Were to invest £50k ? Pension or ?????

thw

Personal Pension Plans almost always have high charges which reduce growth although you get tax releif at the highest rate you pay tax. They also mean that you have to use some of the resulting fund to purchase an annuity(possibly taxable depending on your total income/free pay band. Most ISAs and OEIC(unit trust) rarely beat the index they follow.Suggest find IFA who will invest in Exchange Traded Funds for you as they have very low charges:with planning your income could be low or no tax.Use a fee charging IFA who should charge no more than say 0.5% p.a of fund.At age 40 you could take an aggresive stance with investment bearing in mind that values can fall as well as rise.

Thrugelmir

redstev wrote: »

I am just finding it harder to cover the cost of repairs and maintanace.

All too familiar tale. Holding property for the longer term requires far more careful management than just collecting rents and paying the mortgage.

jamesd

thw wrote: »

Personal Pension Plans almost always have high charges which reduce growth

You're a bit out of date with some of your points.

thw wrote: »

although you get tax releif at the highest rate you pay tax.

At the tax rate the money paid in was paying, so you only get 40% relief on the 40% taxed part of income. Some may be at 20% if you don't have enough 40% income.

thw wrote: »

They also mean that you have to use some of the resulting fund to purchase an annuity

The requirement to buy an annuity was removed in April 2006 when the Alternatively Secured Pension option was introduced. That was recently replaced by Capped Drawdown and Flexible Drawdown, with lower income levels generally.

thw wrote: »

Most ISAs and OEIC(unit trust) rarely beat the index they follow.Suggest find IFA who will invest in Exchange Traded Funds for you as they have very low charges

All trackers, whether OEIC or ETF, under-perform the index they are tracking. If you want to beat it you have to use managed funds instead.

ETFs for tracking can often be beaten using unit trusts or OEICs, particularly when dealing charges are included in the comparison, especially if regular purchases are being made. With no dealing charges you can get the HSBC FTSE All Shar Index tracker with 0.28% TER from Hargreaves Lansdown, while other platforms offer the BlackRock range that goes as low as 0.1% for the institutional one that's made available to normal investors in some.

thw wrote: »

Use a fee charging IFA who should charge no more than say 0.5% p.a of fund.

For an up front fee you should be able to get a good deal lower than 0.5% if all you're going to use is trackers, with the IFA getting no ongoing commission once the initial platform product purchase has been made.

wonderman

A pension is only a savings pot - there is no magic to it. The benefit is the tax relief on your contributions; the downside is that you can not access the funds until you retire.
A lot of pension funds will also still rip you off in opaque fees charging structures and give poor investment performance as well.
If you are a basic rate taxpayer then there are too many downsides of a pension fund to outwiegh the 20% tax saving - imho. Maybe at 40 or 50% it works but not 20%.
I think you are probably better off sticking with the BTLs - now that you have them in place - at least the rent is a good hedge against inflation. Why are they not paying their way? Too large mortgage? Too low rent?

dunstonh

Personal Pension Plans almost always have high charges which reduce growth although you get tax releif at the highest rate you pay tax.

No they don't. Modern platforms have no difference in charges and many personal pensions can actually offer lower charges on basic funds then you would see on other wrappers.

They also mean that you have to use some of the resulting fund to purchase an annuity(possibly taxable depending on your total income/free pay band.

You do not have to buy an annuity. It is a choice you make.

Most ISAs and OEIC(unit trust) rarely beat the index they follow.

That isnt true though it it. Most trackers are around mid table. So, that means half are above and half are below.

Suggest find IFA who will invest in Exchange Traded Funds for you as they have very low charges:with planning your income could be low or no tax.

Many UT/OEIC trackers have lower charges than ETFs.

Use a fee charging IFA who should charge no more than say 0.5% p.a of fund.

0.5% is fine on amounts above 100k but an IFA is likely to have to charge more on amounts lower than 100k to give the required servicing to post RDR standards. It may well be better to pay up front until the value is high enough to justify and require proper servicing.

Gracchus_Babeuf

redstev wrote: »

Hi

I'm after some advise please.
I am 40 years old and have no pension plan other than state pension but dont know what my entitlements are with a state pension. I dont have any pension plan with work either.

I have invested in buy to lets over the last 6 years but they are costing me money rather than making it and am considering selling up. The buy to lets were meant to be my pension.

If I sell up I should come out with about £50k am I best putting this into a pension plan or ISA or is there any other types of investments I should look at.

I don't have a great deal of spare money out of my monthly wage to pay into a pension pot each month either.

Any help and advise would be appreciated.

Pay it into your mortgage. Getting rid of debt is the first step towards financial security.

jamesd

Gracchus_Babeuf wrote: »

Pay it into your mortgage. Getting rid of debt is the first step towards financial security.

That's not really the best idea. Mortgage overpayments make you worse off than investing, in general. That's because investments usually grow more than the mortgage interest rate, so every Pound of mortgage overpayment is one less Pound gaining more compound interest than is being saved on the mortgage. It's even worse compared to pension contributions because you get tax relief on the money taken from the pension to pay off the mortgage.

gadgetmind

jamesd wrote: »

Mortgage overpayments make you worse off than investing, in general. That's because investments usually grow more than the mortgage interest rate

I know how to compare different rates of growth and interest, and I've got a fair and improving knowledge of the skill of investing, but even so, I paid off my mortgage as soon as I could!

Was this the wrong thing to do? Maybe. Does it help me sleep better at nights? Too right it does!

jamesd

Personally I sleep more soundly knowing I have enough money to live on and pay the mortgage instead of having no mortgage but not enough capital to generate a living income. It's an area where each of us will strike a different balance but I try to point out what is most efficient. Then people can choose their compromises, if any.