Make Money Fast Blog: Listener Questions

Questions Asked

Question 1
Hi team

Been listening for ages and having a psychological meltdown over this.

I have approx £20k in my S&S ISA and £20k left on my mortgage. How can I justify the decision to pull the trigger and pay it off? Note that I also have £30k approx in a cash ISA and £5k float easy access. I also overpay the mortgage about £800-£1k per month but that's eased off the last few months, with the money diverted to an early year getaway.

I'm aware there isn't a perfect result or conclusion but I'm struggling to get past how to make the decision.

In context, I do have a big holiday coming up later in the year (£5k-9k expected spend), but I'm itching to pay this off and get regular investing.

It might be that writing this email I'm working it out for myself but I'd be keen to hear your thoughts (not advice!) on how I can think about the situation or other angles maybe I'm not thinking about.

Michael
Question 2
Hi Pete, Roger & Nick,

Many thanks for your podcasts. Listening to you has been a part of my weekly habits for several years and I feel that you have been a “gateway” which has helped me to get a better grip on my future. Thanks a lot!

My question is how much to put aside for care fees when compared with potential IHT liability. Specifically whether to advise my mum to gift her future surplus income instead of investing in her ISA?

Mum is 88, and in reasonably good health. She has £330k in a S&S ISA, £50k premium bonds and owns her property worth £600k.

Mum’s monthly spending is £500, her monthly income (from pensions) is £2k. Leaving mum with surplus income of £1.5k per month. Mum already makes gifts of £100 per month to her two grandchildren from her surplus income and uses her annual gift exemption of £3k per annum.

I have LPA (F&A & H&W) for mum. It is important to me that I treat mum and her finances with respect and stay focussed on mums needs (rather than that of me and my immediate family). As such I have been transferring mums surplus income into her S&S ISA each quarter, so that Mum has enough money to do whatever she wants to do.

I am wondering what is the point in continuing to put more money into mums ISA when she has more money than she needs already.

Mum is widowed; has no desire to travel abroad; make any changes to the house; buy a new car or similar. Mums immediate financial needs are met via her pension income. Therefore aside from potential care home fees I wonder what is the point in continuing to boost Mums investments via the ISA.

Assuming care home (nursing home) fees of £2k per week equates to £104k per annum. It seems to me that Mum has over 3 years of fees covered before she would need to sell her house.

I am an only child and executor for mums will. Currently mum has left her estate to me in her will. Mum says she “doesn’t want her hard earned money going to the tax man”. My concern is that if Mum’s S&S ISA continues to grow then her estate will be subject to IHT when she dies, unless of course the money is eaten up with care fees. With this in mind I wonder whether to advise mum that her future surplus income should be gifted rather than invested.

What are your thoughts?

Many thanks for your excellent work!
Kind regards, The Rusholme Ruffian
Question 3
Hello Pete and Roger (no d!)
Great podcast! I hope all the good karma you give out comes back to you!
Quick and short question: I am aware some physical gold holdings are subject to CGT but some, such as gold sovereigns and Royal mint bullion are exempt. So are there CGT exempt gold holdings that one can buy and keep in a GIA to sell later CGT free?
Many thanks and keep going!
Adam
Question 4
Hi Pete, Hi Rog

My son put me onto your podcast some time ago and I've been working through the back catalogue from 2019 and am currently up to 2023. I have also bought the Retirement Guide book and plan to join the Academy later this year. Like everyone else, I wish I'd found this years ago! But hey ho, we are where we are.

I'm 57 and plan to retire next year. My wife gave up work to look after our children and so apart from state pension all our pension funds are those I've been able to accumulate through my various jobs. I have 4 pensions – 1 DB and 3 DC. One of the DCs is in drawdown as I had to withdraw the tax free element a couple of years ago for reasons I won't go into (but I was careful not to trigger the MPAA).

I now work in Financial Services and you won't believe the Compliance hoops I would have to get through to change out of the default pension funds and likewise consolidation of the DC pensions – that will have to wait until I actually retire.

Having listened to so many episodes, I have loads of questions but the ones spinning through my head the most are:-

1. Can I consolidate a DC in drawdown with my virgin, untouched DCs and does it matter if I wait until I retire to do so? If yes, how would that be presented to me by the provider.

2. With investments all in one person’s name, is there anyway that imbalance can be addressed? For example, what options are there to make use of tax allowances which my wife may have to minimise tax. Is it possible to transfer some of my pension to my wife? – I suspect not. Do we need separate cash pots (in case of death of one of us)?

3. In the Home Straight season and in the book you list a number of questions to ask DC providers. Are there any questions I should be asking my DB provider? even if they are just the practicalities.

Thanks again for the podcasts and guidance. Say Hello to Cornwall for me – I'm sure we'll be visiting Fowey more often when do retire. (Don't suppose you or Roger can recommend a book on the history of Cornwall?)

Mark
Question 5
Hi Pete and Roger,

I’m in my early 50s and only now feel like I’m reaching a stage where I have some financial breathing space, but it has also triggered panic that I may be behind and need to make the most of the next 8–10 years.

For context, I was a single mother for 24 years. During much of that time I worked part-time on a relatively low salary while contributing to the LGPS. My children have now left home and over the last eight years I returned to full-time work and progressed professionally. I’m now earning just above the higher-rate tax threshold at £62,000.

Over the last eight years I have aggressively focused on becoming debt free and paid my mortgage off last year. I currently:

– contribute 8.5% into LGPS (part final salary part CARE)
– Just opened an AVC £550 per month cost to me
– Just opened a stocks and shares investment platform where I can comfortably afford upto £250 per month
– save £600 per month into a cash ISA for flexibility/emergency funds
– currently hold around £20k in cash isa savings

I would ideally like the option to retire around 60, perhaps gradually rather than stopping work completely overnight.

My question is:

Given my relatively late start to focused financial planning (and lack of understanding) am I broadly approaching this in the right way, and what else should someone in my position be considering over the next decade to build a secure but flexible retirement?

I’d also be interested in your thoughts on balancing AVCs versus ISAs at this stage of life, and whether people like me should focus more on flexibility or maximum pension accumulation.

Thank you, Ive just found your podcast and will be listening help reduce some of the fear around pensions and investments I have.

Regards, Lotty
Question 6
Hi Pete and Roger

I’m loving the podcast and it has really helped focus my mind and be more intentional about my finances, having not really saved or invested for the first 40 years of my life.

I am a relatively low earner with a salary of £30,000, which means I can only afford to conmit around £200 a month for savings and investments, but I do save anything left over at the end of the month too. I could look for a higher paid role, but my current job gives me a lot of flexibility including mostly home working and because I have worked in local government for 20 years I get very good sickness and redundancy benefits, as well as a defined benefit pension which I have been paying into from the start of my employment. This will guarantee me my final salary on retirement, although that assumes I work until 68, which is longer than I want to ideally. [ALARM!}

I have built up an emergency fund of 1 month salary and will try and get that to 2 months, but with my sickness and redundancy benefits I don’t feel I necessarily need the 3-6 months which is recommended by many. I also have a stocks and shares ISA which I am hoping to build up and not spend until retirement, with the plan of using it to bridge the gap before I draw on my pension.

I am now considering making additional contributions to my pension and have two options available to me. One is to make Additional Voluntary Contributions (AVCs) via the Prudential and the other is Additional Pension Contributions (APCs) through the scheme itself. With AVCs my employer will pay in with me, but they don’t with APCs.

With my employer paying in with me that makes me wonder if AVCs may be a better option. Alternatively, as I don’t have much money to put in I may keep my pension contributions as they are and focus on my stocks and shares ISA.

I know you can’t tell me which route to take, but I am interested in your thoughts and perhaps there are some questions I should be putting to my pension provider to give me more clarity.

Apologies for the length of the question.
Many thanks, Andrew

Send Us Your Listener Question

We’re going to spin out the listener questions into a separate Q&A show which we’ll drop into the feed every 2-3 weeks or so. These will be in addition to the main feed, most likely, but they’re easier for us to produce because they require less writing! Send your questions to hello@meaningfulmoney.tv Subject line: Podcast Question