pension vs property dilemma

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  • jimjames
    jimjames Posts: 17,586 Forumite
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    n12maser wrote: »
    By the way, the reason I chose a US index fund similar to the S&P 500 is because Warren Buffet said he'd advise his children to put 80% of their savings into an S&P 500 index tracker and the remaining 20% in bonds. Ok so I haven't done the bonds bit yet.......

    Just to pick up on this, I'm assuming Buffet said that because he is based in the USA. UK investors are more likely to want at least some local investments to reduce currency risks - although Brexit vote showed the impact that can have on UK market too
    Remember the saying: if it looks too good to be true it almost certainly is.
  • dunstonh
    dunstonh Posts: 116,288 Forumite
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    By the way, the reason I chose a US index fund similar to the S&P 500 is because Warren Buffet said he'd advise his children to put 80% of their savings into an S&P 500 index tracker and the remaining 20% in bonds. Ok so I haven't done the bonds bit yet.......

    Buffet said it to a room of US investors subject to US taxation. Taxation in the US for investments is different to the UK. US investors are also notoriously home biased. Unlike UK investors domiciled in Sterling. It also needs to be noted that Buffet himself does not follow that strategy for his own investments and those of his clients.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • n12maser
    n12maser Posts: 22 Forumite
    Thanks for the context, did not know that. Am an investment novice!
  • Keep_pedalling
    Keep_pedalling Posts: 16,577 Forumite
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    n12maser wrote: »
    Thanks for the context, did not know that. Am an investment novice!

    While you are in sorting out the future mode, have you both got wills in place?
  • ChesterDog
    ChesterDog Posts: 1,111 Forumite
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    jimjames wrote: »
    Just to pick up on this, I'm assuming Buffet said that because he is based in the USA. UK investors are more likely to want at least some local investments to reduce currency risks - although Brexit vote showed the impact that can have on UK market too

    It should also be noted that WB's advice was to people who will be inheriting billions of dollars as a starting point.
    I am one of the Dogs of the Index.
  • n12maser
    n12maser Posts: 22 Forumite
    No but thanks for raising we have wills on our radar to do it in the next few months. Am aware of I got hit by lightening nothing would go to my partner at present
  • Keep_pedalling
    Keep_pedalling Posts: 16,577 Forumite
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    n12maser wrote: »
    No but thanks for raising we have wills on our radar to do it in the next few months. Am aware of I got hit by lightening nothing would go to my partner at present

    It's worse than than that, you would also lumber her with managing the financial mess you would leave behind with all your assets tied up in trust for your child until he/she reached 18.

    Although the chances of you dying young is low the consequences of it happening are likely to be disastrous, don't put it off for a few months, as those months tend to turn into years with far too many people.
  • Alexland
    Alexland Posts: 9,653 Forumite
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    edited 13 September 2017 at 10:29PM
    Your pension is exceptionally low for your age, you are very exposed to UK house prices (building up a big capital gains tax liability?) and you are missing out on substantial tax breaks.

    The trick with pensions is to make above average contributions gradually over many years to optimise your tax, national insurance and child benefit in each year. We are also in our 30s and this year I am putting around 35k into my pensions and my wife is investing 25k into hers. We don't have a BTL but we do own 80% of our forever house.
  • fiisch
    fiisch Posts: 509 Forumite
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    I'd keep the investment property personally.... If (and I guess it's a very big if) you still have it at 65, that's a continuing income and in theory it'll continue to go up in value.

    Your pension pot isn't great, but neither is your employer's contribution - I think you need to find a way to up regular contributions (e.g.: when your childcare costs decrease) rather than take drastic action and sell the flat.
  • n12maser
    n12maser Posts: 22 Forumite
    Alexland wrote: »
    Your pension is exceptionally low for your age.

    Need to call you out on this as it's simply not true. A Royal London survey in 2015 revealed the average pension savings of a 35 year old in the UK to be £14k. Source - The Guardian (can't yet post link as a new user)

    Well done for you and your wife saving some huge sums but that is certainly not the norm. My generation is heading for a pensions crisis - I work in a reasonably well paid industry (advertising) in London and the majority of my colleagues of a similar age have no property and I imagine little if anything left to contribute to a pension each month after rent + living costs. None of them live particularly beyond their means as far as I can see. House prices out of reach, wages stagnating, food & service prices inflating etc etc
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