Pension or house deposit

sheilanick

kidmugsy wrote: »

If his 1% secures their 3% that's the rate for him to contribute. Thereafter his efforts should be concentrated on accumulating an emergency cash reserve and a deposit for a house. He can contribute to a pension later when perhaps he and his wife are earning more. If he's lucky he'll get the chance to buy a house after a housing crash, and start paying more into a pension after a stock market crash. If he's unlucky he'll find himself paying more than 20% income tax on his pension when he draws it. Lord knows what state the country will be in, forty years hence.

Yes it does
I think if he follows your advice, with savings already in place, he should have sufficient deposit within next 18months, as long as house prices don't run away.

jamesd

He should pay enough in to get the full employer match. Beyond that he's likely to do better by saving hard to get a deposit together and own his own place. Main catch is if that takes too long, as it might in parts of the South East.

I agree with kudmugsy that for investments now isn't a great time to be buying so he'll do better with cash ISA savings for deposit now and probably end up skipping the next stop market dip as a result. But don't let this stop him doing the full employer matching part of the pension, that's worth having anyway.

The ideal time to be investing heavily in a pension or stocks and shares ISA is after big stock market drops, when the newspapers are full of doom and gloom. The end of 2008 and start of 2009 were great times to be buying, as were the next few years. It takes nerve and knowledge to learn that doom and gloom is how stock market sales are announced in the press.

Lots of initial public offerings (IPOs), markets reaching record highs and the press saying it's never been so good are the traditional ways that bad times to buy are announced.

atush

yes, he need to put in more than 1% if the employer will put in more than 3%. He needs to get the mas free money on offer.