We are a couple in our 30s with a baby on the way. All of our savings (130k) is in various high interest deposit accounts. We want to start investing for the mid / long term but neither of us has any experience of investing. Where do we start?
FYI we both contribute AVCs although mine are not maximised, we have a mortgage of around E250 on a house valued about E370. We could pay off more of the mortgage but we already have a fair bit of equity in it and I wonder whether it's wise to put all our money into the house. Having said that, we'll have to pay the mortgage anyway.
Any ideas where we could start to help us make some decisions on how to start investing for the future?
Have you considered an offset mortgage? You are in a position to roughly half your loan to value.
These work by offsetting your savings against your borrowings thereby giving you a "risk free" rate of return equivalent to the mortgage rate.
"risk free" is in inverted commas because it is an analytical term meaning this is your reference point. I.e you need to achieve at least your mortgage rate from any alternative investment you make to see any profit at all.
The future value/equity in your property is not really a relevant consideration because:
a) you have to live somewhere
b) as you say, you would have to pay the mortgage anyway.
This is therefore more of a consideration of the direction of future interest rates (which nobody can accurately predict) compared to the likely returns from an alternative investment strategy, which could make you more money, or could lose you money.
If you are wanting to play safe, reduce the borrowing, that would reduce your monthly outgoings which you could then use to fund a regular savings plan.
By putting a small amount of money into an investment each month, you would be taking less risk and benefit from the statistical advantage of an average investment price. I am assuming that you would buy an equity investment over the medium to long term.
BTW: I once asked a similar question to test the impariality of the advice of a range of high street banks. Needless to say, there was a great deal of resistance to recommend debt repayment rather than buying an investment. I wonder why?