Had a mortgage too long - it's going, going, gone!

debtfreeoneday

have a good weekend

Ali-OK

Morning and it's a happy weekend already - so warm and heating off, rain keeps stopping and starting and it's quite blowy - not sure I'll chance putting the washing out just yet.

Saw DS off early for his day out and realised he needs bigger size casual wear - he's morphed into bloke shape and grown taller again, now close on 6ft at 15 :eek:.

Cracked on with housey jobs early too. Cuppa break before next round - could be a long one if I sit on here though

Need to update sig to take off architect's bill from savings and a possible lunch out with a friend later after office viewing should be the only spend today.

Also found a solution to how to start work on the planned extension (if granted) without costing too much and avoiding the clock ticking on PP running out if savings don't meet the budget within the 3 years they give you to begin - by enlarging a current window from 2' to 4'.

Must write the remaining Christmas cards to finish off that job too.

Have a good day all

Brogden

Ali-OK wrote: »

One thing bugging me at the moment, is after charges, 1.1% is seen as a good return...and even though the 'free bit' of tax relief is added, aside the 25% tax free lump sum, it's taxed on withdrawing anyway....

ISAs are feeling more attractive right now!

Ali :mad: !!

Let's say you have £1000 to save from your SE business profits............

ISA
£1000 minus 20% Tax = £800 in ur 'and

PENSION
£1000 (no Tax.) After you're 55...25% tax free = £250
Balance £750 less tax at 20% = £600
Total £850 in ur 'and !!

Ignoring fund growth (neutral,) that's £50 more on a £1000 gross contribution. Remember the £1000 would be slashed to £800 or even £600 (if HRT payer) if you put it into 'non-privileged savings.'

You can do much better than this too. Remember you will have a personal tax allowance in retirement.......what are you going to fill that with? Answer.......pension (probably) so guess what? Totally tax free up to £11,000 (2016/17) having completely avoided tax at the time you made the contribution Your 25% tax free is 'on top' like 'in addition,' like 'not taken account of.....' WOW !!!

Certainly....ISA's have their place for other reasons but pensions......? I'm on fire with desire :rotfl:!!!!

Broggers x

Ali-OK

Broggers - that's all clear and good, but what about the charges to put in, ongoing management and then to actually turn it into an income?

3% IFA on advice (or if new £1,500 one off)
1% ongoing - IFA 0.5%, fund management 0.5%
3% IFA on advice to withdraw

SIPPs cheaper admittedly - vary from 1.3% upwards ongoing with fund and other charges.

Remember that alot of providers won't allow you to set something new up without going via an IFA.

So that £50 per £1000 gets eroded a bit further. Won't mention inflation and growth - but I guess the point is growth should far outweigh everything else?

Confused!

Brogden

Ali-OK wrote: »

Broggers - that's all clear and good, but what about the charges to put in, ongoing management and then to actually turn it into an income?

3% IFA on advice (or if new £1,500 one off)
1% ongoing - IFA 0.5%, fund management 0.5%
3% IFA on advice to withdraw

Hi Ali

The 3% IFA on advice to withdraw must be a 'no-go!' Surely not?

You are a little like a football supporter that can only see the good in the team you support. In this case it is ISA United :rotfl:!!!

If you require advice in the selection of the underlying investments, including monitoring and realignment then the fees you refer to here will be equally relevant and applicable to an S&S ISA as they would be to a pension plan so I cannot see why a pension should be dismissed on the basis of cost.

There is really no difference between a SIPP and an S&S ISA! Let me firstly say that I have no link at all with this firm except that I will probably become a client at the end of the year. Hargreaves Lansdown offer the 'Vantage SIPP' and the 'Vantage ISA.' They are almost identical. They charge 0.45% p.a. on the first £250,000, reducing on amounts above that. Both the SIPP and ISA are on pretty much the same platform accessing tons and tons of the same funds! Sure the amount you can pay in, the available tax reliefs are different and are, of course exactly what we know well and love. The point is the products are just about the same and costed just about the same! This is true of many firms who were best known for SIPP's but now do an ISA and firms that evolved the other way around! Everybody is doing everything!

Ali, the 3% upfront advice fee is very difficult to bear I know and for me.........I will not pay it . It is my money and I need to try and survive:rotfl:!! I could make some enemies here!

You haven't referred directly to the annual management charge on the underlying funds but I just thought this was worth mentioning as some people do not realise this. This situation is, of course identical in both S&S ISA's as SIPP's. I myself completely ignore this charge as long as it is not terribly out of line. We could probably expect the AMC to be around 1% on an actively managed fund after the platform has negotiated the fee down from 1.5% or whatever the managers charge on direct orders. The important point is that this AMC (whilst certainly charged) is deducted from the fund prior to the share/unit price being struck. For this reason, if we look at a fund we like and how it has performed, if the return is 7.5% last year then we do not have to deduct the AMC. The quoted performance is already net of the AMC. Basically it means that if Igo to Hargreaves Lansdown I will pay them 0.45% above this charge which is invisible and that's it. I can't say that's expensive. Also it's identical for SIPP's and ISA's!

The big attraction of ISA's over pensions can only be access at any time in life. Pension tax reliefs were originally granted to encourage long term 'locked in' savings. If we understand that fundamental difference then we can allocate our ackers accordingly..........but there's no real difference in price between the two.........:D AND you know I was understating the advantage with my 'eroded' £50 don't you?

Broggers x

Goldiegirl

Wow, £3000 for an IFA?


That's steep.


It's just confirmed that DIY is the way to go for me, it'll take research and learning, but it'd rather do that than pay £3000 to someone that I know I wouldn't properly trust

Brogden

Goldiegirl wrote: »

Wow, £3000 for an IFA?


That's steep.


It's just confirmed that DIY is the way to go for me, it'll take research and learning, but it'd rather do that than pay £3000 to someone that I know I wouldn't properly trust

I think with the FCA looking over that you can trust most.....but.....

I am DIY bar the occupational defined benefit. If I want to transfer it is the law that it cannot be done without proof of advice from a specially permissioned IFA!

Goldiegirl

Brogden wrote: »

I think with the FCA looking over that you can trust most.....but.....

!

The trouble with me is that my work background is banks and building societies, so if a an IFA recommended something to me that I didn't think was appropriate, it would make me uneasy.

Ali-OK

It's good to talk, as the old advert goes I'm all ears Broggers

If an IFA is used then it's fee time and 3% isn't unusual. The new withdrawal freedoms seem to have created a new opportunity for charges too - want to move it to another provider for a better pension income? Yes, but the charge is x. Want to draw lumps - yes, the charge is y. Being aware of what's further down the line will stop a further sting I hope.

I'm looking into adding to the current Pru pot direct, but in different funds and I don't have to go to an IFA for that.

I understand more about funds to pick for various risks and have been analysing performance, costs, fund managers and all sorts Enjoying that! So feel more confident in SIPP and S&S ISA via platforms like H&L or Cavendish or Fidelity (remember Lilty recommended the latter) and so on.

Completely understand the fundamental differences of pension vs. ISA too.

Having said all of that, I will probably need an IFA at some point in the future due to inheritance value and putting some of mine in trust for DS too. Yes, I'm definitely worth more dead than alive :rotfl: So I shall plan to interview a few Ali style clipboard and questionnaire at the ready :rotfl:

You're getting through to me :T Keep going

Brogden

You're doing great mate . Its just a couple of things you said made me worry that you were overlooking the tax savings of the pension because of frustrations and the IFA experience not being too good . I like talking to you about this because you really get stuck in to a subject and study it when so many other people just ignore it or say it's over their head, boring or whatever :cool:.

I wouldn't be an IFA for all the tea in China . There is huge personal risk for them and some people do not appreciate what they do. The other thing is, we can do (almost) all of it ourselves if we take the time to read up. Where you mention funds and things only being available through an IFA, I really dont think much is exclusive to them. At the moment a lot of IFA's are very hung up about the volumes of business the providers are trying to get by going direct (D2C platforms etc.) Another reason to not want to be an IFA!

The IFA I am meeting this week will no doubt want to make a lot of investment recommendations and talk about ongoing service and ongoing fees. I need to make it plain that I need from him the ability to transfer as required and I will do everything else myself without advice.....for him it's a 'one job' thing and when its done then that's that!

Good point on the additional fee opportunities for IFA's with the new freedoms. I hadn't really considered that. If using an IFA it is worth telling them what you need from them and what you don't and only pay for what you use. Withdrawing is not exactly rocket science is it? We just need to make sure we know how the tax works - I know that's given a few people a shock .

Have a nice Sunday Ali

Broggers x