Advice sought for pension investment for 24 year old

DiggerUK

He won't be getting tax relief on tax exempt savings and investments.
That's my understanding.

jem16

DiggerUK wrote: »

Tell him to concentrate on protecting the purchasing power of his savings in retirement, and not to fall for Gordon Gekko's promising easy profits they can't guarantee.

Or crazy people promising gold to be a complete asset protection investment.

bendix

scotsbob wrote: »

I am still looking for an answer to my original question

"Is there any way he could invest in ISAs and NI savings and get tax relief?"

Anyone?

Of course not. Tax relief is not a gift. It comes with a trade-off, and that trade off is the money is tied up until pension age.

ISAs and NI savings are easily accessible before pension age.

My advice - tell your son to do some serious reading about this subject because, frankly, the way you seem inclined to advise him strikes me as being the epitome of the blind leading the blind, and you are doing him a grave disservice.

seven-day-weekend

I am not a Pensons expert, but even I can see that he will not get any sort of sensible advice without being prepared to pay for it.

If you were ill you would consult a Dr, if you needed legal advice you would consult a lawyer, why does he think he can get reasonable advice on Pensions without consulting the professionals?

jem16

seven-day-weekend wrote: »

If you were ill you would consult a Dr, if you needed legal advice you would consult a lawyer, why does he think he can get reasonable advice on Pensions without consulting the professionals?

It appears that the decision has been made to use ISAs (possibly even thinking of cash ISA rather than S&S) and NI index-linked savings certificates going by the fact that only Digger's post (which agreed with NI index-linked certificates) has been thanked.

It seems a pity to me not to at least get proper advice and look at the alternatives.

dunstonh

It appears that the decision has been made to use ISAs (possibly even thinking of cash ISA rather than S&S) and NI index-linked savings certificates going by the fact that only Digger's post (which agreed with NI index-linked certificates) has been thanked.

I noticed that as well. Its a shame that he is going to compromise his son's retirement by listening to the least reliable poster on this thread.

On cash ISAs you can assume no real terms growth over the long term. So, £700pm over 44 years would be £369,000 final value in todays terms

On NS&I index linked certs (ignoring constraints), 1% real terms growth on the same figures would provide £463,928

On s S&S ISA getting 2.5% real terms growth on the same figures £668,737

On a pension for a higher rate taxpayer getting 2.5% real terms growth (with higher rate relief reinvested) the final figure would be £1,114,556

It should also be noted that the implicit charges on NS&I index linked certs and cash ISAs are higher than those on modern pensions and in line with the explicit charges on unit trusts used in an ISA. The net interest charge on savings accounts varies but typically its around 1.3%

scotsbob

seven-day-weekend wrote: »

I am not a Pensons expert, but even I can see that he will not get any sort of sensible advice without being prepared to pay for it.

If you were ill you would consult a Dr, if you needed legal advice you would consult a lawyer, why does he think he can get reasonable advice on Pensions without consulting the professionals?

At the age of 23 and with no financial knowledge I put my trust in an adviser when I got married. I wanted term assurance in case I died suddenly. I ended up with something called convertible insurance which cost me more, had to be cancelled after 5 years and was no use to me.
In 1987 I was advised to take out an endowment mortgage when I asked for a repayment mortgage. I resisted that advice and was glad I did. Many colleagues, friends and family members have been getting letters over the last few years telling them their endowment mortgages will not pay for their homes.
About 10 years ago an adviser came to our school and advised teachers that something called AVCs was better than buying extra years in the teachers pension scheme. I resisted that advice and bought added years. Now I and my colleagues are retired and they are worse off and envy my decision.

In all the above cases the advice given was that equity based investments were best. In all above cases that advice was wrong. The advice was based on salesmen calling themselves advisers who were driven by their own greed for commission.

scotsbob

jem16 wrote: »

It appears that the decision has been made to use ISAs (possibly even thinking of cash ISA rather than S&S) and NI index-linked savings certificates going by the fact that only Digger's post (which agreed with NI index-linked certificates) has been thanked.

It seems a pity to me not to at least get proper advice and look at the alternatives.

Why do you assume I haven't looked at alternatives? You may disagree with my opinion. Just because I have chosen to consider a different route to the one you suggest doesn't mean I haven't considered other possibilities.

scotsbob

dunstonh wrote: »

I noticed that as well. Its a shame that he is going to compromise his son's retirement by listening to the least reliable poster on this thread.

On cash ISAs you can assume no real terms growth over the long term. So, £700pm over 44 years would be £369,000 final value in todays terms

On NS&I index linked certs (ignoring constraints), 1% real terms growth on the same figures would provide £463,928

On s S&S ISA getting 2.5% real terms growth on the same figures £668,737

On a pension for a higher rate taxpayer getting 2.5% real terms growth (with higher rate relief reinvested) the final figure would be £1,114,556

It should also be noted that the implicit charges on NS&I index linked certs and cash ISAs are higher than those on modern pensions and in line with the explicit charges on unit trusts used in an ISA. The net interest charge on savings accounts varies but typically its around 1.3%

Higher rate tax is not involved, only standard rate. You present a figure of £463,928. Why is that not an acceptable pension? Because you feel it clould be more, let us say £668,737. If someone is happy with £463,928, why is that a problem? According to your previous post because it is a shortfall. Falling short of what?

I receive an occupational pension of £14400. Could you advise me whether or not that is a shortfall, and tell me how you arrive at your answer.

Linton

scotsbob wrote: »

Higher rate tax is not involved, only standard rate. You present a figure of £463,928. Why is that not an acceptable pension? Because you feel it clould be more, let us say £668,737. If someone is happy with £463,928, why is that a problem? According to your previous post because it is a shortfall. Falling short of what?

I receive an occupational pension of £14400. Could you advise me whether or not that is a shortfall, and tell me how you arrive at your answer.

As to whether your £14400 is a shortfall, only you can answer. If that is more than enough to meet your every needs and reasonable desires then it's not. If you cant afford to do what you always wanted to do in retirement, then it is.

Another way to look at things - at the higher return my calcs show your son could perhaps retire 4-5 years earlier assuming he wanted the same index linked annuity, but then I guess if he so enjoys his work he couldnt imagine wanting to stop early........