Do bear in mind that the S&P 500 is in an epic Bull market, and noone knows how long it'll go on for?
OP you are right though, most people, especially in the UK are too heavily tilted towards residential property in their investments.
If it were me, depending on where I was with my mortgage, I'd probably split the difference, pay down the mortgage with some and invest the rest.
Yes annuity dies with you. Unless maybe there are some policies where you can protect some money presumably at a cost?
Apologies others already replied! Can’t see the point of annuities myself. My plan is to leave maximum amount invested and take 25% tax free with each withdrawal rather than any lump sum.
Ref tax and ISAs three things -
A) Tax free at point of investment so you’re putting in extra at the beginning that can grow, rather then saving it at the end.
B) You can minimise your tax bill by taking tax free amount.
C) If you’re a higher rate taxpayer you can save 40% now and very likely only pay 20% when you retire on a lower income.
So yes - agree both save tax but pension wins in terms of total saving and greater investment potential.
"Pensions are manifestly better than ISAs unless you need the money before you are 55 (soon to be 57)"
Though the advantage is reduced if you are going to be paying 42% tax on what comes out the pension after the 25% tax free lump sum. With the Scottish higher rate threshold at £43k I will be near hitting that with occupational pension and the OAP assuming a bit of inflation in the next 4 years and the freezing of the threshold continues.
Sure but the advantage still remains. And you'll only pay the higher rate on the small amount over the threshold.
Funnily enough I was contemplating asking my mortgage provider if I could go onto interest only for a couple of years and divert the money into my pension and ISA to build those up a bit.
I’m 46 so an increase in investments now would hopefully help my retirement cause. Recognising the risk associated with investing, of course.
In reality (if you have no other income) your tax allowance of £12570 means you only pay tax on £2430 which is £486.
Only if you don't have a state pension (and you assume you took it all out in one year).
the £10k invested isn’t what you put in. as you’d get the 25% topup and High Rate taxpayers can claim back another 25%
No, I was starting with gross salary.
For a 20% rate taxpayer, wanting to save £100 of that:
Pension:
£100 - NI = £92
Assume it doubles to keep the math's easy, £184, it then pays tax at 20% because they also get a state pension that equals the tax free allowance, then they get back £147.20.
This is better if your employer does salary sacrifice on the pension and you don't pay NI on it.
The 25% tax free nets you another £12.50 as well.
So yes this works out better if you're on a salary sacrifice pension, and plan to retire after 55.
ISA:
£100 - 8% NI - 20% = £72
Becomes £144, and no further tax.
If you go down the SIPP route you're getting that 25% added back in (because 20% off = 25% on) making it £90.
TINAS’s example assumes you are a basic rate taxpayer. The advantage is greater if you are a higher rate tax payer when saving and in all likelyhood a basic rate taxpayer when withdrawing.
Agreed on this, I setup mine to effectively keep my salary below the 40% rate, everything over the threshold is going into the company pension.
Though the advantage is reduced if you are going to be paying 42% tax on what comes out the pension after the 25% tax free lump sum. With the Scottish higher rate threshold at £43k I will be near hitting that with occupational pension and the OAP assuming a bit of inflation in the next 4 years and the freezing of the threshold continues.
I'm working on the assumption I'll retire into the 20% bracket. With no mortgage by that point I'll need far less income and I'm pretty comfortable already.
The 25% tax free lump sum means you net £17,000 out of your £20,000
Your personal allowance means you can take £12,570 tax free before paying tax. This is very advantageous if you enter drawdown before you take your state pension.
I agree, but I'm still a way away from being able to access that 25%.
My retirement planning assumes I'll retire on the pension at 55* having overpaid into it for a long while. And the ISA is the "early early retirement" fund, if it does well then that's years before that 55. And being cash rich outside of pensions has advantages (e.g. if interest rates shoot up to 90's levels I can pay down the mortgage, the roof collapses, the foundations subside, I fall ill, the 25% lump sum might change, etc). It's not advice for everyone, but I've considered it and think it's a balanced risk having that smaller pool of funds available now than a larger one later.
*I may need to revisit this as the standard company pension isn't exactly putting ion a stellar performance and TBH could be put into something higher risk/reward.
If you’re putting extra in then you might want to consider a SIPP instead.
*I may need to revisit this as the standard company pension isn’t exactly putting ion a stellar performance and TBH could be put into something higher risk/reward.
check if you can transfer out from your company scheme into your SIPP. Some schemes allow this once a year.
If you’re putting extra in then you might want to consider a SIPP instead.
What is the benefit of doing this?
See earlier comments - you can protect some but at a cost. If you’re interested in investments then it probably makes little sense to take out an annuity.
Ref SIPP comment - if your workplace Prnsion isn’t performing well (and some of them are shite) then you can control your own investments in a SIPP and potentially get better return. There is some flexibility in some workplace pensions to choose where the funds are invested but not much.
What is the benefit of doing this?
If your work scheme is basic/restricted then using a sipp will give you access to a wider range of funds and more often than not, lower fees.
check if you can transfer out from your company scheme into your SIPP. Some schemes allow this once a year.
Yeas, my OH has hers invested with her IFA. I think I'll look into it in April. I wouldn't go down the completely SIPP route as that way it would be less likely for the same investments to collapse and leave me high and dry.
Don't forget that the age you can take your private pension rises from 55 to 57 on 6apr 2028. My older brother is inside by 2 months. Sadly I have to wait a little longer.
You’re not at higher risk of investments collapsing with a SIPP if you invest in an array of funds. They’re each protected and if the SIPP platform company went under you’d still have the funds, they don’t own them.
You’re not at higher risk of investments collapsing with a SIPP if you invest in an array of funds. They’re each protected and if the SIPP platform company went under you’d still have the funds, they don’t own them.
Yes, but I'd end up investing in the same things because I'd have done the same research, applied the same decision making criteria and making the same potential mistakes with both the ISA and the SIPP. If I keep at least one at arms length and managed by someone else then the ISA can do (potentially) risky things and jump on things like the "should I buy Rolls Royce shares" thread.
Based on personal experience, I wouldn’t trust my investments with an IFA. Could just be me though…
Sorry assumed you meant companies going under.
It’s not difficult to just apply a different level of risk to each of you want - eg specific trackers vs global diversified funds (Fidelity World etc)
rolls-royce is a tough call, topped out at 570p and fallen back a bit after results came in to expectations early november,
532p today, if the next results are good, with the dividend restarting then hopefully carry on rising.
8 buys 1 hold 0 sells average price target 626.74 [high 758]
Based on personal experience, I wouldn’t trust my investments with an IFA. Could just be me though
Yea, my OH has her pension with one and it all feels a little too cosy, and he's permanently on holiday ?
rolls-royce is a tough call, topped out at 570p and fallen back a bit after results came in to expectations early november,
532p today, if the next results are good, with the dividend restarting then hopefully carry on rising.
8 buys 1 hold 0 sells average price target 626.74 [high 758]
Yea, I was thinking more "the next RR", there's always going to be something that looks fundamentally undervalued.
Before I started looking into it myself, my IFA would always trot out stuff about it outperforming the FTSE all share index and stuff like that, only when you dig into it you realise they’re talking bollocks and relying on the client to be clueless.
Before I started looking into it myself, my IFA would always trot out stuff about it outperforming the FTSE all share index and stuff like that, only when you dig into it you realise they’re talking bollocks and relying on the client to be clueless.
The only person that cares about your pension is yourself.
If your work scheme is basic/restricted then using a sipp will give you access to a wider range of funds and more often than not, lower fees.
This is me.
I've resisted works provider of choice with limited funds and 1% fee.
I've stuck with my provider Standard Life, and have just swapped from the Stakeholder Pension Product I had to their version of a SIPP (called AMPP). I've kept a nice diverse set of ethical & green funds, and unless I swap funds regularly, then fees are going to be about 30%-40% less than my work provider or my old Stakeholder Pension.
It's also meant I have more flexibility at retirement compared to the stakeholder pension.
I was chatting to my local bike shop guys a few months ago both massively into warhammer, had a look at the shares, and profits , little plastic soldiers are well profitable, both convinced they are gonna snowball with Amazon deals and tv rights , £99 a share , upto £132 this week. I Never got in, if they'd been circa a tenner (via a stock split) I’d have been tempted to add to my regular savers
not got any others I’d have said hochchild last year but they’ve skyrocketed since I’ve been watching them
mining otherwise seems out of favour, I like BRWM , dividends of 5.5p a quarter and 15-25p in q1 on a £4.75-5.25 share , been all over the place recently and it’s as diversified on mining as you are gonna get
My current bet is on the company I work for (always a bad idea, but here me out).
2x aborted takeover bids last year, both priced at roughly 2x the stock price. The finances look crap the last few years because we keep writing off intangible stuff from previous acquisitions like "goodwill" etc. Which means no dividends, which means the share price has been sliding since 2017ish. Then it gets announced that we've had to call the auditor's in for some accounting issues going back years. Which halved our share price again.
So it's currently about 25% of what two other companies thought we should be worth. So if they find a whole graveyard of skeletons in the accounts and the price doesn't immediately jump, I'm betting on a takeover by next summer which will still be at a premium to what we're at now.
Either that or all my eggs are in one basket and I'll turn up in January to find a padlock on the office doors knowing my luck.
rolls-royce is a tough call
Not if you bought at 80p 😎
yes @nickJB still a dilemma when to sell :0) I'm in at circa 88/89p, certainly made my SIPP returns hands down beat my company pension return in recent years
@el_boufador yes certainly time in the market, but timing is also key, especially if you aren't very diversified and a little higher risk (gambling) I really should have downsized my lloyds holdings, great results then the motor finance scandal hits and I'm down 10p a share on rather a big holding. I'm currently trying to build up my holdings in the quarterly dividend payers
@thisisaspoon I will work out who you work for and have a look :0)
I go by
Time in the market
And not
Timing the market
Exactly this. The way to make money is to start a few decades ago. A diverse portfolio, and basically forget about it (other than dealing with the inevitable buyouts, etc)
@thisisaspoon yes I'd definitely diversify :0)
think I found them first google hit has berenburg just downgraded 150 to 60p
I remember working at HBOS during the 2008 financial crash, I had workmates with sharesaves they refused to sell, dropped from 12 to 8, I told a few of them to get rid, stubbornness didn't pay off they were pennies a few months later
Sorry to go at a tangent, but a quick Q; Any issues with taking money out of a cash ISA? Of course I know it won’t be earning interest and can’t be “put back” on top of the allowance.
Im saving for our holiday which will need to be paid in full in May. Why not get 6 months higher interest then withdraw?
@Kryton57 you can get £1,000 tax free interest on non-ISA accounts if you are a basic tax payer or £500 for higher rate tax payer. Platforms like Raisin are brilliant for the type of thing you need.
@kryton57, not an issue at all, its only really an issue if you can max the allowance every year, and you'll not be able to retop up.
just make sure its not a fixed term interest offer, in which case penalties may exist.
is the money a lump sum or are you building it up each month till you require it.
with hindsight, the bank high interest saver style accounts would be well suited for this type of scenario, if you were to save over a 12m period and then take your cash at the end. for the 8% type rate.
*yawning emoji*
I always wonder about people like you. What do you get of out this supposed virtue signalling? How would you even know what you're talking about? It's obvious that you're not a very successful stock picker, or else you wouldn't be trotting out such facile bollocks. Perhaps you have to preach these pessimistic platitudes as a form of self consolation after being badly burned in the past? Whatever the case, it's just rubbish. I make a very good living out of timing the stock market, as do many other people I know. There is an element of luck involved (or bad luck as it more often happens to be) but that is what risk management is for. It's a crying shame that most people in this country seem to think the stock market is some sort of dark art that requires a decade of experience before you've even begun. It's really very simple - price goes up when there are more buyers than sellers - you just have to work out where the buyers are going to be, and then you position accordingly.
It’s a crying shame that most people in this country seem to think the stock market is some sort of dark art that requires a decade of experience before you’ve even begun
It's the whole buy low - sell high thing, and the heavy reporting of crashes and market volatility that make it sound complicated. Whereas "time in the market..." is a bit trite but that's what should make it accessible. Buy a diversified tracker fund and don't touch it and you will do ok.
Absolutely true that it's not rocket science and if you want to do a bit trading you can do the research, have some luck and make some money but it is a hobby/job whereas long term holdings are for everyone and take little effort
I always wonder about people like you. What do you get of out this supposed virtue signalling? How would you even know what you’re talking about? It’s obvious that you’re not a very successful stock picker, or else you wouldn’t be trotting out such facile bollocks.
Congratulations you're obviously very smart and successful. What about the rest of us who aren't such god like financial wizards or have other commitments which mean we can't spend our time managing risk and positioning ourselves in the market with such incredible acumen and agility like you?
After all, the number of people who succeed long term picking stocks is pretty small, so as you're obviously taking up one of the available slots shouldn't the rest of us just stick to index funds like the self-consoling peasants we are?
EDIT: hah nickjb is politer than I am...
@jamz it is time in the market but as you say, getting in and out, adds risk, my worst trait is boredom of holding stocks that flatline. i sold 6k morrisons a week before a takeover came in, same with HL.
we are all different many are risk averse, and dont have the time or inclination to keep track of multiple investments.
my first job out of uni was on LSE during the dot com bubble. the smart investors did well, the majority did not.
I'll always remember the nice guys though, one guy regularly traded and i spoke to him often, as did many of my colleagues,
3 days before the big crash of 2021 he rang and told us to sell at best , it took 5 of us all day to sell his holdings. 8 days later he rang i answered and he asked for a chaps, £80m, he didnt trade again in the 6 months i remained in the company .
the majority of gamblers went angrier and angrier and riskier and riskier and their accounts were closed.. timing was definately key
i was surprised how negative the comments were on that tipranks app when i mentioned it on a previous investment post,
yes i know the brokers are out their to sell you stock, but if 10 brokers from different companies all say XYZ is worth £7 and they are currently £3 then why would you disagree with the experts, DYOR and then invest or not..
my worst trait is boredom of holding stocks that flatline. i sold 6k morrisons a week before a takeover came in, same with HL.
As Warren Buffet says - The stock market is a mechanism for transferring wealth from the impatient to the patient.
@thisisaspoon yes I’d definitely diversify :0)
think I found them first google hit has berenburg just downgraded 150 to 60p
I don't disagree with their assessment, but I think it's very much VERY shorttermist. If it stays this low then we'll be bought (again). The outcomes I see are either a quick bounce back to ~85p next year or hold it for a few years and we'll get bought for 200p+.
I'd say it can't get any worse, but look at Petrofac ?
@Jamz it seems I touched a bit of a nerve there. Do calm down, dear. <handbags>
I'm sure there are some very successful people who time the market but I'm also sure that there are also an equal number of unsuccessful ones.
As per Buffet quote above.
All I'm saying is that i would rather put my reliance on long term historical trends that my money will grow, than on my personal ability and capacity to day trade, and risk turning my fortune into a smaller fortune.
Both our timers are correct to an extent....For a general portfolio, history suggests the longer you remain invested in equities the more money you will make. Trying to dodge in and out of equities as an asset class has tended to be detrimental to returns; time in the market wins. At the individual stock level, getting your timing right - both buying and selling - can make a significant difference to your outcome. For the average man in the street, not able/willing to dedicate time, effort and emotional capital to swings and roundabouts of share prices, buying the tracker on a buy, hold and (almost) forget basis is best; time in the market. And if you have the time and inclination to be a stock picker, then go for it, but just remember it is a zero sum game where even the pros who are right 55% of the time look pretty smart.
"All I’m saying is that i would rather put my reliance on long term historical trends that my money will grow, than on my personal ability and capacity to day trade, and risk turning my fortune into a smaller fortune."
A friend of mine lost the majority of his savings through dodgy mining shares and the like over the last 15 years. Had he invested it in a pension or ISA tracker his current lifestyle would be comfortable rather than juggling whether to fix the car or the central heating.
If anyone has interest in stockpicking I guess you need discipline to keep the risky part of your saving to a very small proportion and not chase losses.
Of course there is risk and risk. Choosing a dozen big UK or USA companies rather than using funds may have a it of the fun without the massive risks of other things.
“All I’m saying is that i would rather put my reliance on long term historical trends that my money will grow, than on my personal ability and capacity to day trade, and risk turning my fortune into a smaller fortune.”
A friend of mine lost the majority of his savings through dodgy mining shares and the like over the last 15 years. Had he invested it in a pension or ISA tracker his current lifestyle would be comfortable rather than juggling whether to fix the car or the central heating.
If anyone has interest in stockpicking I guess you need discipline to keep the risky part of your saving to a very small proportion and not chase losses.
Of course there is risk and risk. Choosing a dozen big UK or USA companies rather than using funds may have a it of the fun without the massive risks of other things.
This video kind of touches on that...n the last 15 mins...worth a watch - in fact his channel is really good for general investment advice..
Of course there is risk and risk. Choosing a dozen big UK or USA companies rather than using funds may have a it of the fun without the massive risks of other things.
That's a reasonable strategy, buy 10 large stocks and put a 25% stop loss which means you lose a maximum of 2.5% of your portfolio if you are forced to sell. A guy I follow usually only buys stocks which are >$100/share as they tend to be less volatile.
Rules like a stop loss are pointless, they just ensure you sell up in a crash and miss the recovery.
All attempts at timing and picking are completely pointless if you subscribe to even the weakest version of the efficient market hypothesis. Basically, are there any reasons to believe that Joe blogs sitting in his sofa is going to know more about a particular company’s prospects than a team of talented analysts spending all their time poring over data? Trading is a negative sum game so you’ve got to be better than average simply to break even and just sitting tight will beat most of these highly paid analysts…
I guess it depends how hands on you want to be and if you think you can time the markets to buy and sell certain stocks with perfect timing..
For me it's difficult to look past an index fund or two.. Like maybe a global one weighted the way you want it and maybe an S&P500 one aswell, and split the money between the two?
Then just let it run on 'auto pilot' aside from adding new money to each, split depending on your mood... for 5-10 years and see where you are?
I work with analysts in Biopharma. Let me tell you that the level of detail is more than impressive. Who else could knock $12bn off a company with just an analyse of published data https://www.fiercebiotech.com/biotech/hidden-data-obesity-prospect-wipe-12b-amgen-market-cap . There is a huge information imbalance and unless you are an insider and act (which is illegal), you are on the wrong side of the information. Seriously, tracker with some international component (S&P500) and 10% of your funds in risk for some fun if you do want to play (lose). Or hold forever as per Buffet. Me, I spend more time doing what I care about whilst the trackers track.
