in this position of excess savings again so I’d like to make it count.

I would do half an half mortgage and savings. The problem with dumping it all on the mortgage is if you ever need funds in an emergency you can't access it. Always good to have a couple of grand stashed away in an account if needs be.

Sorry - just spotted you already have rainy day savings so my advice about as useful as a chocolate teapot. That's what comes from reading whilst trying to make DS breakfast! 🤦🏻

I’d overpay on the mortgage

Don't overpay the mortgage without reading this article https://www.moneysavingexpert.com/mortgages/mortgages-vs-savings/
You may earn more in interest than you will save by overpaying. In which case, go for the savings account. But also consider pension etc.

You sound as if you are well set up. Do you mind me asking why this is just for 4 years (temporary responsibility allowance or similar?)? When this is gone do you expect to still be in a position to save? I know that it's crystal ball gazing to answer that but I'd want to know that I had a decent buffer if bills keep rising faster than wages. It sounds as if you've been in a good financial position so I'm guessing that you've been able to put something away each month and this is just on top.

Does your current pension look as if it will be enough for what you want for your old age? Given you're already in a good position and are looking for the long term, I'd probably be looking to invest a good portion in either (or both) a pension and S&S ISA. That'd hopefully give you a good return over the long term and you could use it for early retirement and/or helping your son when he's older.

Me too but that's why I'm in the mess I am financially.

100% pension - so many people badly underestimate what they need to maintain a decent lifestyle in retirement, and the state pension is buttons

Whilst I agree that pension is important, she has a public sector pension so it's important for her to assess how good that pension currently is (and is predicted to be). She's also a basic rate tax payer so, aside from the 25% tax free, she's likely to be paying the same tax rate on the way out as the way in on any private pension (given it will be on top of her DB pension).

I’d look at a sipp, public sector pension is brilliant but not very flexible, a sipp would allow you to retire early and bridge the gap. Also, see you’re worried about pension dying with you but a sipp would just be transferred to your beneficiary (your son) so not dissimilar to savings.