Overall it's been another good month. At one point I actually hit my current ISA target of £70,000. This has slipped slightly again now but hopefully it will soon be consistently hovering around the mark (until we have a significant market fall that is - when and if that will happen seems to be anyone's guess so it's not worth worrying about.) For the time being I am calculating my investments with Abundance along with my ISA for the sake of simplicity. Although the interest on Abundance is taxable the recent budget changes regarding the £1000 tax free allowance on the interest on savings mean I am very unlikely to ever actually pay any tax.
I paid a fair whack into my SIPP in March (£3,000) but I have been thinking about my strategy for my pensions recently and may well be revising it (yet again). More details to follow.
On my current calculations (and current market positions) I have less than £16,000 to go to be on track for retirement in exactly 2 years time. My SIPP is key to this and I do still feel a little vulnerable to a large market drop with this. However I am protected to some extent by the CIS FSAVC which shouldn't lose much value whatever happens (famous last words). I intend to drop down to a less volatile position with the rest once I have transferred in the FSAVC around Sept time.
Since I started taking an active interest in our savings and investments one year ago I calculate that their value has increased by around £28,000 due to concentrating on budgeting and investing as much of our income as possible (around £8,000 has been in investment profit). Not bad for a year's work :-)
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Going forward we won't be making anything like the same kind of gains as my husband will be retiring fully in June. Still it does feel as if the bulk of the work has been done.
Great update... hopefully the markets will play ball and you can hit the target!
ReplyDeleteI've only just heard about that tax free £1000 on interest (thanks btw) and have dug further. This sounds like a godsend to would be early FI'ers doesn't it?! It also applies to peer to peer lending as well apparently which is great but the real kicker for me is that anyone who's income is under £15,600 (£16,800 for 2016) doesn't have to pay any tax AT ALL on their interest?! In fact that rule is already in place https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/414026/Savings_factographic_final.pdf....
How the hell did I miss this one!?
So let's say if we have a paid off house and can live off of £15,000 per year, each (pah!) ,then any interest on our savings on top of that is tax free? Sounds too good to be true. Although I guess we already have stocks and shares ISAs and SIPPs so it's just another tax break for savers on top of those really.
Either way it sounds great and is a massive bonus to people like us looking into alternative investments such as peer to peer lending and abundance.
I take it you have checked and abundance counts for that scheme? I stumbled across abundance a while back and thought it sounded really good but was weary as not heard much about it so far. It's good to hear someone I respect the opinion of has gone in for it. I remember you did a post a while back on it but never got round to reading it... I will go and check now and will ask any questions that may pop up in my head if you don't mind :) - but for now, I take it you would recommend it to others so far, if your experience with it has been good?
I really want to get involved in it in any case, so thanks for the reminder!
TFS
Hi TFS, yes the budget proposal does sound useful though I must admit that I haven't checked out exactly how it will work and what it applies to etc.
DeleteMy experience with Abundane so far has been good. Their admin works like clockwork (for the most part - weenie and I used the "Refer a Friend" service and they needed a gentle prod to deposit our £50s, it was done within the day though. However that's nothing compared to the struggle I've been having with Interactive Investor for a year now - they seem to have oversold themselves and it's a devil to get a reply to messages, take ages to deposit dividends etc). Most importantly I know what I'm investing in and feel a personal connection to the projects. I will be adding more funds as soon as the Sunshare Leicestershire project starts up - I really like the solar power/social housing combination. The investments are definitely for the long term though. If you do have any more questions feel free to post them up.
I'm sorry you've had trouble with iii, I've never had a problem with them whatsoever, and always had quick replies to messages. I used to have my dividends set to pay out immediately, but changed that years ago to be left in the account so I could accrue them together and reinvest in whatever was top of my watchlist at that time...
DeleteI hope iii sort themselves out!
Cheers
Thanks TV,
DeleteI think iii were just a bit overwhelmed with the response to their ISA transfer offer last year. It took over 6 months for both mine and my husband's transfers to come through, though that's probably not all iii's fault, just general "busyness" with all the providers' at the time. However, iii did actually stop responding to messages at all unless you logged them as "Dissatisfaction" which is pretty poor customer care. Also dividends from some funds are still taking take over a month to appear. There's an ongoing complaint thread about this on the MSE forum (the root of the problem seems to lie with FNZ. - btw I haven't joined in :-))
I do have my dividends set to re-invest but it is still a little disconcerting that they take so long to appear. Anyway, I think everything gets paid that should (eventually) and they're cheap as chips - we only pay £80 per year for both our ISA accounts as they're linked. I'm happy enough to stay put at the moment. :-)
Thanks for the extra info re: abundance!
DeleteRe: refer a friend scheme... I'll flip a coin to see who I sign up through, can't say fairer than that?!
Thanks TFS.:-)
DeleteCongratulations on your progress and being on track. Are you going to take an income from the SIPP (noticed you're largely in Acc units so I guess you'll be selling off?) or will you shift the personal allowance-worth of value into ISAs and maybe use Inc funds there (to protect any gains from tax)
ReplyDeleteThanks ermine. The short answer to your question about my SIPP is "I don't know...yet". I am reassessing my whole plan regarding my LGPS pension and when to take it at the moment and the question on how to manage my finances in the time before I do so is not at all clear to me at the moment . This isn't helped by the fact that I don't yet know what services Fidelity will offer and how much they will cost. At the moment flexible drawdown is only available on pots over £75,000 so unless they change this I might need to transfer out. It's all a bit of a headache.
ReplyDeleteMoving money into the ISA and taking income from there is one I hadn't thought of though so many thanks for that. :-)
You've got two years so a lot of the dust will have settled by then and competitive pressures will probably bear on Fidelity. Or you get to transfer some/all out.
Delete> Moving money into the ISA and taking income from there is one I hadn't thought of though
Yeah, it's kind of odd, particularly for those still working right up to drawing on a SIPP. While still working all the incentives for those over 55 are to favour a SIPP even to the extent of sucking money out of a ISA to pump up the SIPP. Then as soon as you are drawing on the SIPP everything slams into reverse gear and you want to have as much investment income sheltered from tax, which means pump up your ISA allowance to the max, starting with your PCLS, because any income from the ISA doesn't lift you into the tax bracket so you can then take the full £10,800 tax-free from the pension and lump it into the ISA (particularly as you probably want to clear your SIPP before the DB pension starts). At least the £1k new cash savings interest allowance plus the 10% tax voucher on dividends makes that a little less urgent, but unwrapped investments are best avoided, if only to avoid the paperwork and potential CGT hurt.
Thanks again ermine - the help you've given me to think my way through all this has been invaluable :-)
DeleteHi Cerridwen and Ermine
DeleteAs I get closer to FI, I am looking at the tax implications. On one hand piling money into my SIPP while working will maximise my tax relief, but then I will have to pay tax on the money I take out, so it's a calculation of working out if the tax benefits paying in to a SIPP are better than the tax benefits of no tax when taking money out of an ISA.
Looks like I am going to be busy with excel modelling the options!
Best Wishes
FIUK
Exactly! :-) It is a balancing act which I have been thinking about a lot recently - the outcome of which is that I am considering changing my pension strategy fairly fundamentally.
DeleteThis is all very exciting Cerridwen - you're in the home straight, clear goals and timeline in which to achieve them.
ReplyDeleteThe only potential obstacle being market volatility but as you say, it's not worth worrying about.
Hey, perhaps TFS can sign up to Abundance on your Refer a Friend link? :-)
Thanks weenie, I am feeling quite "in control" at the moment, just need to keep my eyes peeled for flying spanners :-)
Deletebtw weenie mentions Abundance's "Refer a Friend" scheme which is well worth following up if you've got £500 to invest. The dates for the offer on the T&Cs have passed but they still seem to be advertising and honouring it. If anyone reading does want a referral it's weenie's turn to do the honours - so she's your man :-)
DeleteLooks positive Cerridwen (but maybe a little scary as it gets closer? :) ). Only natural to feel a little exposed, especially as a fixed date looms.
ReplyDeleteAbundance looks great, I am taken by it I have to admit. I need to pump some more money into my ISA (Selfish FI seeker :) ) but I will be doing some research and checking out yours and Weenie's updates on it.
Mr Z
Thanks Mr Z. I can only keep my fingers crossed for "steady as she goes" at the moment but somehow I don't think that's going to be the case for the whole of the next two years :-)
DeleteUsing Abundance has definitely brought an extra level of "feel good" to my investing and they're already paying out 7% on the project I'm investing in that hasn't even started yet. Will keep you updated on how it goes.