Future Investment/Pension

konn1ch1ha

Hi all,

I am a 35 year old male, married, but in the process of divorcing my wife. I want to start looking at my future retirement pot. 

I am self-employed and on modest pre-tax income between £20-24k. We have an our home (no mortgage). I am also on a very small £4k salary with a pension. I will be looking to buy my wife out of the equity upon the divorce. 

Investing for the future has been something I've been putting off for a while but I need to start thinking about it soon. Investing is a minefield, there are too many options to select from and I am looking for some insight of good places to start. I'm very aware of the government's LISA, which I have been very tempted to invest in. Any good providers? 

Cryptocurrency is something else I've been interested in but that's more of a gambling/techbro thing the kids are doing at the moment and is another avenue of confusion. 

Is it worth speaking too a professional financial advisor? My bank (Loyds)? Where to begin?

TIA

eskbanker

Pension is the obvious vehicle for retirement planning given the tax advantages - if you're already paying into one then can you simply pay more into it?

Dazed_and_C0nfused

konn1ch1ha said:

Hi all,

I am a 35 year old male, married, but in the process of divorcing my wife. I want to start looking at my future retirement pot. 

I am self-employed and on modest pre-tax income between £20-24k. We have an our home (no mortgage). I am also on a very small £4k salary with a pension. I will be looking to buy my wife out of the equity upon the divorce. 

Investing for the future has been something I've been putting off for a while but I need to start thinking about it soon. Investing is a minefield, there are too many options to select from and I am looking for some insight of good places to start. I'm very aware of the government's LISA, which I have been very tempted to invest in. Any good providers? 

Cryptocurrency is something else I've been interested in but that's more of a gambling/techbro thing the kids are doing at the moment and is another avenue of confusion. 

Is it worth speaking too a professional financial advisor? My bank (Loyds)? Where to begin?

TIA

The usual suggestions on here are to avoid financial advisors.  

Either use an independent financial advisor or DIY.

Before arranging anything with your bank check how they operate. It could be they are tied to their own products and not considering whole of market options.

konn1ch1ha

eskbanker said:

Pension is the obvious vehicle for retirement planning given the tax advantages - if you're already paying into one then can you simply pay more into it?

Quite possibly, yes. To be honest, I'm not particularly au fait with pensions. If I leave my salaried job, do I lose the pension too?

gravel_2

No - it's your money. Essentially an investment account with age based access restrictions. You can combine pensions as well so you're not stuck with you old employer's choice forever.

konn1ch1ha

gravel_2 said:

No - it's your money. Essentially an investment account with age based access restrictions. You can combine pensions as well so you're not stuck with you old employer's choice forever.

I've asked the pension provider how one pays more into the fund as it's not obvious. 

Would it be wise to hold off paying any more in if I'm getting a divorce and the possibility of the pensions getting split (despite having next to nothing in mine)?

eskbanker

konn1ch1ha said:

eskbanker said:

Pension is the obvious vehicle for retirement planning given the tax advantages - if you're already paying into one then can you simply pay more into it?

Quite possibly, yes. To be honest, I'm not particularly au fait with pensions. If I leave my salaried job, do I lose the pension too?

As above, the short answer is 'no', but if you're only earning £4K salary then the pension provision will presumably be practically negligible anyway, so it really would have made sense to have started paying meaningful amounts into pensions as soon as you started self-employment, but it's never too late!

You mention that you're planning to buy your wife out of her half of an unmortgaged property, which would suggest that you have access to significant savings, which are likely to be relevant when considering your financial situation?

Brie

If you have savings in a bank account or in a pension they would need to be included in financial disclosure either way.  But if things are just about finalised in your split I'd wait to move too much about as it will just cause confusion in my opinion.  

Once things have calmed down then you can look at contributing more to a work pension.  These are normally called additional voluntary contributions (AVCs) and just add an investment pot to whatever else is in your pension.  The alternative is to open your own personal pension and contribute to that.  There are advantages to both.  Contributing extra to a work pension is easy because you don't need to think much about it (which I like as I'm lazy) and there may be cost advantages as you're part of a large group.  

ISAs are also a good way to save without incurring tax on any gains on your investments.

If you are able to get an appointment with someone at your bank then that might be a good place to start.  Just be aware that they are working for the bank so everything they will be suggesting generally will be to get something with that bank.  But they will give you (hopefully) lots of helpful information that you can take away and think about.  You can then decide if you want to go back to them to get that ISA, mortgage, whatever or go somewhere else.  Whatever happens don't be pressured into signing up to something too quickly just because "Bob at the bank" was a good bloke and very helpful.  

konn1ch1ha

eskbanker said:

konn1ch1ha said:

eskbanker said:

Pension is the obvious vehicle for retirement planning given the tax advantages - if you're already paying into one then can you simply pay more into it?

Quite possibly, yes. To be honest, I'm not particularly au fait with pensions. If I leave my salaried job, do I lose the pension too?

As above, the short answer is 'no', but if you're only earning £4K salary then the pension provision will presumably be practically negligible anyway, so it really would have made sense to have started paying meaningful amounts into pensions as soon as you started self-employment, but it's never too late!

You mention that you're planning to buy your wife out of her half of an unmortgaged property, which would suggest that you have access to significant savings, which are likely to be relevant when considering your financial situation?

I don't have any meaningful savings. I would need to get a secured loan or mortgage on the house.

eskbanker

konn1ch1ha said:

eskbanker said:

konn1ch1ha said:

eskbanker said:

Pension is the obvious vehicle for retirement planning given the tax advantages - if you're already paying into one then can you simply pay more into it?

Quite possibly, yes. To be honest, I'm not particularly au fait with pensions. If I leave my salaried job, do I lose the pension too?

As above, the short answer is 'no', but if you're only earning £4K salary then the pension provision will presumably be practically negligible anyway, so it really would have made sense to have started paying meaningful amounts into pensions as soon as you started self-employment, but it's never too late!

You mention that you're planning to buy your wife out of her half of an unmortgaged property, which would suggest that you have access to significant savings, which are likely to be relevant when considering your financial situation?

I don't have any meaningful savings. I would need to get a secured loan or mortgage on the house.

OK, but even if succeeding in obtaining such finance on a modest income, servicing it may be challenging, in terms of the incremental monthly cost over and above your current outgoings, so it may not be the most realistic time to be looking at building up a retirement pot?  No wish to pour cold water on your aspirations, but just suggesting that you may find you need to prioritise the short term over the long term if there's not enough in the kitty to do both....

Albermarle

eskbanker said:

konn1ch1ha said:

eskbanker said:

konn1ch1ha said:

eskbanker said:

Pension is the obvious vehicle for retirement planning given the tax advantages - if you're already paying into one then can you simply pay more into it?

Quite possibly, yes. To be honest, I'm not particularly au fait with pensions. If I leave my salaried job, do I lose the pension too?

As above, the short answer is 'no', but if you're only earning £4K salary then the pension provision will presumably be practically negligible anyway, so it really would have made sense to have started paying meaningful amounts into pensions as soon as you started self-employment, but it's never too late!

You mention that you're planning to buy your wife out of her half of an unmortgaged property, which would suggest that you have access to significant savings, which are likely to be relevant when considering your financial situation?

I don't have any meaningful savings. I would need to get a secured loan or mortgage on the house.

OK, but even if succeeding in obtaining such finance on a modest income, servicing it may be challenging, in terms of the incremental monthly cost over and above your current outgoings, so it may not be the most realistic time to be looking at building up a retirement pot?  No wish to pour cold water on your aspirations, but just suggesting that you may find you need to prioritise the short term over the long term if there's not enough in the kitty to do both....

To add a bit more cold water, it is unlikely that a financial advisor will be interested due to the small sums involved. Plus they would be reluctant to get involved during an ongoing divorce.

So as per the above post, probably best to get the current financial/divorce difficulties sorted first, and then start planning for the future after that.
Is there any chance you can move to better paid employment at some point ?