Look tobes. Call a spade a spade. My pension is maxed and has a bit of an afc already. This is about other savings. If you don't qualify fine but if you turn your nose up as what is the best return on a long term investment if you do qualify then tut tut. There's nothing stock market included you could invest in that's better than this. I'm fine with your point on pension. Yes it's the best tax benefit to put in but once you've your take home pay in your back pocket and you choose not to do this even on a small amount I think it's nuts.
How can your pension be 'maxed'. So you're putting £40k a year into it? No offence mate, but you don't appear to have a clue on this subject.
You're making the assumption that everyone is earning above 40k tobes. Even then you, MITO is saying isn't wrong. You putting away 10k away in savings + government top up = 12.5k. You saving yourself the 40% tax is equivalent to 12.5k, 10k @ 40% tax = 16.6k gross with a 25% tax on drawing it out at 55 = 12.5k
Plus, what's £3k if you've got that much money? I'd rather spend the £12k now than wait up to forty years to gain £3k
As a middle class bumpkin as yourself, you could help your kids by putting it into their ISA so that years down the line when they want to buy a house, when you lend them 12k you are actually lending them 15k!
Or I could just stick all that money into paying off the mortgage I already have; aka their inheritance. That £12k will be worth a lot more than £15k come the time they get it (assuming I live more than a couple of more years ) If you mean it would help a first time buyer, go back three or four pages to where I said exactly that
The reason Osborne wants people to save in his lifetime ISA is it saves the government money. If it goes into a pension they have to pay the tax back, you also get your employers contribution. If you are paying £40k a year into your pension already and are eligible for the lifetime ISA then it is worthwhile.
Well unless your mortgage AER is more than than 25% + ISA interest then i think you would be making more putting this money into the ISA. You need to remember its not just the 3k the government is giving you, there is interest involved as well
You don't pay any tax if you take out 25% of your pension pot as a lump sum on retirement though. Welcome to my point EDIT: Plus you've missed out the difference in compound growth, between an ISA - Currently 1.43% and an average pension fund at 5%.
whoops my bad, misinterpreted what you said. So in reality you're 40% saving is only guaranteed on 25% of the amount you save. The rest of it will be dependent on how much pension you've saved and if you are 40% tax payer not living in london you are probably going to be putting away a lot of that money i imagine
^ This Or you're a young couple saving for a deposit for your first home. But that scheme already existed before the Budget. Those 2 scenarios aside it's absolute flannel, dressed up as a 'deal' and the mere fact that people have been referring to it as 'free money' shows that it's worked.
How much (if any) tax you pay on your pension depends on how you choose to draw it down post retirement, and that it turn will be dependant on the size of the pot.
Would you bollox. There is no better investment than bricks and mortar. £12k over so many years returning £15k Or Buy a house for what £100k and sell it for £150k+ in 40 years! And that's me being reserved!
But you said in paying off the mortgage, you already own the house and you will already earn the equity on it. I agree if you were to use that money to buy a new house that is different, but it is unlikely you will get a second mortgage depending how much you have already borrowed or how much deposit you put down on the rental yield for a buy to let
My work pension allows a maximum of a certain percentage and gives the same +2%if I do this. I then contribute an extra amount determined by affordability. An extra 5% currently for your info. So this is reasonable. What I am saying pretty clearly is anyone who qualifies should be thinking this is a pretty great investment. I'd like to know exactly where guys think a 25%+ return on an investment is going to come? As I said put in what you won't miss and when it comes to the end great. I realise of course throwing in as much as possible to pension pre tax is a 40% return but this is a take home pay investment and as I said it beats the stock market all ends The thing is once again as I said this is risk free. Depending on your isa. You save, the government tops up and you get interest. The thing is as we all hope our pensions should grow and grow well so we put in to make the pot as big as possible but..... that goes down as well as up. My strong view is this is a nice deal to save in. Even over long term and you have a diversification as a bonus. If you qualify as a house deposit great. If you get sick that's terrible but it comes to you and if you reach 60 you get a big sum. Yes tobes fine contribute as much as possible to pension pot now but there you go that's at 65 and a very wise investment of course.
That is true. Pre crash the rule of thumb was houses doubling in value every 8-10 years. By all means if you've lots and lots of money having houses is a great investment. What I'm saying is put what you won't miss in this so if you wanna have 100 quid in it you get a return. If you can afford to buy to let and service the asset etc you'll make a huge return but that's for rich guys like Dr.
I never said anything about paying off the mortgage. I said put it towards the mortgage. Even if it were paying off the mortgage it would still be better place since it would saving the interest you have to pay.
Which I agreed with at the start of this discussion but I've since pointed out you have to wait up to forty years to see that return (to a maximum of £3k), aiming the government doesn't have a change of heart in the meantime.
You paying the max that your company scheme allows isn't the same as being maxed out in terms of what you could place into a pension pot tax free mate. You could have a separate pension plan that allowed you to create further pension savings, or like me have a sipps pension. Btw you can take your pension at 55 or 57 from 2028. As a short term young person deposit saving scheme this is great, as a long term pension plan add on, it's utter bollocks, and the numbers I've given you prove it. As for risk, you can play it uber safe with your pension pot if you wish, but even doing so you'd do better than the current ISA average of 1.43%, and long term, even a risky level of pension investment is pretty safe over the long term. Short term peaks and troughs distort the long term compound gain. This is nothing more than Tory spin, removing the word pension and replacing it with ISA and the word 'give' instead of tax relief. It's trying to trendy up saving for old age to a generation who have largely said '**** it'. The fact that you've fallen for the spin as opposed to the maths shows it's got a chance of actually ****ing working
