Starting pension contributions at 43.

letspretendforaminute

Thrugelmir said:

Why the FTSE 100? As a base I'd suggest a much broader investment fund to start with. I'd use the stock picks to select the 4% plus yielders. Though on what basis are you going to select these. Ideally they need to meet a set range of criteria not just look attactive on what they currently pay out. You need to ask yourself why others are the shunning the stock given the low level of interest rates these days. Dealing costs mount up. Which would greatly reduce your yield/return on smaller sums. 

I like the FTSE 100 (and tracker) as it is IMO fundamentally cheap although I'd welcome corrections along the way for averaging. 70% of income from the top 100 are derived from overseas so there is an element of global exposure broadly insulated from fx risk. It also yields >4% so you could also ask why others are shunning the index? 
When I invest in a company I look to dividend cover, forward earning, future liabilities such as pensions and debt falling due outside a year. Kraft Heinz was a mistake but also part of my planned strategy to diversify across all regions. 

atush

letspretendforaminute said:

kinger101 said:

Personally, I'd not be spending £10K on a car if I needed to a loan to finance it.  Historically, I've spent less than half that an 8+ year old Mondeo, with 80-100K on the clock.  They're tended to last around 5-7 years before repairs have become uneconomical.

Many would argue that paying off debt should take priority of pension, but I think you definitely need something going into the pension - particularly if it's affordable.  Could you confirm whether you have access to an employer's scheme, and if so, whether this is salary sacrifice or not?

I'd also stick to one low cost globally diversified tracker such as Fidelity World Index or one of the Vanguard VLS funds.  At £300 a month (gross), you're going to have very high transaction costs on individual stocks.

I do ~30,000 miles a year and needed something reliable and it was bought last year anyway, I didn't make that clear sorry.
The employers pension scheme isn't terribly good with only matched contributions and on such a low salary. I'll look into those funds thank you and with regular savings the transaction costs on individual stocks can be very low... from £1.50 trading costs.
As of today I have £4.5k in IQE, £4.25k in SSE, £4k in BAE, £4k in VOD, £3.5k in EMG, £2k in KHC (kraft heinz), £2k in JLP, £1.3k in both HMZ and EFR (energy fuels) and £1k in LLOY for me the sweet spot for dividend income is £4k so my first task will be to bring this up to £4k and that'll be my first monthly savings instruction then I'll look to the funds. 

Investing in single shares is high risk.  Have you thought of puting all/half into a collectiove fund or funds instead?  Something like a global tracker or mutli asset one?

NedS

letspretendforaminute said:

michaels said:

As others have said, any matched employer contributions should be taken advantage of but minimum wage may also come into play.

You are also limited to your gross pension contribution into your sipp not exceeding your gross salary so £375pm max after tax relief.

I have an economics degree but believe in rational markets so would never try to pick individual stocks.

You can deduct all pension contributions from your income that is assessed for UC purposes (I get tax credits and pension contributions reducing income increases tax credits by 41% of the amount paid into the pension) and of course pension holdings are not treated as capital in UC calcs.

Thank you... this is interesting. I'm choosing to put £2,880 in as this is the amount anyone can contribute regardless of earnings. My earnings are pretty close to NMW and I'm wary of salary sacrificing below this. Work is really flexible with the number of hours available to me are 10-30 (shame I can't specify shifts as child care is an issue) so would this monthly contribution of £240p/month then allow me to increase the hours I work by ~6 effectively meaning I can earn £500p/month without hitting the 63p taper? Thank you.

UC is based on Net earnings, your monthly take home salary after all pension contributions have been deducted.

If you pay into a work scheme where pension contributions are deducted from your salary before you receive it, then everything is nice and simple, and happens automatically. However, if you make extra contributions from your take home salary into a private pension such as a SIPP, you will have to notify UC every month and get them to agree to deduct these contributions from your monthly earnings (note on UC you must make monthly contributions to get the full benefit as contributions will be deducted in the UC month in which they are made). This can be a battle to get them to accept it (due to lack of training / knowledge) but it is possible - I had to threaten to go to tribunal before UC Legal looked at it and accepted it. So yes, you can do it. I earn ~£1700/month net and pay around £1200/month net into my SIPP to reduce my net earnings down to my £503/month work allowance to receive my full UC award. Like @michaels I did the same thing with Tax Credits for years. So if on UC you are avoiding the 63p taper and getting the 25p tax relief for every £1 you contribute giving 87p uplift for every £1 contributed.

letspretendforaminute

atush said:

letspretendforaminute said:

kinger101 said:

Personally, I'd not be spending £10K on a car if I needed to a loan to finance it.  Historically, I've spent less than half that an 8+ year old Mondeo, with 80-100K on the clock.  They're tended to last around 5-7 years before repairs have become uneconomical.

Many would argue that paying off debt should take priority of pension, but I think you definitely need something going into the pension - particularly if it's affordable.  Could you confirm whether you have access to an employer's scheme, and if so, whether this is salary sacrifice or not?

I'd also stick to one low cost globally diversified tracker such as Fidelity World Index or one of the Vanguard VLS funds.  At £300 a month (gross), you're going to have very high transaction costs on individual stocks.

I do ~30,000 miles a year and needed something reliable and it was bought last year anyway, I didn't make that clear sorry.
The employers pension scheme isn't terribly good with only matched contributions and on such a low salary. I'll look into those funds thank you and with regular savings the transaction costs on individual stocks can be very low... from £1.50 trading costs.
As of today I have £4.5k in IQE, £4.25k in SSE, £4k in BAE, £4k in VOD, £3.5k in EMG, £2k in KHC (kraft heinz), £2k in JLP, £1.3k in both HMZ and EFR (energy fuels) and £1k in LLOY for me the sweet spot for dividend income is £4k so my first task will be to bring this up to £4k and that'll be my first monthly savings instruction then I'll look to the funds. 

Investing in single shares is high risk.  Have you thought of puting all/half into a collectiove fund or funds instead?  Something like a global tracker or mutli asset one?

Thank you Atush... I'm aware of the risk and will use funds going forwards. Global exposure to one company purely on the grounds that I like their tomato soup in hindsight was not the best idea or investment strategy, shares can be cheap for good reason.

badmemory

Are you getting NI credits via Child Benefits?

letspretendforaminute

badmemory said:

Are you getting NI credits via Child Benefits?

Yes and as far as I know child benefits count towards NI credits until the youngest is 12. In my case in three years by which time I'm expecting (for my sanity) to be working at above the lower earnings limit to get the benefits of paying.

Thrugelmir

letspretendforaminute said:

Thrugelmir said:

Why the FTSE 100? As a base I'd suggest a much broader investment fund to start with. I'd use the stock picks to select the 4% plus yielders. Though on what basis are you going to select these. Ideally they need to meet a set range of criteria not just look attactive on what they currently pay out. You need to ask yourself why others are the shunning the stock given the low level of interest rates these days. Dealing costs mount up. Which would greatly reduce your yield/return on smaller sums. 

I like the FTSE 100 (and tracker) as it is IMO fundamentally cheap although I'd welcome corrections along the way for averaging. 70% of income from the top 100 are derived from overseas so there is an element of global exposure broadly insulated from fx risk. It also yields >4% so you could also ask why others are shunning the index? 

Dividends paid by the majors have been generally flat for a number of years. The increasing yield has been down to the fall in the £. As some dividends are declared in $ and €. Other factors include little increase in profitability and declining dividend cover. When something looks too good to be true i.e. being shunned, there's always factors behind it.