where to put my money

steampowered

Why the obsession with investing in property, over other types of asset?

Property has performed less well than stocks/shares historically, and you'll be paying a heck of a lot more tax.

cloud_dog

cinek wrote: »

thanks for the reply, I am in full time employment and am a high rate taxpayer. Looking at the pension scheme, I need to contribute a min of 5% and my employer will contribute further 7%.

We haven't asked, and it's not clear but, is your current company scheme a defined contribution (pot of money) or defined benefit (final salary) scheme?

If a defined benefit scheme then this may have a consideration on your choices, insofar as you may not be able touch the company DB scheme early, and if you can then there would be a reduction factor applied, i.e. reduced by 5% for each year you take before NRA.

If the above is true then it doesn't alter the value of pension contributions for a HRT payer but, you may want the flexibility of using a separate pension 'pot' rather than adding to your company scheme. Obviously, if the company scheme is a DC scheme then the above can be ignored.

AnotherJoe

cinek wrote: »

thanks for the reply, I am in full time employment and am a high rate taxpayer. Looking at the pension scheme, I need to contribute a min of 5% and my employer will contribute further 7%.

Tax breaks aside, I'd be more than happy with a pension IF I knew I can get money out of it when I'm 57 but I'm sure this will increase before I retire. I can't remember where but I remember reading a while ago that the age requirement might even be 70 by the time I can retire & access my money

What you plan to take ALL your money out before you are 57? Will you spend it in one go?? :eek:


Or, perhaps if you think about it, you might see you need some money when aged 58,59,60, 61 etc etc etc.


Here's what you are doing at the moment by not taking a pension at work.

You get paid £500. That gets taxed and you get probably £250 (after NI). Then you put that in an ISA. £250.

Or you could take that £500, add your employers £700 and put £1200 or about five times more in a pension. But you arent doing this because of your frankly foolish falling for scare stories about not being able to get your pension before being 70. That is your State Pension. MP's arent going to vote for private pensions at that age for three reasons, first many are in the same boat with Self Invested pensions, second, the govt approach has been to let you access it 10 years ahead of SP age, so thats 60 not 70, and third, peoples longevity has stopped rising its now falling so this need to keep pushing the retirement date out is going to stop.
What might happen, probably about the same time you wake up and smell the coffe, is that the 40% tax break goes away, so your £500 in my above example would become £400, but its still a crazy thing to turn down more than doubling your money especially in an environment where getting that extra £100 for every £500 will likely be taken away at some stage.


Now, if you plan to retire aged say 40 or 50 or whatever sure you'll need something to tide you over the period between retiring and taking your pension and then your state pension.An ISA would do quite nicely for that. That doesn't mean you should, almost literally, set fire to your money just because you havent worked out yet that you dont need all your pension money in one lump when you retire and that getting free money twice (employers and tax releif) is a good thing.

bowlhead99

AnotherJoe wrote: »

Or you could take that £500, add your employers £700 and put £1200 or about five times more in a pension. But you arent doing this because of your frankly foolish falling for scare stories about not being able to get your pension before being 70

What might happen, probably about the same time you wake up and smell the coffe, is that the 40% tax break goes away, so your £500 in my above example would become £400, but its still a crazy thing to turn down more than doubling your money especially in an environment where getting that extra £100 for every £500 will likely be taken away at some stage.

In fairness, the opportunity of putting money into a pension to get a tax break and employer contribution was already explained as a good thing, and the difference between state and personal pension access ages clearly articulated yesterday, leading him to coming back first thing this morning and thanking for the information and saying he will revisit the pension option.

It probably doesn't need you to come back another three hours after that and shout at him in red or bold or underlined that he is an imbecile. Sunday is for chilling out. :cool:

cinek

steampowered wrote: »

Why the obsession with investing in property, over other types of asset?

Property has performed less well than stocks/shares historically, and you'll be paying a heck of a lot more tax.

mainly because someone else pays the BTL mortgage off and after 20 years or so I can sell it and get the full value. Hopefully prices will go up during this time too which in London should be the case but I've not looked into the tax side of things