the shizzle > shootin' the shit
Pensions, Savings, Mortgages…
petejh:
Thought for a second you were going to drop that classic George Best line: ''I spent a lot of money on booze, birds, and fast cars. The rest I just squandered''.
lagerstarfish:
--- Quote from: petejh on March 24, 2023, 11:21:54 pm ---Thought for a second you were going to drop that classic George Best line: ''I spent a lot of money on booze, birds, and fast cars. The rest I just squandered''.
--- End quote ---
I spent very little on fast cars
Offwidth:
It's normal for ordinary professional people of my generation and the preceding one to 'have it all'. Owning a house, had a family, have a good works pension, extensive use of PEPs and ISAs, no student loans needed paying off (and Uni grants for the less well off). It sure makes expensive mistakes more manageable.
I think the young are being screwed and I'd be uncomfortable advising anything too firmly. Pension options are much shittier now compared to my final salary DB pension. Housing looks a bit bubble like right now. ISAs are the same as ever but are risky and currently turbulent (but are less tied up in an emergency than property), cash is going backwards (but we all should have a emergency buffer if we can afford it).
Despite all that, the advice above is good.
James Malloch:
--- Quote from: Will Hunt on March 24, 2023, 07:12:16 pm ---It all depends on your circumstances but I would consider that, although pensions are important, they're a contingency for retirement and the money only becomes available to you at that point - a point at which your kids are likely to be independent or near-independent and you'll have paid off your mortgage.
The money might grow more in a pension, but it might have more value in your life by spending it now on housing, preparing to start a family etc.
If your income is >£50k then you probably have enough to do some pension catching-up and be doing some mortgage overpayments/saving simultaneously, it doesn't have to be one or the other.
(I've assumed you're planning on having kids in the next 5 years because I think I've heard you mention that. I could be wrong).
--- End quote ---
yep hoping to have kids in the coming years. It’s one of the things which has actually made me think about starting to chuck a load of this in at the moment. I think in a 3-4 years the nursery bills etc might mean I’m less inclined to put money in to it. It seems especially worthwhile whilst we’ve still got 2.5 years left on our 1.9% mortgage rate. It doesn’t seem worth overpaying it. I’m lucky enough to have plenty spare at the moment but I’ve never really thought how big the tax savings could actually be before by just not storing it in cash…
--- Quote from: lagerstarfish on March 24, 2023, 07:16:00 pm ---(tax relief plus pension investment growth) vs (cost of borrowing interest plus increase in property value)
at 40% tax relief I would be looking at building a secure pension early - it will be there later even if you have to stop work for any reason
also worth considering what can be passed on if you die
--- End quote ---
It sounds like maxing out some contributions over the next few years (before kids come along and whilst I’m still on a decent contract) might be well worthwhile then. Seems to be the prevailing view!
--- Quote from: Paul B on March 24, 2023, 09:04:27 pm ---You're not far away from me are you? If so Rog Hindle (the smartest dressed climber you'll ever meet) would be a good starting point for pensions advice.
He also pointed me to someone for mortgage advice (after Shark's recommendation that was great retired) who has been brilliant; Peter Mullderig (the spelling may be off but I can dig out details).
--- End quote ---
I’m in Skipton so not far away. I’ll drop him a message, thanks.
--- Quote from: petejh on March 24, 2023, 10:18:43 pm ---One of your port of calls for good info on the ins and outs of pensions, mortgages, SIPS and ISAs should definitely be Moneyvator. Their content is top notch and you'll learn a ton of useful stuff there. Some of the contributors to the comments are very clued-up. Try this one for starters: https://monevator.com/sipps-vs-isas-best-pension-vehicle/
Don't disregard your £20k ISA - if you think you might want to stop full time work before you're able to draw your private pension then ISA's are great to bridge the gap between the end of earning income and starting to draw income from a private pension, as ISA's can be drawn from whenever you want. Depending on needs and wants you could split your contributions between pension/ISA for a time. There is also a way to get your full £20k ISA allowance every year, over the long term, without having a new £20k each year, if you're in the position of being able to open an offset mortgage. Worth considering, especially for tax-sheltering any possible inheritance lump-sums in the far future.
Obvs SIPPS and ISA require investing commitment and it can be overwhelming working out which fund to put money in. Again Moneyvator is your friend for useful information on tracker funds if you do decide to go down the SIPP route. A mistake some people make is trying to actively pick a fund theme - the general advice is don't. The no-brainer is to make regular auto-contributions into a global index tracker type fund with the lowest ongoing charge possible, and let global capitalism get to work compounding your money over the long term. That's not advice.
As others have said, if you're 40% taxpayer then the pension is virtually a no-brainer. It's impossible to say what income tax rates will be in 30- years from now but you'll possibly/probably not be withdrawing your pension income at 40% income tax, so it's a deferred benefit on the way in and a possible 20% tax saving on the way out at current rates.
--- End quote ---
Moneyvator is an interesting site, thanks Pete. I’ll have a proper look through it over the next week. I’ve put some savings into my Stock and Shared ISA to use up this years allowance before the tax years ends, though it’s basically just used to hold money at the moment as I’m not confident enough to know what to do. Is there anything that’s very low risk for investments in ISA’s? Low return but almost guaranteed cash/bond kind of stuff. Would be worth me doing that in the interim at the very least…
Hopefully moneyvator can offer some good insights on lower risk investments though. I noticed that I can actually invest in funds like the Prudential Pension funds too via the ISA which I hadn’t really realised. I’ve a lot to learn in this space. I feel stupid when my own investments go down, but don’t really mind when my current pension goes down as it someone who knows what they are doing is probably working hard to get it to go back up!
I’ve arranged a callback from a local Prudential financial advisor next week. That’s the fund my dad uses and whilst he’s retired and drawing his income from it, it’s actually rising in value still (though he doesn’t take loads out). I think I’d prefer the idea of someone else doing it all for me rather than having to make decisions but maybe I will change with a bit of research… My sister swears by her SIPP, for example, but she also knows what she’s doing!
--- Quote from: Offwidth on March 25, 2023, 11:01:38 am ---It's normal for ordinary professional people of my generation and the preceding one to 'have it all'. Owning a house, had a family, have a good works pension, extensive use of PEPs and ISAs, no student loans needed paying off (and Uni grants for the less well off). It sure makes expensive mistakes more manageable.
I think the young are being screwed and I'd be uncomfortable advising anything too firmly. Pension options are much shittier now compared to my final salary DB pension. Housing looks a bit bubble like right now. ISAs are the same as ever but are risky and currently turbulent (but are less tied up in an emergency than property), cash is going backwards (but we all should have a emergency buffer if we can afford it).
Despite all that, the advice above is good.
--- End quote ---
I’d definitely agree with the young being screwed these days. Just the average salary to house price ratio is bonkers!
I’ve been fortunate to get some decent contracts (some very good) in an section of my industry with plenty of work which have allowed me to pay off the student debt that I had, and made some choices which worked out really well (living on a boat was super cheap and fun, and we then made money on it with the COVID boom), made a good choice with the house we have etc and got in before the rates rocketed.
However with investing I’m completely clueless and have always been a cash saver rather than thinking how we could plan for the future a bit better…
James Malloch:
--- Quote from: lukeyboy on March 24, 2023, 07:59:00 pm ---In a similar position and watching this thread with interest :popcorn:
I'm about 5 years older, with 2 young kids and no spare income due to eye-watering childcare costs, but the youngest will be 3 soon so will get 30 free hours and then not long until school, when we'll be laughing. My pension contributions are pretty minimal at the moment but I'm keen to ramp this up and will be really useful to hear the views of those more informed.
P.s. Hi James, I remember meeting you at Ceuse about 8 years ago and climbing together a bit. No offence if you don't 😂
--- End quote ---
It’s partly the prospect of childcare in the future which Is making me think about this now!
Oh god! I’m sure I’d remember your face but I’m awful with names, sorry! I bumped into a few people from that trip in Siurana this winter - it was nice to see some familiar faces.
It was summer of 2013, how time flies…!!! Hope you’re doing well :strongbench:
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