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making the best of my situation

in Savings & Investments
10 replies 767 views
whatsthatnoisewhatsthatnoise Forumite
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First Post
MoneySaving Newbie
Hi all,
Am embarrassed to even be asking this, as I know our choices to date have been lazy to say the least. I am wondering what the opinions may be on what may be a good choice moving forward.

Current position is...

55 years old, self employed. No pension apart from State pension when the time comes. Partner full time employed, with works pension of more than 20 years. We own our home, and also another that is rented out at approx £800 pm. We have savings of approx £300K, but only a small proportion of that is in any kind of investment. The rest is sat in banks, earning nothing.

From here, we have been considering buying another property to rent out, or, maxing out ISA allowance for the next few years, in something like Vanguard LS60. not really thought about pensions, but am starting to now. A bit too late perhaps I know. Or is it.?

What would people choose to do in my position?  

Replies

  • MX5huggyMX5huggy Forumite
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    Look at pensions, you’re 55 so any money you put in a pension is accessible now. They beat ISA’s by a minimum of 6.25% but if your a higher rate tax payer and then a lower rate tax payer when you take the money they are even better. 

    If you are earning £30k per year for the next 10 years pull all your earned income into a pension and live off your savings. You’ll need 2 or 3 years of bigger payments from your pension then the state pension kicks in and you top that up. 
  • moneysavingheromoneysavinghero Forumite
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    You seem to be in a good position financially so leaving your pension a bit late is not the end of the world. Never too late to get the benefits of investing in a pension. I'm presuming you are a high rate tax payer so you get a large instant benefit from putting your money into a pension rather than an ISA.
  • xylophonexylophone Forumite
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    Why not start a pension for yourself?
    https://www.vanguardinvestor.co.uk/what-we-offer/personal-pension/personal-pension-account

    Is your partner able to increase his contributions to his workplace pension?
  • AlbermarleAlbermarle Forumite
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     maxing out ISA allowance for the next few years, in something like Vanguard LS60. not really thought about pension

    Be clear that both Stocks and shares and pensions are both places where you can have your money in investments ( such as VLS 60 amongst thousands of others ) 

    The difference is in the tax treatment , and for most people it is more beneficial to invest via a pension due to the tax relief .

  • barnstar2077barnstar2077 Forumite
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    Start a pension, put as much money in it as you can over the next five to ten years.  Retire.
    Think first of your goal, then make it happen!
  • edited 10 June at 11:19PM
    Steve182Steve182 Forumite
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    edited 10 June at 11:19PM
    Don't buy another BTL, unless you enjoy giving money to HMRC 

    Pension, followed by S/S ISA is the way to go 

    LS60 is a fairly low risk/low reward option, perhaps ideally suited for someone already retired and in drawdown, or maybe someone needing the money in 5 years. Statistically the chances of losing money in a 100% equity portfolio over 10+ years is extremely low. If that was my timeframe I would go with 100% equities to maximise returns and think about de-risking later on. 
    “Like a bunch of cod fishermen after all the cod’s been overfished, they don’t catch a lot of cod, but they keep on fishing in the same waters. That’s what’s happened to all these value investors. Maybe they should move to where the fish are.”   Charlie Munger, vice chairman, Berkshire Hathaway
  • unkleunkle Forumite
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    Rather than Vanguard have a look at HSBC's equivalent which is more world spread. HSBC Global Strategy.
  • whatsthatnoisewhatsthatnoise Forumite
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    Apologies for being absent to respond until now.

    Thanks everyone for your input. It has been really helpful to see that the general consensus is that pensions is the way to go. On that front, is it better to get an advisor to manage it for me, or would I be better advised to sort it myself?

    I have recently spoken to an advisor that has suggested different things, amongst starting a pension, in order to be as tax efficient as possible. Of course, I have been informed that there is a % charge on whatever the total "invested sum" is, but I don't know what the typical figure is in that sense. Does anyone have any views on that or a rough guide as to what the average charges should be?

    @ Steve182... I am beginning to shift away from the idea of another property... With prices as they are now, coupled with the potential hassle and taxation, it doesn't look too attractive at all.

    Can I ask why you say the LS60 is a low risk / reward scheme to invest in? I was under the impression that it was medium / fractionally higher, but I am a total novice, so any opinions are welcome.

    @ Unlke... Thanks for that, I'll have a look at the HSBC option too.



     
  • LintonLinton Forumite
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    I agree with you that VLS60 is a bit higher than medium risk/reward.
  • AlbermarleAlbermarle Forumite
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    Apologies for being absent to respond until now.

    Thanks everyone for your input. It has been really helpful to see that the general consensus is that pensions is the way to go. On that front, is it better to get an advisor to manage it for me, or would I be better advised to sort it myself? It takes 5 minutes to open a new pension on the internet but you then have to choose which investments within the pension you want your money to go into . Some pensions have thousands of choices , others keep it simple with just a handful + ones inbetween .

    I have recently spoken to an advisor that has suggested different things, amongst starting a pension, in order to be as tax efficient as possible. Of course, I have been informed that there is a % charge on whatever the total "invested sum" is, but I don't know what the typical figure is in that sense. Does anyone have any views on that or a rough guide as to what the average charges should be? Typically you will get charged an initial fee , maybe around £2K and then 0.5% to 1 % ongoing depending on what sort of amounts we are talking about . You should talk to a local IFA rather than someone tied to a company.

    @ Steve182... I am beginning to shift away from the idea of another property... With prices as they are now, coupled with the potential hassle and taxation, it doesn't look too attractive at all.

    Can I ask why you say the LS60 is a low risk / reward scheme to invest in? I was under the impression that it was medium / fractionally higher, but I am a total novice, so any opinions are welcome. 

    @ Unlke... Thanks for that, I'll have a look at the HSBC option too.



     
    As a general comment , setting up a simple pension and investing in something like VLS60 , is low cost and easy .
    IFA input is probably more of a benefit if you have more complex finances /large sums / when taking the income in retirement /helping with tax issues , family trusts etc 

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