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Age to start paying into a pension?
Comments
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Just finished a chat with my dad on pensions
BTW, this warms the cockles of my heart. Between us all, young and old, we know this 5h1t, and we just need to share the knowledge across the generations.
My daughter will soon be 18, and I'll have to teach her about pensions, ISAs, compound interest, capital gains allowances, and much more.
Onwards it goes. HMG create the shoals and rapids, and the British people navigate route through them.I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
Any IFA that tells you there is some secret sauce regards choosing such funds is lying.
There isnt some magic option that is best. Its all a judgement call and there are a number of strategies and variations of a theme. The important thing is to have a strategy though and keep it reviewed and rebalanced. Not to hit and hope with a random selection.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
I plan on seeing an I.F.A. about this as i need to talk to someone who knows about this area, but in the mean time, i just worry that i simply can't afford anything worth while
Thats whats a bit daunting, if we pay in hundreds a month now and end up with very little return in retirement.0 -
candykisses wrote: »Thats whats a bit daunting, if we pay in hundreds a month now and end up with very little return in retirement.
As you're obviously cautious, you should select cautious funds.
Here are the funds available within my Friend's Provident (now called Friends Life) pension.
http://www.friendslife.co.uk/common/layouts/subSectionLayout.jhtml?pageId=ifa%2FSitePageSimple%3Afunds.performance.pension#
http://!!!!!!!.com/6xznbqz
You'll notice a risk column. If you choose funds that are marked as L or L+, then you won't make much but neither will you be exposed to any significant risk of losing anything.
You might want to avoid fixed interest right now and instead look at index linked and cash funds.
Similarly, here are the funds available with an Aviva Stakeholder.
http://www.aviva.co.uk/stakeholder-pension/which-funds-can-you-invest-in.html
Again, there are deposit funds, index linked funds, and much more. Personally, I'm happy with a little more risk so go for M+ and even H level funds, but each to their own.
I recently started Aviva stakeholders for wife and daughter via Cavendish Online. It cost £45 up front and the annual fees are 0.55%
Could an IFA beat this? Dunno, maybe they could nowadays.I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
Could an IFA beat this? Dunno, maybe they could nowadays.
With £100pm plus, yes they can. For under £100pm no.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
Not worth worrying about it. You increase it with inflation, either your pay inflation or RPI. If your pay increase by less you can increase the pension contributions by less if you like. Or more. Up to you. Just know that not doing regular inflation-linked increases will hurt the final income a lot and don't completely skip doing them.candykisses wrote: »Thank you , so it would be 2.5% compounded from year one - that would be quite a high contribution in the last 5 years then?
The pension income can be arranged to increase with inflation or not with an annuity or you can use income drawdown and it'll vary with how the investments do. A choice you don't need to make now but it'll be up to you to decide.
Why do equity release at 65 instead of doing an offset mortgage with say a 25 or 30 year term starting at say 60? Stick the money in the offset account so you don't pay interest on it and draw it only as needed. Or invest it and take an income from the investments to pay the interest (subject to investment risk). This would be cheaper than an equity release mortgage. Doing equity release at a later age means you get more of the value out, so it's good to delay doing it. Or you could sell and rent long term, particularly useful if you find that you want to live in a different place, say a single level flat or bungalow instead of a house. You could even think about that sort of move before retiring if it interests you.
Being 47 your husband has a possibly very interesting option for clearing the mortgage more cheaply. You could switch the mortgage to interest only offset and start to invest the non-interest part of the mortgage payments into a pension. When he reaches 55 he could take the 25% pension lump sum and use that to reduce the mortgage, leaving the remaining 75% invested to grow, or taking an income from it to start clearing the mortgage. In effect he'd be getting tax relief on the mortgage clearing work, a nice deal.
That won't pay off as much as making repayments to the mortgage but it does double duty, partly mortgage clearing and partly increasing retirement income.
You could do the same, perhaps increasing the mortgage term to a new 25 years and doing some clearing when you reach 55. Or he could wait longer and clear more. This sort of thing has investment risk but it's very tax-efficient at doing two things with the same amount of money.
Don't worry about leaving things late, getting started is good and you still have a lot of time if committed to it.
A really good thing to watch for is the times when everyone is talking about how bad a recent stock market crash has been, which means that prices will have dropped, so it's effectively a sale, a good time to buy. So that's when you'd do well to put in more money. A time to put in less is when everyone is saying how wonderful the markets are and how the boom won't ever end, so everyone should get in now and ride the profits. 0 -
That's really good going!While i'm on a low earn, i don't think i do too bad at the moment as far as saving goes. I think last year i had 18.5 gross, but i was able to save about 6/6.5k in cash and this is simply because i don't go spending-silly (though i did splash 1.5k building myself a PC, just because i had wanted to for some time).
The big thing to be doing is using investments of some form, not just savings accounts, so you can start to learn how those works while having some of your own money involved to concentrate your mind and have some real risk. a S&S ISA is one good way to do this. Pensions can also be used. Or a bit of both. A bit of both is probably best.
If you're saving for a deposit you can potentially increase your deposit quite nicely if you do well with successful S&S ISA or otehr investing. I did, but of course it's not guaranteed. You do need to be flexible about timing in case markets happen to be down at the wrong time, or you can set up a planned date and start adjusting investments to those that move up and down less a year or two before the planned date.This would obviously all get thrown up in the air when we get our own place & that's the real time when we'll be able to see how much we can save.
Don't just stick to cautious managed funds. Pick a mixture. What matters is the overall risk (up and down movement) level, not the level of each fund. All cautious managed funds are are funds that have such a mixture inside them. It's a better learning exercise for you, with more flexibility, to use a mixture and learn about sector allocation and asset allocation along the way. then you can take your time learning and you'll end up having 30 or more years to use what you learn now while the amounts are relatively low.0 -
gadgetmind wrote: »
My daughter will soon be 18, and I'll have to teach her about pensions, ISAs, compound interest, capital gains allowances, and much more.
What are you waiting for? Some of this stuff could easily be understood before the age of 18.0 -
What are you waiting for? Some of this stuff could easily be understood before the age of 18.
Understanding and doing something with that knowledge are different. I am sure his daughter will be thinking Clothes, Boys, Shoes rather than ISAs, Index Linked Savings Accounts and Pension
It's only us saddos that do
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What are you waiting for? Some of this stuff could easily be understood before the age of 18.
True, but 18 is when some shares currently in a blind trust will be transferred to her, and they have increased in value enough for CGT to be an issue. It's going to be easier to explain the principles by doing the disposals with her and working through choosing an ISA portfolio.
As for compound interest, I'll just show her how she'll be stitched up by HMG with 8-11% interest on her student loan. That ought to do it!
She's got a keen maths/science mind, so will grasp it all straight off, particularly when it's practical rather than theoretical.I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0
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