Episode Details

In this Meaningful Money Q&A (Episode 58), Pete Matthew and Roger Weeks answer six real listener questions on the money decisions facing UK savers and investors. We cover paying off your mortgage versus investing, gifting surplus income to manage care fees and inheritance tax, and how to buy capital gains tax-free gold. We also explore consolidating pensions before retirement and how LGPS members can weigh up AVCs versus ISAs and AVCs versus APCs. Tune in for clear, practical UK personal finance, pensions and retirement planning guidance - education, not advice.

Shownotes: https://meaningfulmoney.tv/QA58

02:18 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

07:33 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?

M