Pension won't be enough - realistic alternatives?

jamesd

kidmugsy wrote: »

My crystal ball tells me that people holding cash paying 3%-6% p.a., and then piling into equities after the great crash of 2016 - 17, might do very well. But that might prove to be crystal b@lls.

Peronally I prefer P2P at 12% until then but that's me...

bigadaj wrote: »

just look at what the average couple could hold in current accounts,mellow in excess of £100k achieving more than 3% which isn't bad if inflation is close to zero.

Short term cash is fine, long term that's not going to do so well compared to 5% plus inflation.

Arthien is definitely in the long term camp with a 40+ year pre-retirement horizon and also too new to be trying short term moves in and out.

Still, my personal view at the moment and one I've been acting on is that I don't currently favour equities or corporate/government bonds compared to my other options. We'll see how it turns out in five years or so since it could take that long or longer for a major downturn in those markets to happen. Or it could be tomorrow or the day of a Brexit yes vote if that happens. (shrug)

bigadaj

jamesd wrote: »

Peronally I prefer P2P at 12% until then but that's me...

Short term cash is fine, long term that's not going to do so well compared to 5% plus inflation.

Arthien is definitely in the long term camp with a 40+ year pre-retirement horizon and also too new to be trying short term moves in and out.

Still, my personal view at the moment and one I've been acting on is that I don't currently favour equities or corporate/government bonds compared to my other options. We'll see how it turns out in five years or so since it could take that long or longer for a major downturn in those markets to happen. Or it could be tomorrow or the day of a Brexit yes vote if that happens. (shrug)

You don't often do worse than follow the example of the rich, and their target generally seems to be wealth preservation through diversification.

A spread of your wealth across a combination of cash, equities, bonds, property plus a bit of spice through p2p, vct etc seems advisable, thought this relies on a fair bit of initial wealth to be able to spread.

jamesd

bigadaj wrote: »

You don't often do worse than follow the example of the rich

There's a lot of truth to that. A study I read quite a few years ago observed that one reason that poorer people stayed poorer is that they tended to save rather than invest, leaving the bigger gains from investing to the wealthier people.

At the start there's good reason for that because when you have little you do need to have a decent emergency fund that truly is sufficient. After a while, though, the extra money in cash is just that cash dragging down the long term prospects.

It was one of the things that shaped my own approach to investing.

kidmugsy

Invest with the rich? I must look into the RIT investment trust, then.

jamesd

I've considered using RIT myself.

Thrugelmir

jamesd wrote: »

There's a lot of truth to that. A study I read quite a few years ago observed that one reason that poorer people stayed poorer is that they tended to save rather than invest, leaving the bigger gains from investing to the wealthier people.

The rich can afford to lose money. The majority of people cannot do likewise. Naive to suggest that investing is a one way street.

jamesd

Thrugelmir wrote: »

The rich can afford to lose money. The majority of people cannot do likewise. Naive to suggest that investing is a one way street.

The majority of people can afford to lose money on investments at the levels normal in that activity, helped along by the normal result being making more money than on savings. Either you take the ups and downs or you commit to losing out.

Arthien

AnotherJoe wrote: »

Just to clarify, when I said I was looking for 'guaranteed income', I'm certainly not looking for a goose laying golden eggs, I think that was really just my dislike of risk talking
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It's your dislike of risk taking that's also got you lumbered with a 5% mortgage so don't equate low risk with certain outcomes. When you took that mortgage out ?4 years ago? you presumably wanted to protect against rates rising but there's no such thing as a free lunch and the cost of that certainty has been probably 50% higher mortgage payments than you could have paid.

The 5% mortgage wasn't an 'avoiding-risk' based decision, it was a 'only one available' decision. My husband and I were struggling to save for a larger deposit whilst renting, and Help to Buy wasn't a thing then, so we went for it. Fortunately it has paid off so far, as a 3-year fix over 40 years at 5% has allowed us to pay our own mortgage instead of someone else's, and now the deposit savings have become a monthly overpayment, meaning we're due to pay it off in 14 years at the going rate. Obviously we'll hope to move up the ladder and have kids and other expenses over the next few years, so it won't actually happen that way, but it's certainly worked out well so far. The alternative was spending several more years in an increasingly damp and dilapidated rental and seeing house prices increase far more quickly than our savings.

I actually tried logging into my pension this weekend, after being inspired by this thread, but it's showing as down for maintenance... for a week! What normal company does maintenance for a week?? They're clearly off out spending my hard earned cash :rotfl:

dunstonh

I actually tried logging into my pension this weekend, after being inspired by this thread, but it's showing as down for maintenance... for a week! What normal company does maintenance for a week?? They're clearly off out spending my hard earned cash

Friends Life? Their online system needs taking down for good and starting again.

[Deleted User]

Arthien wrote: »

I actually tried logging into my pension this weekend, after being inspired by this thread, but it's showing as down for maintenance... for a week! What normal company does maintenance for a week?? They're clearly off out spending my hard earned cash :rotfl:

Yeah that sounds typical for household name pension companies. It's amazing just how many plans are not even accessible online. Probably to keep you like a mushroom One of the reasons for consolidating to a SIPP Never looked back...