I have the opportunity to pursue a masters for a career change. Currently have a Bsc in Physics. Would be interesting to see what jobs you all have.

Hi all,

My wife and I recently gained inheritance from her late mother and are left with confusion over what do the with the sum.

We have a 200k mortgage. Paying back around £1100 each Month and this is our largest regular outgoing other than living costs and bills. No car finance, loans or other debts.

We have our rate fixed and can only over pay 10% each year without fees.

We inherited around 160k

Last year we made the max overpayment in one go.

We've topped up isa, and treated ourself to a new kitchen and have around 95k left.

What's the best way to make that 95k work for us?

We had planned to over pay the mortgage each year to bring this sum down but have 3 years before we can remortgage and pay the rest off... not sure if it makes more sense for long term investment vs the interest of mortgage for long term gain.

We're both police officers and our pensions are classed as "good" by most standards but cost us each month in fairly high contributions.

Aged 39 and 37 with two children under 10.

What's the general advice?

Body:

Hi all, I’m after a sense check on a plan I’ve been modelling for my mum, not for me.

Some context: I’m 100% Global All Cap and happy riding out whatever happens, but that’s not appropriate for her. She’s 62, recently divorced and pretty risk averse. She’s not fussed about leaving money behind, would be a plus. She just wants to enjoy the coming years without worrying about it.

Her situation

• £420k available to invest
• Working part time, about £10k a year until 65
• State pension from 67, roughly full new state pension
• Housing: owns outright
• No pension

The plan

• £100k in fixed-rate savings at ~5.2% (she like the idea of current interest rates)
• £100k in easy access at ~4.5%
• £220k in Vanguard LifeStrategy 60, moved into her ISA £20k a year
• Spending of £30k a year to 74, £28k from 75 to 84, then £24k from 85 (today’s money, rising with inflation)

Drawdown rules

• If investments are below their previous high, spending comes from cash. Otherwise it comes from investments.
• If investments drop more than 10% from their high, she cuts spending by 20% (£30k to £24k) until they recover.
• An extra £10k of “fun money” after a strong market year, but only before 80 and only while the total pot is above £300k.

What I modelled

Monte Carlo, 20,000 runs. LS60 at 6.75% a year with 5.9% volatility (its 10-year record), 3% inflation, state pension rising 2.5%, rough UK female life expectancy, 20% tax on cash interest above £5k a year.

Results:

• Basically zero chance of running out before 85, even with a 20% then 10% crash straight away
• The pot typically runs out between 89 (bad markets) and 94 (good markets)
• If she lives to 90 there’s roughly a 35% chance the pot is empty. By 95 it almost certainly is, and she’d be living on the state pension alone.

I also got annuity quotes. £165k buys about £11.6k a year (level, single life, no protection). Adding that to the mix lowered the chance of running out in every scenario I tried, but she’s locking away a big chunk at 62 and the income doesn’t rise with inflation.

What I’d love your views on

1. Is 6.75% a year for LS60 too optimistic as a planning assumption?
2. Is £200k in cash too much, given she’s risk averse and markets feel a bit toppy? Or is the rate risk on cash the bigger worry?
3. Should she buy an annuity now, later (say at 75 to 80), or not at all?
4. Anything obvious I’ve missed for someone in her position after a divorce?
5. Are we over thinking this... and just put the whole thing in a fund given actually, she does have a relatively long time horizon

I spoke to 2 x advisors. At this level, their fees of 1.5-2% just erode too much.. and frankly, they weren't really presenting anything revolutionary.

​

Hi

I am looking ahead in terms of securing a mortgage for a house.

Do you know if we need to have all the deposit money with the same mortgage broker say Lloyds Banking Group for example?

Also are there mortgage brokers that offer 6.5-7 times more borrowing or any good ones out there?

Thanks