23 Years Old & Starting a Pension

ferox666

Don't just dive into property without doing full research!!

A lot of people buy as it's a great "investment" "on the ladder" - but remember ladders go down as well as up and many people (particularly those who bought in 2006-2008) are deep in negative equity. There have been 30%+ nominal falls in some areas (particularly further north away from London area, which has also had drops - but not quite so dramatic though) and many (myself included) think property prices still have further to fall. Combined with voids, insurance, tax, management charges, mortgage interest, repairs etc you're not guarenteed to make a profit (plus can take up a good deal of time). Those buying now should not pay more than 2003 prices for that area. If it's to live in, fine, but as an investment it is not the pot of gold many think it is.

atush

Prices are recovering in many areas. Perhaps not yours. Mtg lending is increasing or the first time in ages (probably due to funding for lending). Rental income is rising.

A good a time as any to buy, but as I said above there ARE pitfalls so do your own research.

mark55man

Assets outside of tax free vehicles are not too bad if you are just starting and a basic rate tax payer. Still use up your allowances if you can, but don't be too worried about investing outside them

* You get 10K or so capital gains (or share price gains),
* if so minded you can invest in a wider range of assets than just in a ISA/Pension/SIPP (DYOR)
* if you have a partner you can share gains with her.
* Dividends are not much better in an ISA that outside one for basic rate tax payers

If you want to time the market - lots of people are worried about toppiness - then you can put some in Premium Bonds which will guarantee capital, may come close to breaking even against Cash ISA and could give you a nice bonus. Then if the market does tank 5-10% correction you can buy in (being all out of the market is bad, but you are significantly invested so keeping some cash/cash like is OK).

Finally, one thought triggered by an article in money week (bit trashy but thought proviking) is that property funds are currently lagging which suggests that under means reversion principles they may do better than average over next 3-5 years. Also as you want to use the money for property there is some logic is investing in property - especially as your other assets are proerty light. NOTE: UK domestic House prices may not correlate with the funds you invest in - that is something I can't comment on - maybe someone else could?

Finally finally, you could invest in some defensive high yield stocks and build a high yield portfolio (HYP). This will build an income stream, although is less concerned with capital value so if often used at to supplement pensions - but defensives may be good if there is a blip so worth a thought

http://boards.fool.co.uk/high-yield-share-strategies-51166.aspx

http://boards.fool.co.uk/high-yield-hyp-practical-51676.aspx

Carpi09

I didnt want to create another thread so i brought this one back.

Has anyone changed their opinion in the months that have been?

Anyone else care to reply?

Thanks :j

atush

Not really, although you could find out what it would cost if you were allowed to buy added years in your pension.

I like the idea (esp if not buying soon and letting) of unwrapped investments into equities. I like investment trust savings plans for this purpose. but do keep up saving in cash alongside in case you want to buy.

And yes, there could be further price falls esp in areas where the economy is very poor. But they are stable in others, and if you are renting and will then live there (or keep renting) that won't really matter to you much. Prices will rise-eventually. As unlike america, we don't have a lot of extra land going spare and people do need somewhere to live.

So really, you are doing very well for your age and income so far. And there is nothing to say that you cannot do more than one thing with your money.