Investing at a young age

Prism

You won't be able to use an ISA while the money is still within the organisation though you can still make investments. Just not tax free. You will pay corporation tax on any gains you make and then later on will still need to extract the money, paying income or dividend tax.

Albermarle

Is it possible for a pension platform to lock me into their platform, unintentionally by the choice of products or intentionally?

The simple answer is no.

If you transfer a pension , you can not always ( or even usually) transfer the investment funds 'in specie '( means directly without change ) . So most transfers are in cash.
The current pension provider converts your current investments into cash and transfers the cash to your new provider Then you have to choose what investments to use the cash for with your new provider.
Two points to note :
1) When I say cash , it is not cash you can access until you are 55. It is just cash transferring from one pension provider to another .
2) Some older pensions have special guarantees that can be difficult to transfer but this would not apply to you. I recently transferred a pension and it took 5 minutes on line and the money transferred in two days , no questions asked.

Thrugelmir

What's the breakdown of your £60k of debt? This may be a hindrance to your future plans.

short_butt_sweet

is all the debt student loans?

avoiding repaying student loans may be a very bad idea. assuming you have the loans where you start repaying when your income goes over c. £25,000, then that would involve keeping your taxable income below that level for 30 years. when your company is making £84,000 a year (is that likely to continue?).

(as already mentioned,) one major good thing you can do without taking money out of your company as income is to make employer pension contributions into a personal pension for yourself. this is even a deductible expense for corporation tax.

but most other uses involve taking it out as income (salary or dividends). that includes spending, buying a home, or contributing to an ISA - a very attractive tax shelter, with a £20,000 annual allowance, which you'll miss out on if you keep your personal income so low.

it's possible to invest inside your company, but you'll pay a lot more tax on investment gains there than you would in an ISA; and you're just deferring the problem of how to take the income out (or magnifying it, since your capital will (hopefully) grow as a result of being invested).

if you will have to repay all the student loan eventually, it may be better to pay it sooner, since the interest rate is relatively high. i think you should be at least drawing c. £25,000 total income now (i.e. up to whatever is the maximum before you start repaying the student loan), and consider (perhaps depending on how your business goes) taking a lot more (e.g. £50,000, i.e. just before higher-rate tax starts) and perhaps voluntarily paying the student loan off faster than you have to (to reduce the interest on it).

Lokolo

BrandonGriggs wrote: »

I live in the city, where property is in the millions. I am not sure I would be able to afford it, although I would like to. I am not fond of mortgages either.

But you have £60k in debt? :think::think:

BrandonGriggs

The 60k is all in student loans, uk based student loans

BrandonGriggs

short_butt_sweet wrote: »

is all the debt student loans?

avoiding repaying student loans may be a very bad idea. assuming you have the loans where you start repaying when your income goes over c. £25,000, then that would involve keeping your taxable income below that level for 30 years. when your company is making £84,000 a year (is that likely to continue?).

(as already mentioned,) one major good thing you can do without taking money out of your company as income is to make employer pension contributions into a personal pension for yourself. this is even a deductible expense for corporation tax.

but most other uses involve taking it out as income (salary or dividends). that includes spending, buying a home, or contributing to an ISA - a very attractive tax shelter, with a £20,000 annual allowance, which you'll miss out on if you keep your personal income so low.

it's possible to invest inside your company, but you'll pay a lot more tax on investment gains there than you would in an ISA; and you're just deferring the problem of how to take the income out (or magnifying it, since your capital will (hopefully) grow as a result of being invested).

if you will have to repay all the student loan eventually, it may be better to pay it sooner, since the interest rate is relatively high. i think you should be at least drawing c. £25,000 total income now (i.e. up to whatever is the maximum before you start repaying the student loan), and consider (perhaps depending on how your business goes) taking a lot more (e.g. £50,000, i.e. just before higher-rate tax starts) and perhaps voluntarily paying the student loan off faster than you have to (to reduce the interest on it).

Thank you for the response.


Yes all of it is student loans. I was selfishly planning to avoid paying it because I am not sure where my business will be in the next year or two and I would ideally like to invest everything into it's growth

wjr4

1) Lifetime ISA or Help to Buy ISA
2) regular savers for emergency fund
3) employer pension contributions.

What are your short, medium and long-term goals? Without this, nobody can really make suggestions.

ANDY597

I would second the advice already given,


Im assuming (perhaps incorrectly) from your original post that you have a ltd company, so your accountant will be able to tell you the best way to invest in a pension as an employer/employee


Then the LISA for when your ready for the property market.


May I ask what your business is? No relevance to the thread, im just nosey

System

BrandonGriggs wrote: »

Hi, thanks for the link.

I saw pensionbee and my ignorant opinion was that it was mainly for those who were not knowledgeable of investing.

You're not knowledgeable of investing. If you were you'd know that one of the best ways to invest is to select a fund, Vanguard Lifestrategies or their Global All Cap for example, pay into it and leave it to do its thing.

Just because it is simple doesn't make it wrong. It would appear you missed that lesson at university.