Mid 30s, new to pension and investments

shell145

Albermarle said:

If you are saving for retirement , then best to stick with pension or maybe a LISA as well .
The advantage of a S&S ISA is that you could take money from it earlier but if you intend to keep it for 25 years then better to just put more in pension due to the tax benefit. 
On the other hand if you are likely to want the money in less than say 7 years , you probably are better off staying away from investments anyway.
There is some disconnect between your pension projection of £24K including state pension and the calculation of Kangoora which indicates a pension pot of £800K . Normally this would give you at least £24Kpa on its own .
Some pension projections can be pessimistic .

What is the link for the calculator you're using? I can't find anything from Google.
Putting just 7,200 into a pension for 26 years, with a lump sum of 13k, surely wouldn't produce an 800k pot?

Dazed_and_C0nfused

shell145 said:

Albermarle said:

If you are saving for retirement , then best to stick with pension or maybe a LISA as well .
The advantage of a S&S ISA is that you could take money from it earlier but if you intend to keep it for 25 years then better to just put more in pension due to the tax benefit. 
On the other hand if you are likely to want the money in less than say 7 years , you probably are better off staying away from investments anyway.
There is some disconnect between your pension projection of £24K including state pension and the calculation of Kangoora which indicates a pension pot of £800K . Normally this would give you at least £24Kpa on its own .
Some pension projections can be pessimistic .

What is the link for the calculator you're using? I can't find anything from Google.
Putting just 7,200 into a pension for 26 years, with a lump sum of 13k, surely wouldn't produce an 800k pot?

Don't know about the details of the calculation but it isn't £7,200 and £13,000.

Those are the amounts you intend on contributing, they will have £5,050 basic rate tax relief added so an immediate 25% increase on day one.

El_Torro

For £600 a month for 26 years with a starting lump sum of £13k to be worth £800k the investments would have to grow by more than 8% per year. So yes, that’s too optimistic. Also that quotes nominal figures, not taking inflation into account. £800k in 26 years time will be worth a lot less than £800k today.

Using the Hargreaves Lansdown pension calculator I get roughly £300k. This assumes 5% growth per year. HL also quotes the figure in today’s pounds, not taking into account 26 years worth of inflation. HL uses 2% as the annual average rate of inflation.

shell145

El_Torro said:

For £600 a month for 26 years with a starting lump sum of £13k to be worth £800k the investments would have to grow by more than 8% per year. So yes, that’s too optimistic. Also that quotes nominal figures, not taking inflation into account. £800k in 26 years time will be worth a lot less than £800k today.

Using the Hargreaves Lansdown pension calculator I get roughly £300k. This assumes 5% growth per year. HL also quotes the figure in today’s pounds, not taking into account 26 years worth of inflation. HL uses 2% as the annual average rate of inflation.

Thanks, I find it at about £367k (using £750 controbutions which will be gross after government top up), i think that calculator was using 2.4% growth. So that is not enough for what I want to allow, even if I don't draw it until 66.

I also want to save extra, so I can reduce my hours from mid 50s if at all possible.
So I definitely need some investments in a S&S ISA or perhaps something else, to use from mid 50s. And more for retirement, whether that is property, LISA or pension, so much to think about!

penners324

Pension Bee is easy to open and manage and offers a limited range of funds. And has an easy to use app.

steampowered

shell145 said:

I am perfectly happy renting the house to my friend. My house is going up in value, it has even increased in value the last 6 months. It is much better than my money sitting in a savings account, it cannot be invested elsewhere as I will want it in the next couple of years. I will sell my house when me and my partner want to move, partly for STD reasons. I do pay income tax on the rent.

I have travelled A LOT. Several 2-3 month trips, I'm now not in a position to do travel more than 4-5 weeks every Jan/Feb and then standard 1 week holidays through the year. When I retire early, I will travel substantially again.

Isn't a S&S LISA is better than just a S&S ISA? Because of the government top ups

You are putting a lot of trust that your friend will leave when you want him to leave. Perhaps you trust your friend enough for this. Personally I would sell, but each to their own, if you are happy with that risk.

A S&S LISA is only suitable for first time buyers (which you are not) or if you are saving for retirement. If you want to withdraw your funds from a S&S LISA before retirement, you will pay a 20% penalty, which will remove the government bonus. If you are not comfortable locking the money away until retirement then you should use a regular S&S ISA.

shell145

steampowered said:

A S&S LISA is only suitable for first time buyers (which you are not) or if you are saving for retirement. If you want to withdraw your funds from a S&S LISA before retirement, you will pay a 20% penalty, which will remove the government bonus. If you are not comfortable locking the money away until retirement then you should use a regular S&S ISA.

I guess what I'm really trying to find out, is if I should put all of my money 100% earmarked for retirement into a pension, or if  I should put some into an S&S LISA. 

shell145

penners324 said:

Pension Bee is easy to open and manage and offers a limited range of funds. And has an easy to use app.

I just tried to set up a pension with Pension Bee. They say I can't because you need to have at least one pension to transfer to use them. Damn

Albermarle

shell145 said:

Albermarle said:

If you are saving for retirement , then best to stick with pension or maybe a LISA as well .
The advantage of a S&S ISA is that you could take money from it earlier but if you intend to keep it for 25 years then better to just put more in pension due to the tax benefit. 
On the other hand if you are likely to want the money in less than say 7 years , you probably are better off staying away from investments anyway.
There is some disconnect between your pension projection of £24K including state pension and the calculation of Kangoora which indicates a pension pot of £800K . Normally this would give you at least £24Kpa on its own .
Some pension projections can be pessimistic .

What is the link for the calculator you're using? I can't find anything from Google.
Putting just 7,200 into a pension for 26 years, with a lump sum of 13k, surely wouldn't produce an 800k pot?

I took the £800K figure from a previous post ( from kangaroo) without really checking it .
I read it again - it assumes 5% growth + 2 % inflation .
So the £800K includes inflation over 30 years and is not in todays money + the growth is on the optimistic side.

shell145

I've set up a pension with vanguard, my 15k lump sum became 18.75k, 650/month by d/d. it feels good!
I'll put a small amount extra into a S&S ISA
thank you so much for the help, and letting me clear up my own head!