pensions/investments advice

gazz7878

i know nothing about pensions or investments but have started to think its about time i started saving a bit....only looking to put away £100 month at the minute, but want to know what the best option is, not sure about being tied into a pension as i would prefer to see my investment growing over the years....any help appreciated! cheers

dunstonh

not sure about being tied into a pension as i would prefer to see my investment growing over the years

Being tied in has little to do with the investment returns. Exactly the same funds that are available on unit trusts, investment bonds and ISAs are also present on pensions. The only difference will be the tax wrapper they are held in. i.e. ISA or pension.

For example, if you picked invesco perpetual income as one of your funds, the rate of growth will be the same in a pension or an ISA.

only looking to put away £100 month at the minute, but want to know what the best option is,

Its a good start (well, providing you arent aged 55 that is )

What is best will vary from person to person. Some need the financial tie in that the pension offers and some will still benefit from the tax relief. Others will benefit more from being in an ISA and giving more flexibility.

Post 6th April 2006 rules have meant that in general basic rate tax payers are usually better off with an ISA unless there is a spouse with no income or unlikely to get a state pension in their own right. In which case a pension would be good for them. There are other scenarios as well so you cant say its a 100% better option to go with an ISA.

gazz7878

thanks for the reply...

im 28 at the minute so got a few years saving to do, but as i said dont know anything about it....do you think the isa could be a good start then? then once ive got a few thousand in that look into moving it somewhere else?

dunstonh

do you think the isa could be a good start then?

if you are a basic rate taxpayer, single with no working/children tax credits then an equity ISA would be the best start. It should be noted that when we refer to ISAs in this context, we are not referring to Cash ISAs.

gazz7878

can you recommend any equity isa's that i could look into?