Is it possible to become a millionaire (or near to) through investments?

bigadaj

Malthusian wrote: »

Am I the only one who thought these were going to be documentaries about people who manage to "play the system" and claim housing benefit despite being millionaires? (The sort of "colourful" people who manage to claim for 22 kids and that sort of thing.) It's actually about people who let to people on housing benefits and are millionaires. Why this would be noteworthy is beyond me. If you are on benefits then the owners of the shop where you buy food are likely to be millionaires, the people who make your clothes are likely to be millionaires, so why would it be a surprise if the person who lets a house to you is a millionaire?

I suppose the subtext is that the relative shortage of housing relative to demand has pushed up prices and yield because if the self fulfilling prophesies as housing benefit allowances are linked to average rents which continually rise, and have arguably risen faster and more dramatically because of landlords and lack of supply.

Glen_Clark

bigadaj wrote: »

I suppose the subtext is that the relative shortage of housing relative to demand has pushed up prices and yield because if the self fulfilling prophesies as housing benefit allowances are linked to average rents which continually rise, and have arguably risen faster and more dramatically because of landlords and lack of supply.

Exactly, but also they have become millionaires through housing benefit. Taxpayer subsidy has made this more profitable than productive industry - exactly the sort of industry we need to make things we can sell abroad to pay off Osborne's debts. Who wants to train and invest in a factory full of depreciating machinery so the Government can tax and regulate you into barkruptcy? When you can just buy up existing appreciating housing for buy to let and the Government will borrow money to throw at you?

JohnRo

Housing benefit used to be nothing more than an internal audit.
I suspect the programs mentioned are more about how this liberated revenue stream has become the lifeblood of a vast unproductive bonanza rather than the something for nothing housing spiv "millionaires" behind it.

kingrulzuk

2 years ago when I had turned 30 me and my OH (same age) made up our minds to retire at 40 but before that to save up as much we can in 10 years’ time so we set a number and it was £1million.
Now in 2 years we have invested everywhere we can earn high return and so far we have around £300k put together.
So yes it is possible if you make a good plan and stick to it.

adindas

talexuser wrote: »

People who invested the max every year since the very start of Peps and Single Company Peps before they became ISAs were millionaires if reinvesting dividends quite a few years ago as reported in the press, with all the income now tax free.

For this reason I think eventually the government will almost certainly have a lifetime limit on the amounts in ISAs (like pensions), when enough people are not paying substantial tax on the income.

People might say about tax free ISA.
But your money to be put into ISA has been taxed thorough income tax at various rate depending on how much people are earning at the first instance as part of our income. So it is not really tax effective, as they money you save have been taxed anyway. It is just preventing the double taxation.

I am interested to learn the best way of preventing this to be taxed in the first instance.

I am aware a lot of people are talking about the putting it in the pension. Could you put as many as you want in the pension , say 50% of your income or is there any limit of doing this.

bowlhead99

adindas wrote: »

I am aware a lot of people are talking about the putting it in the pension. Could you put as many as you want in the pension , say 50% of your income or is there any limit of doing this.

Yes, you can put your entire earned income (salary) into a pension if it doesn't exceed the maximum annual allowance amount of £40k a year.

Even if your earned income does exceed £40k a year, say you earned £100k this year... as long as you were in a pension scheme and didn't use up the whole allowance last year or the year before, you can use up the unused spare capacity from those earlier years this year instead if you like.

So for some people the limiting factor is their own salary and others it is the annual allowance. There is also a lifetime allowance but it's £1 million +, so you don't worry about that for now.

adindas

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bowlhead99 wrote: »

So for some people the limiting factor is their own salary and others it is the annual allowance. There is also a lifetime allowance but it's £1 million +, so you don't worry about that for now.

When you said a life time allowance, does it mean you could have a pension pot worth for one million before it getting taxed.

Also I am interested to learn how the people who are currently contributing to the company pension scheme a percentage of their income. If they want to increase their pension contribution to avoid paying a higher band tax rate, what is the best way and mechanism to do this without the burden of submitting tax assessment form.

Could they just contact the company pension officer and tell them that they want to increase their pension contribution to avoid paying higher tax ?>?

jamesd

75% is always taxable but there is an additional charge on money taken out when the value of the pot is over a million Pounds.

Yes, it's usually easy to just ask for an increase in pension contributions.

adindas

jamesd wrote: »

75% is always taxable but there is an additional charge on money taken out when the value of the pot is over a million Pounds.

Yes, it's usually easy to just ask for an increase in pension contributions.

What do you mean with this ?
Let say after the pension age, If I take a lump sum, 75% of the lump sum taken is taxable, is it what you mean ??

jamesd

A pension pot can deliver a 25% tax free lump sum. The remaining 75% is taxable income. There are some possibilities:

1. UFPLS. This is from uncrystallised money and it is 25% tax free lump sum and 75% taxable income.
2. Drawdown, crystallise and take the whole possible tax free lump sum. Any income taken from the remaining 75% in the pension pot is taxable as income. Say take £100k tax free lump sum leaving £300k in drawdown then take 20k a year of taxable income from the 300k.