Increasing your Net Worth

pip895

jimjames said:

pip895 said:

Whether the transfer out was a good move remains to be seen - Things have certainly started off well and my apparent net worth is much higher as a result, but I wont really know the answer for many years - possibly until after I'm dead! 

What transfer value did you get vs pension value? Was it above 20x?

Around x 40 - I got a positive recommendation to move but as it increased at 5%/annum it was rather good in these low interest rate times.   

Diplodicus

pip895 said:

jimjames said:

pip895 said:

Whether the transfer out was a good move remains to be seen - Things have certainly started off well and my apparent net worth is much higher as a result, but I wont really know the answer for many years - possibly until after I'm dead! 

What transfer value did you get vs pension value? Was it above 20x?

Around x 40 - I got a positive recommendation to move but as it increased at 5%/annum it was rather good in these low interest rate times.   

A DB pension transfer continues to be a great windfall for many - if you can do it.

KeepOnKnitting

I would struggle to say if my better decision was always opting in to company pensions, or deciding to go bankrupt when I messed up really really badly. I had about £50k written off, and my pensions are about £50k, so it would appear to be 50:50. However, the bankruptcy allowed me to go to uni and get a degree, so that might actually have a bigger long term impact as I can now afford to contribute to the pension again.

london21

KoalaK32 said:

What’s the best financial decision you’ve made that helped boost your net worth? Also, what tool do you use to keep track of your net worth?

I started investing at a young age, did a sharesave for 3 years from age 18.
I contracted for some time which helped boost my savings.
Having parents that encouraged spending less and saving/investing more and were into real estate investments themselves.

MaxiRobriguez

Didn't sell our old house when moving to our new one and rented it out for a few years (pre-tax changes) before selling it on. Had to take out a bigger mortgage on current property but probably netted me about £50k which for a late 20's person at the time was quite significant. That opened up eyes to running a bigger mortgage and using capital to invest, which I've done since by salary sac'ing all the way down to minimum wage and using an offset mortgage to take additional cash flow from when needed.

Those two things combined have probably increased my net worth by about £150k in five years, to a total which is almost double what it would have been otherwise. Mad to consider that it's not through hard work, just a reasonable understanding of options.

Track it all on a spreadsheet by the way.

hildosaver

Best financial decision I ever made was buying £950 of bitcoin in 2014.

YellowStarling

MaxiRobriguez said:

That opened up eyes to running a bigger mortgage and using capital to invest, which I've done since by salary sac'ing all the way down to minimum wage and using an offset mortgage to take additional cash flow from when needed.

Snipped by me.

Just curious as I do something similar - LTA doesn't concern you then?

Also, not after an exact rate, but would there be an interest rate ballpark/range that would encourage you to cease doing this (i.e. if your returns from investing no longer covered the servicing of the additional mortgage(s)/amount?).

MaxiRobriguez

YellowStarling said:

MaxiRobriguez said:

That opened up eyes to running a bigger mortgage and using capital to invest, which I've done since by salary sac'ing all the way down to minimum wage and using an offset mortgage to take additional cash flow from when needed.

Snipped by me.

Just curious as I do something similar - LTA doesn't concern you then?

Also, not after an exact rate, but would there be an interest rate ballpark/range that would encourage you to cease doing this (i.e. if your returns from investing no longer covered the servicing of the additional mortgage(s)/amount?).

Not too worried.

Planned early retirement at 50, using a S+S ISA to bridge the gap. Forecasting I'll breach LTA in my late 80's but pot should still have around 300-500k left in it then (in todays money) which should see me through. And lets face it, there's going to be many changes in rules in the next 50 odd years which makes forecasting that far out a bit of a mugs game. For now I'm just happy to take the 42% tax dodge I can get which might not last forever.

RE: returns from investing no longer covering mortgage - that's not how I do it. The returns from investing simply get reinvested. I use money in my offset mortgage (which is funded from mortgage repayments) as either cash flow in event of big purchases (like a new car we recently got) or as speculative purchases of individual stocks (I've recently topped up on Boohoo and Unilever shares). The net outcome of this is my outstanding mortgage balance has basically gone nowhere in the last few years, but rather than only having access to that leverage every couple of years (when re-fixing the mortgage), I have access to it all the time - which makes speculative purchases and funding one off costs a bit easier.

I plan to take my mortgage into retirement which doesn't suit most people, which is why I'm comfortable doing it this way. I should have enough income from the DC pot to fund it.

For clarity, get paid about £65k annually - variable as it's made up of bonus/overtime etc and because of that my reference salary is a bit lower so I'm not chucking in £40k to pension each year, more like £25k. I'm mid 30's, current pension pot is £125k. So another 15 years of this will mean capital input of £400-500k and anticipating pension pot at retirement of £800k-£900k. Hopefully that's an underestimate. 

Mrs_Z

Best decision back in 2005 was to leave my permanent job at the time which was local and well paid.  I took on a temp to perm role and wondered many times if I'd made a right decision when after 5 months I was still temping for less money than I had earned in my old job.  The recruitment consultant had told me the company normally would offer the perm roles after 3 months.
After considerably longer than 3 months, I got the permanent role and doubled my old salary.  It turned out to be a very good financial move, although it was not planned as such.
Fast forward 10 years, we bought a BTL property - held it for 10 years or so, and just sold it before Covid hit - we were just lucky with the timing.
However, with all of that - perhaps the corner stone of building wealth has been always to know your needs from wants / nice to haves and live well within ones means.
To track everything I use an excel spreadsheet - and a very simple one of that! 

Alexland

YellowStarling said:

Just curious as I do something similar - LTA doesn't concern you then?

I found that after 'breaking the back' of the mortgage and increasing to heavy pension contributions in my mid 30s that I had already used nearly half of the LTA at 40 and assuming 2% growth above inflation and the LTA being inflation linked after the freeze then those existing contributions would have already used around 70% of the LTA at 55 assuming protected early access. So that only leaves a few more years until mid 40s to keep making heavy contributions before being likely to exceed the LTA.

Still much depends on stock market performance and valuations at age 55 as it's unlikely to be linear. I am only salary sacrificing higher rate income which also reduces my adjusted net income for child benefit and I don't expect to be earning such good money for much longer anyway. A few years ago I reduced my hours to look after our young kids. Similar to Maxi the intention is to retire at 50 (already have enough in S&S ISAs to bridge the gap) or maybe earlier and will use some of my TFLS to repay the modest IO mortgage. After a couple of decades of being told that developing a career and qualifications really matter I can now see the path to that being of little significance. The main unknown is if I will work all the way through my 40s as if we get some inheritance then it may be unnecessary but then retiring very early might set a bad example to the kids. Should inheritance be used for something more worthy than becoming a full time dad?

For now the focus is on filling my wife's pension as she is younger and has only used around a quarter of the LTA and it could need to last her a very long time so we are contributing 100% of her earnings. We will likely do some recycling from my TFLS and our LISAs into her pension until age 75 so eventually she might also get somewhere near LTA too. From paying lots of NI in my 20s then I had a high starting amount for the new SP so should have enough NI years by late 40s but we will need to buy some extra years for my wife. We have already purchased an incomplete year from when she was at uni.

Anyway to answer the original question we track our net worth each month in excel and use in the latest house value from zoopla (not too accurate but close enough and fairly stable) and with regular contributions of new earned money we rarely see any significant negative variations.