Pension

[Bloders]

Yes, but your effective tax rate should be higher when earning full-time, than when a pensioner. An earner on 42k and a pensioner on 16k both pay 20%, but at very different overall rates.

sorry, i dont follow you here. can you explain further please

 

[PostHarvest]

I have money invested with Nutmeg Saving & Investment. The company has grown from a start-up to 70,000 customers in 6 years. They offer pension funds and ISA's and are currently managing funds of £1.7 billion all managed on line. I've been with them for 4 years and my money has returned over 36% in that time. Their aim is to keep fees low and I've found them to be very good at dealing with my questions. You can also get a statement at the end of every business day which is better than the annual statements that I've had from other investment companies. I've spoken to two traditional financial advisors recently who both claimed they had never heard of Nutmeg, which I took as indicators that they didn't know their business. I don't have any tie-up with Nutmeg other than I'm a customer and investor.

 

[farmerm]

sorry, i dont follow you here. can you explain further please

Higher rate tax payer is paying 40% on the money they earnt to invest in a pension or an ISA. If you put it in to an ISA you have paid your 40% tax and that is gone. If you put the money into a pension the gov give you the 40% tax back This means two things

1) When it comes to retirement your pension pot for the same investment is way larger than your ISA pot and compounding means that assuming your ISA or your pension fund perform at the same rate the amount in the pension will grow faster.

£600 (£1000 income less 40% tax) Invested in an stocks and shares ISA which manages to average 5% growth each year over the next 30 years With compounded interest after 30 years your £600 investment is valued at about £2470

As a higher rate tax payer put the same £600 in a pension and the gov give you your 40% tax back so rather than £600 your fund starts at £1000. With the same 5% growth and same effect of compounding your £600 investment in your pension after 30 years would be £4115

2nd For the majority of those who pay higher rate tax during their working life, come retirement their income drops below the higher the rate tax band... they can they draw from their pension at 20% but paid into an ISA from income that had been taxed at 40%.

Plus for those who would rather their children inherit their hard earnt money than ther government I think there is no inheritance tax on unspent pension funds but unspent money in an ISA could be taxed at 40% depending on the value of your estate when you die....

 

[Bloders]

Higher rate tax payer is paying 40% on the money they earnt to invest in a pension or an ISA. If you put it in to an ISA you have paid your 40% tax and that is gone. If you put the money into a pension the gov give you the 40% tax back This means two things

1) When it comes to retirement your pension pot for the same investment is way larger than your ISA pot and compounding means that assuming your ISA or your pension fund perform at the same rate the amount in the pension will grow faster.

£600 (£1000 income less 40% tax) Invested in an stocks and shares ISA which manages to average 5% growth each year over the next 30 years With compounded interest after 30 years your £600 investment is valued at about £2470

As a higher rate tax payer put the same £600 in a pension and the gov give you your 40% tax back so rather than £600 your fund starts at £1000. With the same 5% growth and same effect of compounding your £600 investment in your pension after 30 years would be £4115

View attachment 849755

2nd For the majority of those who pay higher rate tax during their working life, come retirement their income drops below the higher the rate tax band... they can they draw from their pension at 20% but paid into an ISA from income that had been taxed at 40%.

Plus for those who would rather their children inherit their hard earnt money than ther government I think there is no inheritance tax on unspent pension funds but unspent money in an ISA could be taxed at 40% depending on the value of your estate when you die....

yes, i get all that, i didnt grasp what you meant in your earlier post.

What i was sort of getting at, is that if your a higher rate tax payer, you could put a lot into your pension, reitre at 55 and spend your pension as a 20% tax payer - providing you dont want a pension in excess of 40K

Your spreadsheet is vaguely similar to the one i generated for purchasing a buy to let.
Of course, if you dont pay much tax, the story is ver, very different.

 

[Bloders]

I have money invested with Nutmeg Saving & Investment. The company has grown from a start-up to 70,000 customers in 6 years. They offer pension funds and ISA's and are currently managing funds of £1.7 billion all managed on line. I've been with them for 4 years and my money has returned over 36% in that time. Their aim is to keep fees low and I've found them to be very good at dealing with my questions. You can also get a statement at the end of every business day which is better than the annual statements that I've had from other investment companies. I've spoken to two traditional financial advisors recently who both claimed they had never heard of Nutmeg, which I took as indicators that they didn't know their business. I don't have any tie-up with Nutmeg other than I'm a customer and investor.

would you mind saying what it has done in the last 12 months please?

 

[lloyd]

Not always, I bought at £1,100 acre in 1985 and sold in 2015 for £14,000, It had a slight premium for where it is and who bought it, but would sell for £11,000 to anyone.

Someone hoovered up.

 

[Still Farming]

Yes but its foresight we need not hindsight ,what is the next County Tractor?

Crystal ball?

 

[Highland Mule]

I have money invested with Nutmeg Saving & Investment. The company has grown from a start-up to 70,000 customers in 6 years. They offer pension funds and ISA's and are currently managing funds of £1.7 billion all managed on line. I've been with them for 4 years and my money has returned over 36% in that time. Their aim is to keep fees low and I've found them to be very good at dealing with my questions. You can also get a statement at the end of every business day which is better than the annual statements that I've had from other investment companies. I've spoken to two traditional financial advisors recently who both claimed they had never heard of Nutmeg, which I took as indicators that they didn't know their business. I don't have any tie-up with Nutmeg other than I'm a customer and investor.

https://www.ftadviser.com/your-industry/2018/10/08/nutmeg-s-losses-increase-to-12-3m/

To be fair to the traditional FAs, they are really only minor bit player, of questionable profitability. Have you heard of Curve, or Monzo?

 

[Still Farming]

Endownment Policies were good once?
Management fees , etc etc all taken with life salespersons also.
Kids looked ay the rush last week when help to buy isa's were on.
If they paid max in and per month then they would get about £50 a year if the bank did not drop and then cut their fab looking rate that was to catch them.
Plus the rules and regs. and conditions when they draw down to get a mortgage .
READ THE SMALL PRINT EVERY TIME?

 

[Bloders]

Higher rate tax payer is paying 40% on the money they earnt to invest in a pension or an ISA. If you put it in to an ISA you have paid your 40% tax and that is gone. If you put the money into a pension the gov give you the 40% tax back This means two things

1) When it comes to retirement your pension pot for the same investment is way larger than your ISA pot and compounding means that assuming your ISA or your pension fund perform at the same rate the amount in the pension will grow faster.

£600 (£1000 income less 40% tax) Invested in an stocks and shares ISA which manages to average 5% growth each year over the next 30 years With compounded interest after 30 years your £600 investment is valued at about £2470

As a higher rate tax payer put the same £600 in a pension and the gov give you your 40% tax back so rather than £600 your fund starts at £1000. With the same 5% growth and same effect of compounding your £600 investment in your pension after 30 years would be £4115

View attachment 849755

2nd For the majority of those who pay higher rate tax during their working life, come retirement their income drops below the higher the rate tax band... they can they draw from their pension at 20% but paid into an ISA from income that had been taxed at 40%.

Plus for those who would rather their children inherit their hard earnt money than ther government I think there is no inheritance tax on unspent pension funds but unspent money in an ISA could be taxed at 40% depending on the value of your estate when you die....

Another question to ponder.
Say you wanted a 300K investment pot, how much are you prepared to invest with a single pension company?
I could afford to pay more into a pension, but i dont want it all in the one pot!

 

[Derrick Hughes]

Whats retiring. Im dieing with work shoes on . Sad if you have to retire to enjoy life

 

[bobk]

Whats retiring. Im dieing with work shoes on . Sad if you have to retire to enjoy life

My thoughts too , keep doing something your body allows . plenty fall off the perch straight after retirement

 

[Highland Mule]

Another question to ponder.
Say you wanted a 300K investment pot, how much are you prepared to invest with a single pension company?
I could afford to pay more into a pension, but i dont want it all in the one pot!

Use one fund manager but have the funds spread around. Right now I have money in about a dozen different risk groups and funds, but all under the one umbrella (Fidelity Fund Management).

 

[Hfd Cattle]

For what it's worth I see 'buy to let' as the best pension. We have properties paid for and giving us a monthly income and the original asset( the houses) have appreciated in value. Buying land is ok but you have to cash it in to get a realistic earning of it ,i.e. £150,000 should buy you a decent 3bed house to let with a return of £700 a month , £150,000 might buy you 15 acres but you will get a very little return for your money if you let it and very little more if you farm it !

 

[Farma Parma]

Stuff Pensions thats my view, stopped a small private one i had about 7 years ago, wasnt paying in much
Id rather save up & if i need the money, which i have done on several occasions its there.
Bad job when my mother now gets taxed on her State Pension as she is still in the business on paper.
They shouldnt be able to do that i think.
You need to live now, i'll take the future if i make it that far.
Come with nowt, leaving with less

 

[Highland Mule]

For what it's worth I see 'buy to let' as the best pension. We have properties paid for and giving us a monthly income and the original asset( the houses) have appreciated in value. Buying land is ok but you have to cash it in to get a realistic earning of it ,i.e. £150,000 should buy you a decent 3bed house to let with a return of £700 a month , £150,000 might buy you 15 acres but you will get a very little return for your money if you let it and very little more if you farm it !

It’s a sound investment, but you are double taxed on the money, at least, and all at the present time when presumably you don’t need the income. You’ll pay tax when you earn the money initially, on the rental income and probably CGT if you ever liquidate the asset. The first time my pension money will be seen by the taxman is when I’m on my dotage and spending it slowly - and even then only on 75% of the total find value.

 

[Hfd Cattle]

Whats retiring. Im dieing with work shoes on . Sad if you have to retire to enjoy life

Important to make plans for the possibility of not being able to work . However while I think often of packing up I will probably keep my work boots on doing something while I can .

 

[bobk]

It’s a sound investment, but you are double taxed on the money, at least, and all at the present time when presumably you don’t need the income. You’ll pay tax when you earn the money initially, on the rental income and probably CGT if you ever liquidate the asset. The first time my pension money will be seen by the taxman is when I’m on my dotage and spending it slowly - and even then only on 75% of the total find value.

And don't forget 8% stamp duty for buy to letters

 

[Bloders]

For what it's worth I see 'buy to let' as the best pension. We have properties paid for and giving us a monthly income and the original asset( the houses) have appreciated in value. Buying land is ok but you have to cash it in to get a realistic earning of it ,i.e. £150,000 should buy you a decent 3bed house to let with a return of £700 a month , £150,000 might buy you 15 acres but you will get a very little return for your money if you let it and very little more if you farm it !

I do not disagree.
The downside being the investment is taxed (ie the money you put in to buy the house) and then the rent is also taxed.
The other downside is you dont actually retire, as when your older, someone has to manage the houses, and when you sell the houses, you pay a load more tax.

 

[Bloders]

And don't forget 8% stamp duty for buy to letters

Agree.
You could set up a LTD company to buy a couple of houses though and save on some of the tax?
A future government might not loathe private landlords as much as society seems to do so now!