Partner and I self employed - sipp or property? What investing platform?

Duncannnn

Guys my partner and I are mid 30’s, self employed without a pension.

We both earn around 40k ish per year.

I know I need to do something quick to ensure we can retire comfortably. Another thing that plays on my mind is I’ve a lung condition that will progress, the rate at which is unknown…..there’s every chance I may not be able to work at 50, heck I might not even be here, but that’s the dice everyone of us roll.

back to our earnings 

much of my earnings now come from Republic of Ireland, and a lot of this is taxed at source now. So I’d say now about 10k of my total earnings comes from UK work…..I am unsure how this would affect uk government tax relief for investment into a sipp?

i know we are going to have to make some big contributions to be able to retire comfortably. I’d say I could put away 600 a month into a sipp quite comfortably my partner probably much less as she’s throws about money like it’s toilet roll.


I’ve many questions, I’d love to hear opinions from anybody in the same boat as ourselves who is much further ahead than us.

so a few questions 

1. property vs pension?

2. sipp or open the governments lifetime isa?

3. What platform for a sipp - interactive investor?

4. Can anyone recommend some good resources to read up on this?

thanks 

Albermarle

so a few questions 

1. property vs pension? Partly because this is a pensions forum, you will not find many enthusiasts for rental properties. Especially as the tax regime for BTL is more onerous than in the past.

2. sipp or open the governments lifetime isa?
Lifetime ISA (LISA): how they work & best buys (moneysavingexpert.com)
In the second half of this link you will find a ' pros & cons' for LISA vs pension ( you can have both of course)

3. What platform for a sipp - interactive investor? The platform choice is much less important than the investments you choose to hold in the pension/platform. However II is better for people with larger funds so perhaps not the best choice.

4. Can anyone recommend some good resources to read up on this? Many of us have found reading this, and the Savings and Investments forum regularly, a good source of info.

Stubod

....forget the rental property idea, lots of worry, stress, legislation, tax.....better to go with pension / investing...(IMHO).

dunstonh

1. property vs pension?
2. sipp or open the governments lifetime isa?

1 - property is not the easy option any more.  if you have building/refurb skills and understand the market then there is still good money to be made.  However, the days of any property being able to be profitable are gone.   Plus, realistically, you would need a minimum of 8-10 properties in your case.  So, you would need to become a professional landlord to make it viable.

2 - The government don't issue a LISA.    LISA is just a tax wrapper.   as it stands, and with your small proposed contribution (small relative to your income), earlier than state pension age  of 68 is not likely to be viable unless you intend to take your planning seriously in the future.    LISA beats pension for basic rate taxpayers but pension beats LISA for higher rate.   There are other pros and cons of both wrappers.   You say you are self employed but if you went limited company, then it swings to pension.      If you wanted property, then you would probably do that on a limited company structure too.

El_Torro

On the point about owning a rental property: Albermarle is right in saying that most people on this forum are not fans of Buy To Let. I own one myself, with no plans to sell it. I think that for some people it could be a useful part of a diversified portfolio. I would prioritise getting your other investments up and running though, namely ISAs and pensions.

Pensions are more tax efficient than ISAs, though it is also harder to get your money out of a pension when you want to. Both have their uses. Remember that to get the most out of a LISA you should leave the money there until you are 60. So if you are focusing on pensions and LISAs I would put some into ISAs too. 

QrizB

Duncannnn said:

Guys my partner and I are mid 30’s, self employed without a pension.
We both earn around 40k ish per year.
...
i know we are going to have to make some big contributions to be able to retire comfortably. I’d say I could put away 600 a month into a sipp quite comfortably my partner probably much less as she’s throws about money like it’s toilet roll.

The very rough guide (to give you somewhere to start thinking) is that, if you have no pension savings but want a similar standad of life in retirement as you have now, you should save "half your age" in % of your current income into your pension.

If you're 36, that's 18%. 18% of £40k is £7200 a year, which happily coincides with your £600 a month.

So you shoudl both be looking at saving 18% / £600 a month towards retirement, from now until you retire (another 32 years, unless you find you can retire early). If your income increases, so will your contribution. Saving more than that will help!

£7200 a year for 32 years, ignoring growth, is roughly a quarter of a million quid. This should let you top up your state pension by about £10k pa.

MallyGirl

Opening a LISA even with a £1 before you turn 40 gives you options in the future. I was too old when it was launched - like many on here - so it was never an option.