What are the best forms of investment?

srcandas

atush wrote: »

rubbish, pensions get tax relief and ISas don't. Pensions use your personal allowance, ISAs don't.

Agree with the rest of your post but those two arguments do not stand up to close analysis.

EDIT: When being under 25.

However if you are saying that some need to be stopped from blowing their ISAs on a new car or holiday then I can see the point.

:beer:

innovate

srcandas wrote: »

Haven't thought out the details but there are under the right (but not foreseeable) circumstances situations when a pension before 25 makes no sense at all.

Why not? For instance, if your goal is to retire at 50, you can't start early enough with a pension. Also, if your employer offers a pension scheme, I think you would be nuts if you didn't join it.

Of course I would not advocate to exclusively putting your money into your pension pot, but some of what you put to one side needs to go into your provisions for income in later life.

BTW, I do know people who have had no choice but to pay into a pension when they started work at the tender age of 18. The law in their country prescribed it. Of course, at the time, they'd much rather have had the money to spend as they saw fit - - but over time they saw the light. Some of them retired, or semi-retired, at the age of 51.

srcandas

innovate wrote: »

Why not? For instance, if your goal is to retire at 50, you can't start early enough with a pension.

We all accept free money is a good thing and that a pension as opposed to an ISA stops the money being frittered away .

But on economic grounds:

Let us assume I save in ISAs £20000 by the time I am 25. I decide this is best to go towards my pension. So I put it in one getting tax relief

Now let us assume that I have £25000 in a pension and I need £25000 to buy a franchise to move my career forward

What I'm asking is can the HMgov not think of a way of resolving the first two issues without restricting lives

ps. If your goal in life is to retire at 50 and you are not yet 25 then best spend money on help

Totton

dunstonh wrote: »

...What appears to be lacking is common sense, research and flawed opinions that are not based on facts.

I think I just described the average Daily Mail reader! (or writer)

Thankfully many Daily Mail readers will understand that you are able to overcome your bigoted thoughts and still give good advice.

dunstonh

Thankfully many Daily Mail readers will understand that you are able to overcome your bigoted thoughts and still give good advice.

You cannot possibly read the Daily Mail without realising how bigoted it is and how much they print is opinion rather than fact. I'm not saying that some of it doesnt make a good read. However, you do have to take a lot of it with a pinch of salt or realise that there is two sides to the story and they do tend to fixate on the one that suits them.

atush

I read it on holiday sometimes, it always gives me a laugh. As it is so badly written at times, and SO very dumbed down.

jamesd

atush wrote: »

rubbish, pensions get tax relief and ISas don't

Both get tax relief, just at different times: both while growing, pensions on the way in, ISA on the way out.

atush wrote: »

Pensions do pay what you 'need' if you put enough into them

You have to put in more than you require to be able to take out money at the rate you need at various times, like retiring before the state pensions are available. This is one of the sad bits of pension regulation that limits an aspect of their suitability for retirement planning. A similar issue arises near the end of life when you don't have access to the pot at a rate that will permit you to use it all in your remaining time for things like care costs.

atush wrote: »

and if you put in enough to use your personal allowance, they will be on the same tax basis as ISA income.

Not so, changes in tax rates could give either the edge and even if tax rates remain the same, the value of the relief for each depends on the tax bands when paying money in and taking it out. Pension is better with higher tax rate on the way in, lower on the way out, ISA the reverse.

atush wrote: »

They only fail, when you fail to put enough in.

Plenty of other ways to fail including investment risk and changes in legislation that can affect eligibility to or amounts of income that can be taken out: GAD limit changes, maybe some future return to compulsory annuity purchase, changes in age at which pensions can be taken.

atush wrote: »

workplace is Always best as you get free money

Not so, investments, costs and access to the money also matter, it's these things that make NEST the lemon of the auto-enrolment market pension products.

atush wrote: »

there is NO free money with an ISA.

Employer contributions, if you have one of the employers who will pay into an ISA. Some do. In part because there is more recognition now that there are benefits to both products and in part because limits make it impractical or highly undesirable to use pensions for some employees. Say those where the value of the benefit is over the annual contribution allowance, who are in protected pension benefits having exceeded the lifetime allowance and hence can't make any more pension contributions or those who are using flexible drawdown and can't make more pension contributions. Or those who are over 75 and can't make more pension contributions, where the employer dislikes age discriminatory pay packages.

aspiration_2

jamesd wrote: »

Both get tax relief, just at different times: both while growing, pensions on the way in, ISA on the way out.

Just to be crystal clear - Pension contribution are taken off ones income before tax (govt pays you some money). ISA contribution are made from taxed income but interest/dividends not taxed.

atush

And pensions are not taxed if that income is under whatever personal allowance applies at the time.

No pension income, and only State pension and ISA income and part of your allowance can be wasted.

Originally Posted by atush
and if you put in enough to use your personal allowance, they will be on the same tax basis as ISA income.
Not so, changes in tax rates could give either the edge and even if tax rates remain the same, the value of the relief for each depends on the tax bands when paying money in and taking it out. Pension is better with higher tax rate on the way in, lower on the way out, ISA the reverse.

My reply is based on current policies. Trying to guess policies in 20 yrs time is nonsensical.

Quote:
Originally Posted by atush
They only fail, when you fail to put enough in.
Plenty of other ways to fail including investment risk and changes in legislation that can affect eligibility to or amounts of income that can be taken out: GAD limit changes, maybe some future return to compulsory annuity purchase, changes in age at which pensions can be taken.

As above, you have to base pension planning on what things are like now. Isas could be taken away from all tomorrow, or the ability to find new ones. Investment returns would fail the same, in either an ISA or a pension if they were invested in the same thing.

Employer contributions, if you have one of the employers who will pay into an ISA.

Never heard of this here or elsewhere. But great if you can find it. Probably rare.

Jonesy135

Just to add to the pensions talk


Id say if your company runs a scheme you'd be made not to join it!!


im 22 and now earn 22.5K ive been paying 3 or 4% into my companies pension plan (a scheme called Future Planner) for a little over 4 years... the company contributes double what i do.

even though ive only paid a total of£9694.69 in total (i got my statement through a few days ago) if i died tomorrow my beneficaries would receive just shy of a £90K pay out

if i see my plan out to term (when im 68) assuming that i dont get another payrise ever (ignoring inflation) my pension pot would be just over £312K

which equates to £8400 per year pension

or

£80K lump sum plus £6300 pension


and so far i havent even been contributing £1000 a year to it!!


now obviously things change, pay may go up and down etc but for 4% of my salary thats my old age sorted! especially as i climb up the ladder at work, earn more and there for contribute more!!



TL;DR - Contribute to a decent company sponsored pension!

Just my 2 pence