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If you are a 40% tax payer then you would be mad not to be doing this before investing anywhere else (assuming you havent maxed out your annual limit) If your employee scheme isnt great then contribute what you need to get max employer contributions then open a SIPP and take the tax benefit there. There are charges to this though so with only very small amounts it may not pay for itslef
That's trotted out often, but I think it depends.
If you'll be looking to buy/upsize a house at some point, then having the funds locked away in a pension is sub-optimal.
If you're looking to retire earlier than pension fund access would allow (and there's noise that this age could be raised), then you need some way of funding the interim period.
It's also not like it's a magical 40% gift - you just pay tax on it later.
It’s also not like it’s a magical 40% gift – you just pay tax on it later.
There are far better places than Morzine to have on your bucket list.
Yeah but only about 10% tax or thereabouts.
Edited. Oops incorrect buffer.
Yeah but only about 10% tax or thereabouts.
Depends on how your retirement income is structured.
I'm not saying it's not tax efficient to shove money into a pension - just that it's not a one size fits all no-brainer as is often stated.
Depends on how your retirement income is structured.
Strictly speaking yes. But in reality no.
I mean fair enough, if you've got a huge pension that delivers £40,000 a year then maybe.
But for me, I'd consider myself doing damnably well if I could get £2000 a month income in retirement. ( So damn well it's just a pipe dream)
What's the personal allowance these day... About £12k. Which leaves me £12k taxed at 20% I think.
Which equates to around 11% IINM. Which is very much lower than 40%
Anecdotally, and slightly off-topic, following a thread on here ("Bicoin for n00bs", IIRC)I bought £150 in Bitcoin back in November via Revolut; it was worth £200 just over a month later so I decided to gamble by moving £1000 from a savings account where it was doing nothing into Revolut and buy that value in Bitcoin.
As of this morning, that £1150 initial investment is worth £1642. That is utterly nuts. Around 42% growth.
I am still a total n00b so debating daily whether to quit while I'm ahead and do some more research, or just remove the original £1000 to put back in the savings account (which exists to hold money to pay the self-assessment tax bills every 6 months), or sit it out and see where it goes but watch the XBT value to sell quickly if it starts dropping rapidly...
I feel like someone who's tried betting on the horse races for the first time and happened to back a winner, but whose winnings are automatically bet on the next race!
What’s the personal allowance these day… About £12k. Which leaves me £12k taxed at 20% I think.
Which equates to around 11% IINM. Which is very much lower than 40%
You forgot about the 25% tax free lump sum, so if you are putting £24k into a draw down account each year you will get £6k tax free plus your £12k personal allowance leaving you to pay 20% on the remaining £6k = £1,200 tax on £24k income. Sweet!
Nice job @Pierre 🙂 ! No advice as I'm in the same boat. That said, I have drunk the bitcoin kool aid and will be hodling/buying any future dips, but I don't need the cash for a tax bill fortunately....
42% is quite tame in the scheme of things - not to say I've experienced the mad end of things but I'm in a similar boat. Had a grand I could afford to risk on crypto and had the patience to sit out the past couple years. I reckon that will continue for a good while yet, so would do the same if I hadn't already. Compared to HL's latest 2021 recommended funds...
The managers have a good long-term track record. If you invested £10,000 in the fund 10 years ago, it would've grown to £13,583 and paid out £5,506 as income. Reinvesting the dividends would've grown the original investment to £20,648*
10 years??! It was crypto that has been a doorway into investing for me, I think I've been spoiled by setting big percentages.
Also...
The top 2.8 per cent of bitcoin addresses now control 95 per cent of the supply
How does that compare to global fiat currencies? 🤔