Add to Pension or buy to let?

pitza

I am a 45 year old with two personal pensions but like most people I need to raise my contributions, question is is this the best way forward or is buy to let a better option? I live in east anglia.

EdInvestor

How much have you already got in forecast pension income?That is, how much are your PPs worth now, and how much are you contributing?

Check your state pensions forecast as well:

https://www.thepensionservice.gov.uk

If the total is coming up to around 9-10k in forecast income, you may be better off with a different investment - though using your maxi ISA or paying off your home mortgage could be a better bet than buy to let these days,

inmypocketnottheirs

EdInvestor wrote: »

How much have you already got in forecast pension income?That is, how much are your PPs worth now, and how much are you contributing?

Check your state pensions forecast as well:

www.thepensionsservice.gov.uk

If the total is coming up to around 9-10k in forecast income, you may be better off with a different investment - though using your maxi ISA or paying off your home mortgage could be a better bet than buy to let these days,

The link is https://www.thepensionservice.co.uk.

dunstonh

the .co.uk is to a commercial site that has nothing to do with state pensions.

pitza

EdInvestor wrote: »

How much have you already got in forecast pension income?That is, how much are your PPs worth now, and how much are you contributing?

Check your state pensions forecast as well:

https://www.thepensionsservice.gov.uk

If the total is coming up to around 9-10k in forecast income, you may be better off with a different investment - though using your maxi ISA or paying off your home mortgage could be a better bet than buy to let these days,

Thanks for the advice I will do my sums. By the way do you think a pension is still a good investment bearing in mind all the scandles of recent times, is it a case of throwing good money away?

dunstonh

Thanks for the advice I will do my sums. By the way do you think a pension is still a good investment bearing in mind all the scandles of recent times, is it a case of throwing good money away?

The media have overplayed pensions and scared a lot of people off. However, when you look at the number that have lost their pensions, it is a small minority (figures quoted tend to be around 80,000-150,000). These pensions are also a certain type and have no comparison with personal pensions.

A personal pension is just a tax wrapper that contains investments. The pension doesnt make or lose money. Its what you invest in that does. THe same investments available with all the other tax wrappers are available to pensions. This includes cash, unit trusts, oeics, sicavs, investment trusts, shares, gilts etc.

A mortgaged buy to let is a high risk transaction. Any borrowing to invest contains extra risk. Doing it at this time also means you are buying at the top (or near the top) of the biggest property price bubble in recorded history. The time to do it was 7-8 years ago in my opinion. At this point, you would need to know what you are doing and be good on DIY so you can buy cheap and upgrade the property cheap. Of course, there could still be many more years for the bubble to get bigger. No-one has the crystal ball there. People seem to have short memories and forget that property can go down as well as up. If you bought property before the last property crash, it took nearly 12 years to break even.

If you still like the idea of property, then use the pension to invest in property funds. You should have an elememnt of property anyway as part of a balanced portfolio but I bet yours hasnt. Most pensions arent invested with modern investment strategies but in single funds. That was just the way it was. The options available today are far greater than 5 years ago. So, a review and revamp of the pension may just be needed to suit your investment requirements and risk profile.

EdInvestor

pitza wrote: »

Thanks for the advice I will do my sums. By the way do you think a pension is still a good investment bearing in mind all the scandles of recent times, is it a case of throwing good money away?

As mentioned, the pension itself is a wrapper.What's important is the funds your money is invested in inside the wrapper and the charges.

if you want to post some more detials about the pensions you already have, we could see if they are a good deal or not.Post the provider's name, the fund(s) the money is in, and the annual charges you are paying.

It is often quite easy to make a big improvement in a pension's performance, just by choosing some new funds.

pitza

dunstonh wrote: »

The media have overplayed pensions and scared a lot of people off. However, when you look at the number that have lost their pensions, it is a small minority (figures quoted tend to be around 80,000-150,000). These pensions are also a certain type and have no comparison with personal pensions.

A personal pension is just a tax wrapper that contains investments. The pension doesnt make or lose money. Its what you invest in that does. THe same investments available with all the other tax wrappers are available to pensions. This includes cash, unit trusts, oeics, sicavs, investment trusts, shares, gilts etc.

A mortgaged buy to let is a high risk transaction. Any borrowing to invest contains extra risk. Doing it at this time also means you are buying at the top (or near the top) of the biggest property price bubble in recorded history. The time to do it was 7-8 years ago in my opinion. At this point, you would need to know what you are doing and be good on DIY so you can buy cheap and upgrade the property cheap. Of course, there could still be many more years for the bubble to get bigger. No-one has the crystal ball there. People seem to have short memories and forget that property can go down as well as up. If you bought property before the last property crash, it took nearly 12 years to break even.

If you still like the idea of property, then use the pension to invest in property funds. You should have an elememnt of property anyway as part of a balanced portfolio but I bet yours hasnt. Most pensions arent invested with modern investment strategies but in single funds. That was just the way it was. The options available today are far greater than 5 years ago. So, a review and revamp of the pension may just be needed to suit your investment requirements and risk profile.

Thanks dunstonh very very interesting to read and very helpfull to a layman like me, my pensions are with the cis and scottish widows so I presume that I need to contact them to see what I am investing in and if property is involved, if it is not what are my options please?

pitza

EdInvestor wrote: »

As mentioned, the pension itself is a wrapper.What's important is the funds your money is invested in inside the wrapper and the charges.

if you want to post some more detials about the pensions you already have, we could see if they are a good deal or not.Post the provider's name, the fund(s) the money is in, and the annual charges you are paying.

It is often quite easy to make a big improvement in a pension's performance, just by choosing some new funds.

Sorry I did not see this reply before I replyed again, will look up details

JoeK_3

pitza wrote: »

Thanks dunstonh very very interesting to read and very helpfull to a layman like me, my pensions are with the cis and scottish widows so I presume that I need to contact them to see what I am investing in and if property is involved, if it is not what are my options please?

It's a good starting point to contact the existing pension providers but you should then contact an Independent Financial Adviser to get a balanced view of the performance of your pensions.

As indicated in previous posts, the property market is for experienced investors and as property in the Uk is very expensive, it's easy to lose a fortune when playing with figures in excess of £100,000.

Take advice from professional people before embarking.

JoeK

pitza

EdInvestor wrote: »

As mentioned, the pension itself is a wrapper.What's important is the funds your money is invested in inside the wrapper and the charges.

if you want to post some more detials about the pensions you already have, we could see if they are a good deal or not.Post the provider's name, the fund(s) the money is in, and the annual charges you are paying.

It is often quite easy to make a big improvement in a pension's performance, just by choosing some new funds.

My main pension is with the C.I.S with profits fund cant find the imfo about charges but they do invest in property, the second pension is the Scottish Widows Pensionbuilder, charges not known.