Worried about the future

magic_genie

Apologies if this is in the wrong forum, I'm not as familiar with the forums as I'd like to be, because when I do have the time to read some discussions, they're always well informed and interesting.

I'm a little bit worried about the future, I'm unsure if I should be - mostly because I don't have a PENSION, there I've said, it's out in the open, no pension, no pension. Hmmm, I feel better already.

Some details about me:
I'm 36 y/o.
I presently earn 30k a year and save nothing.
I live in a flat that I own, the mortgage I owe is 52k, it's presently worth 130k.
I have a house that's rented out on a Buy to Let mortgage, I paid 110K, it's presently worth 140k.
I have an ISA (£100 per month) this is a year old.
I've been paying £75 a month into a 'Universal Retirement vehicle' (stockmarket related) that I've had for 10 years, started when I worked in the Middle East for a year, last time I looked this had lost money, I don't really understand it.
I have 10k in a savings account.

So, that's a little bit about me, I'm about to pull another 7k from my mortgage and buy another buy to let for 50k hopefully in the next month or two. I work for a small company, it offers no pension.

If you're still reading, thanks ever so much. What are your thoughts on my finances, my main concern is the PENSION, am I an idiot for not having one, should I rush out and get one, who should I go and see.

I don't really know what I'm doing, I've just tried to do the very best I can for the past few years, tried to do whatever seems sensible.

If you work in the Middle East, put money away they say, so I tried, then the stock market crashed.

Buy into property they say, so I did.

Do you all have pensions?

Hope to hear from you, kind regards
Alex

Milarky

Hi,

I've put a link back to your post here in the Pensions section

EdInvestor

Hi Alex

magic_genie wrote:

I have an ISA (£100 per month) this is a year old.
I've been paying £75 a month into a 'Universal Retirement vehicle' (stockmarket related) that I've had for 10 years, started when I worked in the Middle East for a year, last time I looked this had lost money, I don't really understand it.

Most of your investments looks great, no problem

What are the ISA and the "URV" invested in?
Please post more info on both.

thaylock

Alex, Personally I think you are doing a grand job, 2 properties with another one on the way, excellent stuff. I am in a similar position, I currently own 3 properties, but I also have a pension (I only pay into a pension for the tax breaks, no other reason), I think a pension could complements your other income (such as rent from properties). In my view pensions are a complete rip off, I hate them because by law you have to buy an annuity by the time you reach 75, which effectively means you are giving your pension pot away for a guaranteed (paultry) yearly income, property on the other hand can give you similar returns but you can also leave the property to your family in the event of your death, I don't think you can cash in your annuity & leave that to your family. That said, start a pension anyway purely for the tax benefits.

dunstonh

In my view pensions are a complete rip off, I hate them because by law you have to buy an annuity by the time you reach 75, which effectively means you are giving your pension pot away for a guaranteed (paultry) yearly income

A couple of recent threads in the pensions forum discussing this issue. Makes good reading.

Im not agreeing or disagreeing with the above at this stage but I will point out that an annuity rate at age 65 is higher than savings rates currently. Tax relief going in, growth on that tax relief compounded over many years means that pensions can be more favourable than alternatives if you are younger. As you get older, the benefits of a pension reduce in favour of alternatives.

property on the other hand can give you similar returns but you can also leave the property to your family in the event of your death,

Buy to Lets are potentially a higher risk. You can have potentially good returns or you can face large losses. Especially if using a mortgage on a buy to let scheme. If you die before retirement, the whole fund value of a "modern" pension is paid to your nominated beneficiary with no IHT payable. The irony is that to get the most out your of pension, you need to die before you commence it.

I've been paying £75 a month into a 'Universal Retirement vehicle' (stockmarket related) that I've had for 10 years, started when I worked in the Middle East for a year, last time I looked this had lost money, I don't really understand it.

Stockmarkets go down as well as up, just like property. If you look back, property price drops occur at different times to stockmarket crashes. We have had the stockmarket crash of a few years ago and growth since then has improved and outperformed property. Property will have its turn at some point and prices will fall back. Its the cycle of these things. In an ideal world you would know when the low point is and when the high point is and put your money in when its low and take it out when its high.

One pointer I would suggest is that you get that pension reviewed by an IFA. The name rings a bell and I believe that it is a legacy charging pension based on charges of the early 1990s and not current pensions. Indeed, the applies to anyone reading this. Personal pension charges have dropped big time since 1999. However, anyone on those legacy pensions are quite probably still on high charges. There are a few things which are better on some older pensions though so a proper check would need to be carried out.

thaylock

dunstonh,

Thanks for expanding on my views.

magic_genie

Thanks for your kind posts everyone.

>What are the ISA and the "URV" invested in? Please post more info on both. >
I will try and dig these out tonight.

regards
Alex

Moorepart

you look in a good position ,my advice is keep on buying- buy to let,properties
and use your Isa max allowance every year,your pension will be your properties,new rules comming on buy to let into pension, do your research on different sites.

Properties and cash are made in Heaven.

Good Luck.

Pal

My advice is not to fall for the hype about property as chances are high that a lot of BTL landlords are about to get seriously stung by house price falls. Now is not a great time to be buying: the only people who are saying that BTL is still a sensible idea are house owners and BTL landlords desperate to talk up the market to stop the value of their investment falling.

ReportInvestor

magic_genie, you've done very well. A pension is primarily an investment towards your retirement with tax advantages, but also with strings attached. You are clearly investing towards your retirement.

There is plenty of well informed comment above. My only concern would be the overbalancing of your investments towards residential property. The other potential trouble with buy-to-let on a mortgage is that it gears up your current investment.

If property rises 10% your potential investment gain is more than that. And vice versa if it falls.

EdInvestor

Speaking as a property investor I would agree that now is a poor time to buy in most places as yields are too low.

If it were me I would not get another BTL at present but rather would seek to diversify into assets such as equities (I like the shares that pay dividends) and commercial property funds.

Looks like you've got an unused 7k stocks and shares ISA allowance there, magic genie.Why not think what you could put in it and leave BTL no 2 until later?