Investment Advice??

Roger175

Macka09 said:

@Roger175. 

I really appreciate the reply. 

I have been very silly upto now regarding money in the future and retirement. As it is now creeping up I’m panicking about it. 

The investment side of things is interesting but I just don’t understand it enough to risk playing with real money. A few friends in the trade have gone into Forex trading and rave about it but again, they’re still on the tools so I take it all with a pinch of salt. 

I will have to have a good look into the Sipp you mention. Thank you. 

Macka09

Don't fret about the investment side of things. If you buy something like I mentioned above (a low cost global tracker fund, you will be fine).

Just to make it clear, the way SIPPs (Self Invested Personal Pensions) work, is as follows. You deposit money and the pension provider claims back the standard rate tax relief, so if you put in £80, the provider claims another £20 from HMRC, so £100 will end up in your account. (if you are a higher rate tax payer, you can claim a further £20 back, but this is done via your tax return). Once you have that £100 in your account you should really invest it in something and nothing is simpler than buying a chunk of a fund. A fund is just a basket of shares, but with a simply low-cost tracker, like the one mentioned in my earlier post, these shares are not actively chosen by a fund manager who charges a small fortune, but simply by a computer which is tracking the index. There's lots of debate about which funds to buy, but this simple type do a pretty good job on the whole and will suffice for your needs. They will rise and fall as will all investments, but the secret is to just leave them alone and on the whole, in the longer term, the trend will be in an upwards direction. 

When you get to retirement age, there are various option for get your money out, but that's probably best left for another day, I don't want to overwhelm you with info. The main thing is, get an account opened and start contributing ASAP. Make it your new year's task!

Macka09

Roger175 said: Macka09 said:

@Roger175. 

I really appreciate the reply. 

I have been very silly upto now regarding money in the future and retirement. As it is now creeping up I’m panicking about it. 

The investment side of things is interesting but I just don’t understand it enough to risk playing with real money. A few friends in the trade have gone into Forex trading and rave about it but again, they’re still on the tools so I take it all with a pinch of salt. 

I will have to have a good look into the Sipp you mention. Thank you. 

Macka09

Don't fret about the investment side of things. If you buy something like I mentioned above (a low cost global tracker fund, you will be fine).

Just to make it clear, the way SIPPs (Self Invested Personal Pensions) work, is as follows. You deposit money and the pension provider claims back the standard rate tax relief, so if you put in £80, the provider claims another £20 from HMRC, so £100 will end up in your account. (if you are a higher rate tax payer, you can claim a further £20 back, but this is done via your tax return). Once you have that £100 in your account you should really invest it in something and nothing is simpler than buying a chunk of a fund. A fund is just a basket of shares, but with a simply low-cost tracker, like the one mentioned in my earlier post, these shares are not actively chosen by a fund manager who charges a small fortune, but simply by a computer which is tracking the index. There's lots of debate about which funds to buy, but this simple type do a pretty good job on the whole and will suffice for your needs. They will rise and fall as will all investments, but the secret is to just leave them alone and on the whole, in the longer term, the trend will be in an upwards direction. 

When you get to retirement age, there are various option for get your money out, but that's probably best left for another day, I don't want to overwhelm you with info. The main thing is, get an account opened and start contributing ASAP. Make it your new year's task!

I really appreciate the advice. 

I think what I may do is try to take my 2 very small pensions from previous employment and put them into a SIPP. 

LHW99

Macka09 said:

Roger175 said: Macka09 said:

@Roger175. 

I really appreciate the reply. 

I have been very silly upto now regarding money in the future and retirement. As it is now creeping up I’m panicking about it. 

The investment side of things is interesting but I just don’t understand it enough to risk playing with real money. A few friends in the trade have gone into Forex trading and rave about it but again, they’re still on the tools so I take it all with a pinch of salt. 

I will have to have a good look into the Sipp you mention. Thank you. 

Macka09

Don't fret about the investment side of things. If you buy something like I mentioned above (a low cost global tracker fund, you will be fine).

Just to make it clear, the way SIPPs (Self Invested Personal Pensions) work, is as follows. You deposit money and the pension provider claims back the standard rate tax relief, so if you put in £80, the provider claims another £20 from HMRC, so £100 will end up in your account. (if you are a higher rate tax payer, you can claim a further £20 back, but this is done via your tax return). Once you have that £100 in your account you should really invest it in something and nothing is simpler than buying a chunk of a fund. A fund is just a basket of shares, but with a simply low-cost tracker, like the one mentioned in my earlier post, these shares are not actively chosen by a fund manager who charges a small fortune, but simply by a computer which is tracking the index. There's lots of debate about which funds to buy, but this simple type do a pretty good job on the whole and will suffice for your needs. They will rise and fall as will all investments, but the secret is to just leave them alone and on the whole, in the longer term, the trend will be in an upwards direction. 

When you get to retirement age, there are various option for get your money out, but that's probably best left for another day, I don't want to overwhelm you with info. The main thing is, get an account opened and start contributing ASAP. Make it your new year's task!

I really appreciate the advice. 

I think what I may do is try to take my 2 very small pensions from previous employment and put them into a SIPP. 

That's a good start. The way to do it is to choose your SIPP provider. eg Hargreaves Lansdown, AJBell, iWeb.

Then you ask them to tranfer the old pensions and give them all the details and over a few weeks / months it gets done.

Meanwhile you can start putting in a bit of cash - even as littel as £50 per month if you wish, while researching suitable trackers / funds.

People here will be happy to suggests ones that a new investor could look at - probably global trackers of the type Roger175 suggested

MartaUK

I'm also self-employed so I opened the LISA with the hope of keeping it until 60 as the government adds the 25% bonus. Not sure if it is any better than a pension or SIPP.

ColdIron

It's OK as a basic rate taxpayer. 25% uplift on contributions same as a pension but tax free withdrawals like an ISA

Pensions win if you pay higher rate tax and of course you can make much larger contributions

Roger175

ColdIron said:

It's OK as a basic rate taxpayer. 25% uplift on contributions same as a pension but tax free withdrawals like an ISA

Pensions win if you pay higher rate tax and of course you can make much larger contributions

Agreed, but if I recall, you can't contribute after the age of 50 and can't start withdrawing (without penalty) until 60, so pension has to be the better answer here.

ColdIron

Sure, pension for me every time, but once you start to receive state pension the other pension will be taxed and it would be nice to have some tax free income. They both have their place

Albermarle

MartaUK said:

I'm also self-employed so I opened the LISA with the hope of keeping it until 60 as the government adds the 25% bonus. Not sure if it is any better than a pension or SIPP.

In both cases what is important is to add as much to them as possible/as allowed/as you can afford.

Macka09

Silly question here and probably very naive of me. 

Do you guys have investments to actually grow your money as well as investing into your pensions?

Is it a case of paying everything into a pension or try and grow some spare cash with investments first then pump it in to the pension?

I do apologise if this is a stupid question. 

LHW99

Macka09 said:

Silly question here and probably very naive of me. 

Do you guys have investments to actually grow your money as well as investing into your pensions?

Is it a case of paying everything into a pension or try and grow some spare cash with investments first then pump it in to the pension?

I do apologise if this is a stupid question. 

Definately not stupid (no question should be considered that )

Some people will have investments (S&S ISA's etc) as well as pensions, some not.

Mostly on here people say:

Make sure you have an emergency fund, to cover a few months income in case the boiler goes or your employment gets to the point where you just have to change jobs, and have to cover a bit of time before a new one etc.

Then get going on adding to your pension to get maximum employer contributions

Then think about any spare cash: perhaps fixed rate savings, additional pension contributions, and / or investments in funds or whatever.

And if you have an outline budget so that you know what you spend, and where you could save if things get tough - it helps.