Retirement income from property?

julieq

A few subjects here.

I'd caution against stocks and shares personally. They've done almost nothing except demonstrate volatility since 2000, and there's a net outflow of capital from the established markets to the Far East so you can't really expect much other than stagnation. Carefully picked investments are worth looking at, but you're a few yards behind the institutional investors in terms of what they are told relative to what you can find out yourself so you're going to be at a disadvantage. You can make money in a few ways "investing", luck is one, sitting on an underlying ramp is another, but the only sustainable way is to have good information and use it intelligently.

I definitely agree that when debt is cheap it's worth having. Offsetting a mortgage is a good strategy, paying it off is a very poor strategy indeed, a half paid off mortgage is no use at all in terms of security. "Mortgage free" is about psychology really, not financial logic.

I buy books and art because I like it and I know about it, not as investments. A lot of times that's an extremely good strategy, something I bought a few years ago for £500 and did a lot of work on attributing to a particular artist was valued at £5K last year, other times I will overpay to fill a gap in the collection. Anyway the chances of me selling are remote in the extreme, I'm too much of a hoarder. The time to make a real killing has passed really, and again you're trailing in the wake of the big dealers who have very deep pockets. The common theme though is that if you have enough knowledge, albeit in a narrow area, and you're prepared to take the risk of being wrong, you can beat the professionals.

Dithering_Dad

EdInvestor wrote: »

DD

Could I suggest you "reverse engineer" your retirement income/allowances (and those of your wife)? My sense is you are accumulating too much taxable (as opposed to tax free) income and could end up losing your lucrative age allowances to "clawback".

In general terms it would appear to me that commercial property is a lot riskier than ordinary BTL (excluding new build flats). If you want to try letting then a really good way is to let out your old home when you move, which means you can access really big extra allowances when you eventually sell and effectively pay no CGT.

Hi Ed, you're completely correct and this is why I was considering my investment options. As you know, the most tax efficient pension strategy would be for a husband and wife to have £10k each income from state pensions & personal pensions to take advantage of the age allowances and to have the remaining retirement income from tax free sources such as ISAs.

From what I remember from a recent pension review, I will get about £6k in state pensions, £10k from my SIPP and if I stay with my current employer for 25 years on my current salary, £25k. My annual pension income will therefore be £41k. Although I can reduce this by taking the 25% tax free payments, I'll still be well over the age related allowance with my pensions, so will lose out on that one (not a bad problem to have though, TBH). I will gain from being a high rate tax payer while accruing my pension, yet a low rate tax payer when I receive my pension.

My wife is a SAHM, and so we set up a stakeholder pension for her and pay the max we can (a woeful £3600 pa :rolleyes:). We also got a state pension forecast and bought some Class 3 contrubutions that she had missed. She will now get full state pensions and some S2P which should pay her about £5k. Our aim is to continue paying into her pension at a rate where she will have a combined state & personal pension income of £10k per annum. She will definately be within the age related allowance limits and should have a completely tax free income.

We're now looking at ways to gain further income in retirement, but as you identified, we need to try and shield as much of this income from the tax man as possible. An obvious option will be to max out both our ISAs, which is something we will be doing.

I was then looking at other income streams, which included BTL, Commercial property and downsizing from family home. Hence the creation of this thread to see what other people thought, but more importantly to see what other people were doing. Unfortunately, and this isn't unique to my thread, certain people seem to have more interest in criticising / mocking ideas than in actually putting forward alternatives.

I know that you have a combination of FS pensions, Money Purchase & BTL. These must also be taking you over the age allowance limits. I'd be interesting in hearing your strategy for tax reduction in retirement.

dopester

julieq wrote: »

A lot of times that's an extremely good strategy, something I bought a few years ago for £500 and did a lot of work on attributing to a particular artist was valued at £5K last year, other times I will overpay to fill a gap in the collection. Anyway the chances of me selling are remote in the extreme, I'm too much of a hoarder.

If you've got it, sell it, before it loses ever more value in the months and years to come.

You can buy it later, or something very similar, for a lot less money in the future, and hoard a lot more stuff for your money if you choose.

dopester

Dithering_Dad wrote: »

Hence the creation of this thread to see what other people thought, but more importantly to see what other people were doing. Unfortunately, and this isn't unique to my thread, certain people seem to have more interest in criticising / mocking ideas than in actually putting forward alternatives.

I'm not guilty and find your motives admirable (saving / investing / pension planning). My only caution was the village shop plan may not be a winner in the new-world.

Actually I thought of something the other day.... to ask you... and it was... how long has the shop been empty? Why is the current owner selling it?

Dithering_Dad wrote: »

Unfortunately, if it was great timing, then the shop would not be available at such a low price. Catch 22. I suppose.

Dithering_Dad

StevieJ wrote: »

A little like Cinema when videos hit the streets, it was finished, never quite works out as you expect.

Yes, there are no cinemas anywhere in the country now that we have DVDs, Satelite & cable TV and Freeview and all the other options that mean people don't have to venture out of their houses.

People (myself included) actually like venturing out and browsing physical products. I enjoy going to WHS/Waterstones to check out new releases and read the blurb on the back of a book. The same with DVDs & CDs in music shops. I have never bought clothing online as it's such a hassle to post back if it doesn't fit. I even sometimes go to PC World for IT stuff if I need it that day. I do a lot of shopping online, but also a lot in the 'real world', I suspect most people are the same - except perhaps some of the agorophobics on here :rolleyes:

As I've said many times, BTL doesn't appeal to me very much because of the potential for hassles with tenants, vacant periods, etc. The shop thing was considered because it is in a good location on the high street and is only £80k - though would need renovating and fitting out for the two flats & shop space. My missus is the driving force for this as she loves renovating/decorating and we have excellent links to builders, plasterers, and other tradesmen. She is toying with the idea of opening a shop herself. There are no children's shoe shops in that village and the nearest is about 20 miles away.

As we know from our own experiences as parents, childrens shoes have a high turn-over, are not cheap and any caring parent wants to make sure that their children's shoes fit those rapidly growing feet correctly. Certainly this is not a product that I'd feel comfortable buying of the internet. We also know from experience that dragging children around busy shopping centres can be a very wearing experience. We use our village high street a lot already, and the appeal of just popping into a shoe shop with the kids straight after school or on Saturdays.

When my missus mentioned the kids shoe shop idea and showed me the shop that was up for sale, I was a little dubious (I still am), but I think her idea has definite potential. It'd certainly provide us with a second income stream and get her back into the work environment.

Dithering_Dad

dopester wrote: »

I'm not guilty and find your motives admirable (saving / investing / pension planning). My only caution was the village shop plan may not be a winner in the new-world.

Defininately not dopester, I think from reading the thread people can see who is contributing and who is just trying to take the p*ss:

julieq wrote: »

Anyway, sorry DD, looks like the awkward squad have vetoed your shop idea. You may like to put us all on ignore or something?

I decided that this was the best advice this indivual has ever provided, and after enduring her following me about the forums making these sorts of comments to me (clearly trying to start an argument), I've decided to follow her advice. In the words of Generali, "Another one for the Ignore list, old bean".

I was really grateful for your input Dopester, especially regarding rates. Thanks also to everyone else who had an input - you know if you were trying to help or not (and so do I). Thanks to those who were trying to help

dopester

Dithering_Dad wrote: »

As we know from our own experiences as parents, childrens shoes have a high turn-over, are not cheap and any caring parent wants to make sure that their children's shoes fit those rapidly growing feet correctly. Certainly this is not a product that I'd feel comfortable buying of the internet. We also know from experience that dragging children around busy shopping centres can be a very wearing experience. We use our village high street a lot already, and the appeal of just popping into a shoe shop with the kids straight after school or on Saturdays.

When my missus mentioned the kids shoe shop idea and showed me the shop that was up for sale, I was a little dubious (I still am), but I think her idea has definite potential. It'd certainly provide us with a second income stream and get her back into the work environment.

For quite a time when growing up, our family was financially stretched. As kids we often went, with our parents, to the markets (market-stall traders) for our shoes and trainers. A pound a pair stuff. Occasionally of those big shoe discount places. Jumble sales, hand-me-downs, clothes agencies too (like for shirts for school.)

The last kids clothes and shoes boutique in our area closed down soon after. A friend of a friend has just opened a shop, got a good deal on the lease, but is selling stuff with a very high markup which targets wealth.

You can't get away from the fact that many ordinary people will have less money to spend and look at different options to get by in spending less money where they can.

Necessities May Not Be Profitable

Of course, not all textile or apparel firms were unprofitable in the 1930s. If you look at the exceptions in the textile and apparel field, you could see something that could be important in sorting out investment opportunities. Suprisingly, luxury goods do better in a depression than basic necessities.

This requires some explaining. You might expect that luxury sales would fall away and only necessities would be purchased during a slump. But this is only half true. The majoritiy whose spending power has fallen will spend the little money they have on necessities. But that does not mean that the people who purvey those necessitites are going to make much of a profit.

It makes no difference whether the industry has a product that is "essential." Bread is essential, but baking has often been less profitable than selling diamonds, which are not necessities. Many products of the textile industry are essential. Most of the time people have to wear clothes, especially in northern climates. That did not keep the textile industry in profits in the last depression.

Dithering_Dad

dopester wrote: »

Actually I thought of something the other day.... to ask you... and it was... how long has the shop been empty? Why is the current owner selling it?

The shop used to be a hardware store - the sort of Aladin's cave sort of thing that I remember from being a kid. The owners must have run it for years and years and were well into their retirement years when they decided to close down the business. The cellar and two upper floors seem to have been used for storage and look as though they have been untouched for about 20 years! They're unfortunate in that they decided to retire in a recession - had they done it 3 years earlier they'd have been much better off. Timing is everything!

The shop has been empty for about 6 months I think.

We have a lot of friends who work in the various building trades and I'm pretty handy at building after helping my Dad with his building business during school/college holidays, etc. Probably nothing will come of it, but it's sometimes nice to plan these things and examine them - it costs nowt to dream .

SingleSue

julieq wrote: »

A few subjects here.

I'd caution against stocks and shares personally. They've done almost nothing except demonstrate volatility since 2000, and there's a net outflow of capital from the established markets to the Far East so you can't really expect much other than stagnation. Carefully picked investments are worth looking at, but you're a few yards behind the institutional investors in terms of what they are told relative to what you can find out yourself so you're going to be at a disadvantage. You can make money in a few ways "investing", luck is one, sitting on an underlying ramp is another, but the only sustainable way is to have good information and use it intelligently.

I definitely agree that when debt is cheap it's worth having. Offsetting a mortgage is a good strategy, paying it off is a very poor strategy indeed, a half paid off mortgage is no use at all in terms of security. "Mortgage free" is about psychology really, not financial logic.

I buy books and art because I like it and I know about it, not as investments. A lot of times that's an extremely good strategy, something I bought a few years ago for £500 and did a lot of work on attributing to a particular artist was valued at £5K last year, other times I will overpay to fill a gap in the collection. Anyway the chances of me selling are remote in the extreme, I'm too much of a hoarder. The time to make a real killing has passed really, and again you're trailing in the wake of the big dealers who have very deep pockets. The common theme though is that if you have enough knowledge, albeit in a narrow area, and you're prepared to take the risk of being wrong, you can beat the professionals.

I was much the same with regards to books...just a hoarder of them not someone who purchased them as investments.

Reading is my hobby and a lot of time was spent building up collections of books from certain authors..something I still do in fact, except this time, I have the thrill of the chase in getting the collection (one by one from various different sources very cheaply, ebay/boot sales etc) whilst reading through it and then they are sold as collections for a slightly greater price thus funding the purchase of new collections of authors and giving a small profit to pay other bills.

The initial sell off was done over a very short period of time when the realisation hit that I was no longer of the financial status I had become used to, the savings had been depleted and I was then forced to claim benefits. I sat there in a room full of books whilst not being able to afford to put the heating on and eldest getting warnings for not having the new uniform at school and thought "What on earth am I doing?".

This was of course when things were still booming and so a better price could be attained, now with things a lot tighter for most people, the prices are not so good and the market more fussy....Hard back books are no longer as desirable even if they are 1st editions.

dopester

I'd rather put forward my point-of-views across to you now on the forums, even if it may seem negative, for you to at least consider, than you proceeding with perhaps overlooking something.

Apparently not brought about by the "credit-crunch" - but no one to buy a successful shoe business and run it for themselves?

North West Evening Mail
Barrow’s oldest surviving shoe shop to close after 131 years
Last updated 11:51, Thursday, 07 May 2009

ONE of Barrow town centre’s oldest shops is closing after 131 years.

George Gummers, the owner of shoe shop Rigg’s Bros, which first opened in Dalton Road in 1878, is retiring after 27 years at the helm.


The shop will shut in two to three months and the remainder of its workforce will be relocated to F Dickinson Footwear Ltd of King Street, Ulverston, which is also owned by Mr Gummers.


Mr Gummers says the closure of the store has nothing to do with the credit crunch, which has claimed a number of shops in the town centre in the past year.

--
Dalton Road is sad enough as it is without losing one of the very few decent shops that ARE left.

Recession-hit shoe store to close after 50 years

Matlock Today
Published Date: 30 April 2009

A shoe shop is to close after more than half a century of trading in Matlock Green.

Six jobs will go when Matlock Shoe Sales closes at the end of May, with bosses blaming the credit crunch, falling town trade and the decline of British shoe production.

A spokesman for the company, originally known as Slacks Footwear, said: "Unfortunately the six existing staff – some of whom have been here a long time – will be made redundant which is the worst part."

He added: "Our lease ends later this year and faced with increasing overheads and the virtual disappearance of UK shoe manufacturers – we have reluctantly decided to close."

The closing down sale is now on.

It isn't all bad news though, especially if you stand out and can get a special following for your goods. Such as this woman who seems to be doing good trade.