cryoman1965
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| posted on 15/9/14 at 06:16 PM |
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Starting a Pension.
My 17 yr old comes home from work and asks about starting a pension. I have a company pension so have very limited knowledge in this. His company
don' t offer a company pension or a stakeholder. Any free advise welcome where to look and what 4o look for. I.E Are all stakeholder pensions
the same.
Cheers
Nige
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Chris_Xtreme
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| posted on 15/9/14 at 07:28 PM |
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I know you said 17, but the company may have something in the pipe line. If they are really small may be not
https://www.gov.uk/workplace-pensions-employers
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bi22le
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| posted on 15/9/14 at 08:33 PM |
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Any money he puts away (and get used to doing so) is great.
when I turned 30, nearly 2 years ago, I looked into pensions. The market is dead. Low interest rates and debatable returns on investment. The pension
market is very stale so I would not put any money into it right now.
first thing to do is get him putting money. Set up a standing order to get a set amount of money out of his account and into a high interest ISA.
These wont offer much, something like 1.5% I think.
Then do what I did. After a year (£100 a month =£1200 total) I brough ETF. Read about them. They are automated shares essentially. Aimed to track what
ever you want. It allows you to invest in stock exchanges (NASDAQ, FTSE250, etc), industries (IT, new business, chemical etc) or comodities.
Essentially what ever you think will be big in 30 years you can get.
ETF are special because they are tax free (ISA compliant) and automated. You basically get a clever computer to broker and manage it, not a fat cat in
London taking your wedge.
I have invested over £1500 this year and am currently sitting on approx 8% growth. You cant get that anywhere else.
Im not a sales man, do some googling. You will see that there is a hell of a lot of interest for financial geeks on ETFs. Shop around for the broker
(you need someone to actually purchase these. It functions like a Paypal account basically) you want to use.
For you information. I use Morningstar to compare ETF data and IWEB to invest my monies.
If you want any further info then U2U me and I would be happy to assist.
Track days ARE the best thing since sliced bread, until I get a supercharger that is!
Please read my ring story:
http://www.locostbuilders.co.uk/forum/13/viewthread.php?tid=139152&page=1
Me doing a sub 56sec lap around Brands Indy. I need a geo set up! http://www.youtube.com/watch?v=EHksfvIGB3I
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cliftyhanger
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| posted on 15/9/14 at 09:17 PM |
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Just saving into a high interest regular saver account can be a good way to start. Rates are about the best you can get. Then maybe, if he really
wants to, stick into a pension scheme at some point. Danger until that happens is that he may decide to blow it on something more useful to him, eg
cars/girls/booze etc
I have an inherent distrust of financial institutions, and I prefer the idea of using a BTL as a self funding pension scheme. Needs cash to get it
started though, and not insignificant amounts.
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russbost
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| posted on 16/9/14 at 07:18 AM |
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My pension lost around 1/3 of it's value just b4 I was 50 & able to make any drawings against it (2007 crash) however the funds which
(fortunately) I had invested in property for rental continued to provide the same return they always had & in fact grew during this period both in
capital value & %age return - the lesson is pretty clear, the more you can do without the intervention of large organisations & financial
advisors all creaming their bit off the top the better you will do.
Several of my friends who have retired in recent years have taken their pension lump sum & invested it in property, the rental return is way in
excess of any they could possibly hope fro from an annuity & they have a "fund" which continues to grow in both return & capital
value - about the only other place you could possibly match the return would be on the stock market & quite frankly unless you have some sort of
insider knowledge or are a stockmarket guru you might just as well "invest" it in the local bookies!
Obviously it requires discipline to save sufficient to get a 1st property, but there are plenty of buy to let mortgages around & sensibly done
will be the best thing he could ever do, in the meantime stick it in a high return ISA - perhaps "locked in" for 5 years or so to remove
temptation of spending it!
Good luck to him - nice to actually hear about a youngster with some plans for his future rather than just today!
I no longer run Furore Products or Furore Cars Ltd, but would still highly recommend them for Acewell dashes, projector headlights, dominator
headlights, indicators, mirrors etc, best prices in the UK! Take a look at http://www.furoreproducts.co.uk/ or find more parts on Ebay, user names
furoreltd & furoreproducts, discounts available for LCB users.
Don't forget Stainless Steel Braided brake hoses, made to your exact requirements in any of around 16 colours.
http://shop.ebay.co.uk/furoreproducts/m.html?_dmd=1&_ipg=50&_sop=12&_rdc=1
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NOTE:This user is registered as a LocostBuilders trader and may offer commercial services to other users
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jossey
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| posted on 16/9/14 at 08:20 AM |
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Nothing to do with me but look here
http://www.hl.co.uk/pensions
They have alot of papers about pensions.
Property is potentially a better bet as a long term investment.
Given people generally spend a 3rd of their take home pay it would make sense to have 3 properties paid off by retirement of a similar value to your
house you want to live in. This in theory without any yield give you a living income.
My house is 250k rental would be 875 per month I could live on the income of 2 of these if my own house was paid for. Plus I could sell up if
needed.
When the housing market collapses the rental market increases which they suggest occurs every 20 years...
Thanks
David Johnson
Building my tiger avon slowly but surely.
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cliftyhanger
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| posted on 16/9/14 at 09:36 AM |
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OK, lets face it, BTL property is a no-brainer.
As long as you can get the deposit together....
A property should return 5-7% initially. That should just about cover expenses etc for the first couple of years. After that it will make a small, but
increasing profit. If you take nothing out I expect the property will pay for itself (ie no input from you overall) after 15-20 years.
At that point you will have(a) a property which has REAL value that will always increase in value (ok, few ups and downs, but this is a long-term
investment) and will produce an income which will also increase, roughly with inflation.
There is no other product available that can touch that. Unless you are crooked or very very lucky.(put it this way, my first property bought 20 years
ago, cost 60K, plus 12k to sort it. Initial rent was 10k pa. Today 24k pa, house worth £450k. So I am getting approx 30% return on my initial
investment, plus the capital has grown about 9%pa on average.)
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swanny
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| posted on 16/9/14 at 09:41 AM |
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Not all pensions are the same. my advice would be to find a good trusted financial advisor that comes well recommended.
one of ours has been recently moved and is now performing dramatically better than before. important not to leave pensions for ever and assume they
will be ok. if you are paying a management fee (and you are) make sure someone is actually managing it for you not just taking the money.
at some point in the future i hope we'll have a mixture of property and other investments, but at present we are seeing similar income to that
we could expect to see from a rental income on a buy to let (if mortgage free) every month with no hassle/non payers/repairs etc/insurance and other
costs from investments recommended by our financial advisor. at this point in our life, hassle free income is highly attractive :-)
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Irony
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| posted on 16/9/14 at 10:10 AM |
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I don't have a pension and it worries me. I am 34 and I have put all my spare money into property. I hope this is the right decision long
term.
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whitestu
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| posted on 16/9/14 at 10:48 AM |
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Most buy to let properties are only viable because of the very low interest rates we have now. That probably will change in the future.
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907
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| posted on 16/9/14 at 11:17 AM |
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quote:
Originally posted by Irony
I don't have a pension and it worries me. I am 34 and I have put all my spare money into property. I hope this is the right decision long
term.
IMHO you will never regret this decision.
At one time I had amassed several tens of thousands with Equitable Theft but when it crashed the only one it didn't effect
was the head honchos Mr VT. There was always enough to pay his millions.
My pot was now valued at £5k and the company pension advisor said we should transfer what was left to Theft Equitable.
What I didn't know was that the transfer value of £5000 was £500, and he had a standing charge per transaction of £500.
Pensions are legalised robbery.
Paul G
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russbost
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| posted on 16/9/14 at 11:59 AM |
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quote:
Originally posted by whitestu
Most buy to let properties are only viable because of the very low interest rates we have now. That probably will change in the future.
Yes, but if interest rates go up so will inflation & so will rentals, pensions however may well come down, in a high interest market the stock
market (where pretty much all pension money goes) does not perform well - I know where my money is staying!
I no longer run Furore Products or Furore Cars Ltd, but would still highly recommend them for Acewell dashes, projector headlights, dominator
headlights, indicators, mirrors etc, best prices in the UK! Take a look at http://www.furoreproducts.co.uk/ or find more parts on Ebay, user names
furoreltd & furoreproducts, discounts available for LCB users.
Don't forget Stainless Steel Braided brake hoses, made to your exact requirements in any of around 16 colours.
http://shop.ebay.co.uk/furoreproducts/m.html?_dmd=1&_ipg=50&_sop=12&_rdc=1
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NOTE:This user is registered as a LocostBuilders trader and may offer commercial services to other users
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keithjardine
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| posted on 16/9/14 at 12:18 PM |
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Well done to the lad being 17 AND having a job/career that has some form of financial planning offered and has clearly got him thinking about the
future. I'd echo the above feelings about a pension vs property, his money is locked in for a very long time in a pension and requires some
management to avoid feeding the fat cats too much vs a property that can be sold relatively quickly to release funds.
Personally if I had my time again (32 now, mortgaged up with Mrs and two kids and very content) I would have bought a 2/3 bed terrace house at 60-70k
(little risk of depreciation and little appreciation so capital tax gains are minimal), lived there whilst doing a basic tidy up then rent out before
moving to the next property-of course pre 2008 a mortgage could have been obtained on the high street the same day with few questions-hindsight!!
Nowadays buy to let mortgages are 25% deposit up front plus fees, this is not straightforward for a 17 year old just starting out even on a modest
property. He'd potentially be better off saving a deposit for a personal residential mortgage on a 2/3 bed terrace house somewhere local so he
knows the area and more importantly can rent a room or two to mates (or room share with randoms). This will enable him to pay the mortgage alone if he
is stuck and if room renting he can use that money to offset his spending on the property and essentially live there for free whilst the mortgage is
still being paid-he will have to be disciplined to save though!
Room renting has tax advantages so long as he meets the criteria (£4250 tax free annual income from room rental).
This may provide an easier/cheaper/quicker route into BTL as once his foot is in the door the mortgage can be swapped to BTL if he no longer resides
there.
Currently I have no pension provision but overpaying the mortgage to reduce the term by 8 years, then I will divert the basic monthly payments @ £950
to a savings account (or perhaps withdraw and stash as cash so I can claim benefits when I retire and live in a care home for free when i'm
decrepit).
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snapper
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| posted on 16/9/14 at 06:14 PM |
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Most pensions benefit from employer contribution and interest free on what is put in effectively adding value to the pot
As most youngsters will work till 70 there is a little more time to acrue value
I agree that for some the property market is a good bet but as most will struggle to afford 1 property in their lifetime buy to let may be more
difficult than it sounds
My divorce and separation from child plus a break up with a subsiquent partner quashed all hope of property investment however I am lucky enough to
have been in a final salary non- contribution scheme for many years, it now requires 8% from me and that hurts but I'm close to the enough years
now
Greasing the top step of the staircase of you raging parents house is always an option
I eat to survive
I drink to forget
I breath to pi55 my ex wife off (and now my ex partner)
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Acc8braman
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| posted on 18/9/14 at 10:16 AM |
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quote:
Originally posted by bi22le
Any money he puts away (and get used to doing so) is great.
when I turned 30, nearly 2 years ago, I looked into pensions. The market is dead. Low interest rates and debatable returns on investment. The pension
market is very stale so I would not put any money into it right now.
first thing to do is get him putting money. Set up a standing order to get a set amount of money out of his account and into a high interest ISA.
These wont offer much, something like 1.5% I think.
Then do what I did. After a year (£100 a month =£1200 total) I brough ETF. Read about them. They are automated shares essentially. Aimed to track what
ever you want. It allows you to invest in stock exchanges (NASDAQ, FTSE250, etc), industries (IT, new business, chemical etc) or comodities.
Essentially what ever you think will be big in 30 years you can get.
ETF are special because they are tax free (ISA compliant) and automated. You basically get a clever computer to broker and manage it, not a fat cat in
London taking your wedge.
I have invested over £1500 this year and am currently sitting on approx 8% growth. You cant get that anywhere else.
Im not a sales man, do some googling. You will see that there is a hell of a lot of interest for financial geeks on ETFs. Shop around for the broker
(you need someone to actually purchase these. It functions like a Paypal account basically) you want to use.
For you information. I use Morningstar to compare ETF data and IWEB to invest my monies.
If you want any further info then U2U me and I would be happy to assist.
Hi,
Could you let me know what App you are using for this?
Cheers
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