Need to worry about which index you track. Active funds also generally outperform passive. And some aren’t much more expensive than passive nowadays.
Overpaying your mortgage, even by a bit every month will knock months and sometimes years off it.
Definitely take the pension tax breaks while they are still there. Some debate about the longevity of this benefit. Especially for the 40% higher rate part.
-si- Would be s&p 500 mate. Are there any actives that charge at the same rates as say the s&p index trackers in a Vanguard ISA? I will max out pension while I can but don’t want to put AVCs in, would rather spread these to the annual ISA allowance and any additional investment account I can get. Would love to shave off some decent rime from mortgage term though. That would be game changing.
So the s&p500 is basically tracking the north American version of the ftse 100. All in on equities in that case. No diversification there mate, aside from the other types of assets you can invest in, there isn’t even diversification geographically for the equities themselves. All or nothing in the US.
A really good diversified fund will give you a proper mix of assets and geographic spread and the increased management cost could be offset by the potential for enhanced returns vs a tracker fund.
Depending on how many years you have left on your mortgage and the outstanding balance, it would surprise you how much difference even one or two hundred quid a month can make in terms of overpayment.
The split between isa and pension is also a good idea as it leaves you with more flexibility in terms of accessing the funds a bit earlier if you are able to write before your company’s pensionable age. Although that’s balanced out with the loss of the automatic 20/40% uplift for pension contributions.
-si- Active funds also generally outperform passive.
Ha, what are you basing this on?
Pretty much everything I’ve read in recent years has shown the reverse, even more so once you consider active fund management fees.
The only caveat to that is that we have been in a bull market for a long time now, and some might claim that active funds could be more able to ride out any downturn with less of an impact, but that is also by no means guaranteed and active and passive funds seem to have performed similarly during the covid downturn.
Overall, the chances of finding an outperforming active fund are likely very slim.
https://www.ft.com/content/c6183f2f-f58a-3569-a6ac-9d2b44adfe28
https://www.ft.com/content/6b2d5490-d9bb-11e6-944b-e7eb37a6aa8e
https://www.ft.com/content/655fefe7-837b-4304-a0a4-f750c127bbb7
its only a little thing, but getting an app like Moneybox and forgetting about it is great - you honestly dont miss the money being saved. Plum is another one i think
-si- the s&p passives basically don’t have anywhere near the AMCs an active would have. I’m not really interested in a diversified fund as I have this with pensions and the usual glidepath to cash and safer stuff like gilts. I actually want the riskier curve for 15-20 years so i can get the returns. And I woild rather not pay for management when an index can perform well enough.
-si- ref emortgage. I think i might be limited to a 10% overpayment but need to check. Its a bit of a no brainer and I really don’t know why I haven’t down it before. Shaving off 5 years plus with just a couple of hundred extra a month and refinancing when it makes sense to is obvious. Why don’t they teach this shit in schools? We wouldn’t have the amount of crippling credit debt in the UK.
Idk what real estate is like in the UK, but here slumlording/multiunit rentals is whats up. My college roommate and I buy and rent apartments, and while its a pain in the ass, the return is far greater, and less risky, than anything else imo. I index thru Vanguard and everything else goes into real estate. Its disgusting, and landlords are defo the enemy and all that, but I want to fucking retire and its not that hard to be a humane LL and still get paid.
Millsy if you are looking to hold for the long-term and have a fairly high risk tolerance you may wish to consider not limiting yourself solely to the big dollar-denominated names and mixing in some Chinese / Asian / Emerging / Smaller Cap action too.
Your pension will no doubt have a fair old chunk of US large cap exposure already so you’d just be doubling down on that with the pure S&P ETF imo. You can get trackers for the Global/ Asian markets too obviously - I agree you are probably wise to avoid active managers for your purposes but I wouldn’t be too quick to write them all off (!)
The golden rule here is that you can never have too much diversification. Have a tactical tilt towards whatever you like but, honestly, never underestimate the power of diversification to help deliver consistent long-term growth.
Eagerly awaiting Rhouses’ input here
