Having trained as an accountant, 32 year old Katie had seen her income increase considerably in recent years. Her financial position was strong: she repaid her credit cards each month and using her savings she just bought a new car.
By accumulating cash in the savings pot of her Offset Mortgage she anticipated repaying it four years early. We had previously advised Katie to stop contributing to her Cash ISA because of the low interest rates. Her cash could better be used to reduce the cost of the interest in her Offset Mortgage. Her only employee benefit was being in her company’s pension scheme and she had recently increased her contributions to 8% of her income.
Katie’s main concerns were:
- Not having sufficient reserves outside of her pension to allow her to retire early
- Becoming ill or having an accident and receiving no income
What we did for Katie:
- Explained the recent change in ISA rules, assessed her investment time frames and her risk tolerance
- Checked the access terms of her current Cash ISA then transferred part of her savings to a Stocks and Shares ISA
- Set up a regular contributions to her new Stocks and Shares ISA
Income Protection –
- Assessed her income and expenditure and established the level of sick pay she was entitled to from her employer
- Calculated how long her savings would last without an income
- Set up an income protection plan that would provide her with a replacement income should she suffer an illness or accident that stopped her from working
Benefits for Katie:
Now, she feels her money is providing the prospect of long term growth whilst retaining access to cash from her existing ISA and Offset Mortgage, as well as having a flexible savings plan.
Also, should she have suffer an incapacitating illness or accident, Katie would not have to rely solely on her own savings and state benefits.