Investment portfolios

noClue

grumiofoundation said:

noClue said:

AnotherJoe said:

Onestepcloser said:

I'm not too clued up on the whole pension thing, the little I know is my company matches my contributions that's about it.  I really need to read up on it but struggle with a lot of things as I'm dyslexic. Any books or articles that explain things in the simplest ways.

You end up with a guaranteed 6.25% gain 

Where does this 6.25% come from?

Retirement comes - 25% of 1000 = £250.
750 A 20% tax = 600
Total = £850

£50 = 6.25% of 800.

Sorry you have to bear with me, is this 25% of total not taxable? is there any up limit of the amount?

But thanks, I get the idea of 6.25% now.

AnotherJoe

noClue said:

grumiofoundation said:

noClue said:

AnotherJoe said:

Onestepcloser said:

I'm not too clued up on the whole pension thing, the little I know is my company matches my contributions that's about it.  I really need to read up on it but struggle with a lot of things as I'm dyslexic. Any books or articles that explain things in the simplest ways.

You end up with a guaranteed 6.25% gain 

Where does this 6.25% come from?

Retirement comes - 25% of 1000 = £250.
750 A 20% tax = 600
Total = £850

£50 = 6.25% of 800.

Sorry you have to bear with me, is this 25% of total not taxable? is there any up limit of the amount?

But thanks, I get the idea of 6.25% now.

25 % non taxable means that, indeed, 25% is not taxable.
There is a  limit, it's just over a Million £,  of which 25% eg £250k is not taxable 

After that there are tax complexities.
So when you get to a million, stop. 

noClue

I sse, now all dots are connected. That's why there's the 1M cap.

LHW99

Regarding my workplace pension could I transfer that into a vanguard sipp?

Probably, BUT if you are still with your employer they are unlikely to pay their contribution in any more = loss of "free cash".

May be worth considering if you leave a job, and the new employer's scheme won't let you transfer the old one across (or is worse value)

Onestepcloser

LHW99 said:

Regarding my workplace pension could I transfer that into a vanguard sipp?

Probably, BUT if you are still with your employer they are unlikely to pay their contribution in any more = loss of "free cash".

May be worth considering if you leave a job, and the new employer's scheme won't let you transfer the old one across (or is worse value)

Ah right will leave that as it is then, I do have another pension from when I was younger, need to try and find out who it's with and see about moving it.

EthicsGradient

Another advantage of a SIPP over an ISA is that the tax relief is effectively an interest-free loan. Taking grumiofoundation's example figures for a basic rate taxpayer, the government gives you £200 to invest now, and when you get it as income many years later, just want £150 back as tax.

bowlhead99

EthicsGradient said:

Another advantage of a SIPP over an ISA is that the tax relief is effectively an interest-free loan. Taking grumiofoundation's example figures for a basic rate taxpayer, the government gives you £200 to invest now, and when you get it as income many years later, just want £150 back as tax.

This doesn't seem to me like it is 'another advantage' any more than the advantages already presented, and may be confusing to understand if you put it like that.

If the tax relief was just an 'interest free' loan you could pay it back for what it was when you got it. However, they don't 'just want £150 back as tax' in years or decades time. if you double or quadruple or ten-bag the £200, into £400 or £800 or £2000 through investment gains and the time value of money, you will be paying back £300 or £600 or £1500, in other words the same proportion as the £150 is to the £200 today - you will have paid a rate of 'interest' on the £150 equivalent to whatever percentage investment return you made on the grossed-up capital. 

Albermarle

Onestepcloser said:

LHW99 said:

Regarding my workplace pension could I transfer that into a vanguard sipp?

Probably, BUT if you are still with your employer they are unlikely to pay their contribution in any more = loss of "free cash".

May be worth considering if you leave a job, and the new employer's scheme won't let you transfer the old one across (or is worse value)

Ah right will leave that as it is then, I do have another pension from when I was younger, need to try and find out who it's with and see about moving it.

To go back to the beginning . You have more money to invest . Most probably it will be better to increase your pension contributions a lot than start making new and separate investments. Or split the extra money between both.

Onestepcloser

Albermarle said:

Onestepcloser said:

LHW99 said:

Regarding my workplace pension could I transfer that into a vanguard sipp?

Probably, BUT if you are still with your employer they are unlikely to pay their contribution in any more = loss of "free cash".

May be worth considering if you leave a job, and the new employer's scheme won't let you transfer the old one across (or is worse value)

Ah right will leave that as it is then, I do have another pension from when I was younger, need to try and find out who it's with and see about moving it.

To go back to the beginning . You have more money to invest . Most probably it will be better to increase your pension contributions a lot than start making new and separate investments. Or split the extra money between both.

Don't have more at the moment as I'm clearing some debt first, should be clear in about a year and should then  have about 1k per month.

In regards to wife's pension with the council they don't contribute but she said this:
you put in £300 a month it only costs you £205 off your salary.

She will find out tomorrow what she is putting in just now. Then the 2 of us will need to look at setting up a SIPP.  As I haven't made any payments to vanguard yet, I'm wondering if it would be worth seeing if they would allow me to change it from an idea to a SIPP for the tax benefits.

LHW99

In regards to wife's pension with the council they don't contribute

I think you will find they do (generously), but it won't be spelled out anywhere