Age: 40
Spouse’s/Partner's age: 40
Annual gross income from employment or profession:
Annual gross income of spouse: Stay at home mother
Monthly take-home pay: 5000
Type of employment: Private employment
In general are you:
(a) spending more than you earn, or
(b) saving?
Saving small amounts per month
Rough estimate of value of home: 500,000
Amount outstanding on your mortgage: 300,000
What interest rate are you paying? 1.15 (I think - ulster bank tracker)
Other borrowings – car loans/personal loans etc None
Do you pay off your full credit card balance each month? Yes
If not, what is the balance on your credit card?
Savings and investments: 80,000 in various fixed term accounts for last few years. 40k in current/regular saver/online deposit accounts. 15k prize bonds
Do you have a pension scheme? Yes, work provided (only 5 years, nothing before that). Wife has pension built up with 15+ years contributions.
Do you own any investment or other property? No
Ages of children: 8, 6
Life insurance: Yes, to cover mortgage + a little extra. My work has plenty of additional benefits for me.
What specific question do you have or what issues are of concern to you?
Over the last number of years; interest earned has been at least on par with the tracker rate of the mortgage if not substantially better so we've generally been keeping our savings in 1 yr+ fixed term accounts. As interest rates on all types of accounts have dropped, I'm now considering the best option for what to do with our savings.
The options I see right now are:
1) Pay a lump sum off the mortgage. We're very happy in our current home and have no plans to move, nor do we foresee any need for large amounts of cash anytime soon.
2) Move savings to current highest fixed term - possibly long term (5 year gov or similar)
3) Pile into pension/shares/some other form of long term stock market investment
From what I've read here, it's not a good idea to borrow to invest, is this true when money is borrowed at such a low tracker rate? I also realise that it's wise to invest in stock market for long term - so if I don't invest now, it might be too late to help with any retirement fund. I'm generally risk averse. The thoughts of paying 1/3 off the mortgage appeal to me, but I just can't figure out if that's my best move.
Any advice? Any options I've missed?