Seriously big numbers coming out from The Chancellor this afternoon. Add into the mix tax rises & caps on Government spending over the next few years, should we be worried about where the markets will be heading during that time.
Seriously big numbers coming out from The Chancellor this afternoon. Add into the mix tax rises & caps on Government spending over the next few years, should we be worried about where the markets will be heading during that time.
The next few years will be a very challenging time for many economies around the world. We have to get on top of the pandemnic first.
Wanted to post this separate to the "are we all doomed" thread......
Indications coming out from The Treasury that pension tax relief will be changed in the March Budget. A flat rate for all of 25%, instead of the current 20% & 40% rates. Will obviously be a small benefit to basic rate taxpayers but may deter higher rate taxpayers from putting more into their pensions than necessary.......especially if they are going to be paying higher rate tax in retirement.
Thought I would bring it up in case anyone wanted to make use of the 40% relief before the end of the tax year. Use it before you lose it
(think my old pension salesman traits are coming out there !!)
Wanted to post this separate to the "are we all doomed" thread......
Indications coming out from The Treasury that pension tax relief will be changed in the March Budget. A flat rate for all of 25%, instead of the current 20% & 40% rates. Will obviously be a small benefit to basic rate taxpayers but may deter higher rate taxpayers from putting more into their pensions than necessary.......especially if they are going to be paying higher rate tax in retirement.
Thought I would bring it up in case anyone wanted to make use of the 40% relief before the end of the tax year. Use it before you lose it
(think my old pension salesman traits are coming out there !!)
The removal of higher rate relief has been rumoured for at least the last 20 years!
Wanted to post this separate to the "are we all doomed" thread......
Indications coming out from The Treasury that pension tax relief will be changed in the March Budget. A flat rate for all of 25%, instead of the current 20% & 40% rates. Will obviously be a small benefit to basic rate taxpayers but may deter higher rate taxpayers from putting more into their pensions than necessary.......especially if they are going to be paying higher rate tax in retirement.
Thought I would bring it up in case anyone wanted to make use of the 40% relief before the end of the tax year. Use it before you lose it
(think my old pension salesman traits are coming out there !!)
One thing I would introduce at schools as part of the curriculum is education re personal finance. Many of us waste a huge amount of money out of ignorance.
Wanted to post this separate to the "are we all doomed" thread......
Indications coming out from The Treasury that pension tax relief will be changed in the March Budget. A flat rate for all of 25%, instead of the current 20% & 40% rates. Will obviously be a small benefit to basic rate taxpayers but may deter higher rate taxpayers from putting more into their pensions than necessary.......especially if they are going to be paying higher rate tax in retirement.
Thought I would bring it up in case anyone wanted to make use of the 40% relief before the end of the tax year. Use it before you lose it
(think my old pension salesman traits are coming out there !!)
The removal of higher rate relief has been rumoured for at least the last 20 years!
I have a feeling that the pandemic is the excuse the Treasury have been looking for and will happen this year. I wish they would introduce a contributions cap and remove the lifetime allowance, though. That would be much more equitable, transparent and remove one of the many uncertainties from pensions planning.
The Chancellor also stated he’d be spending £55bn on beating C19, & that’s just the UK, on vaccines, testing, (failed) track & trace, PPE etc.....
Keep an eye out on C19 Pharmas that manufacture, PPE, Testing products & vaccinations, subject of course to country wide approvals, UK is MHRA & US is FDA, their share prices will only go one way with contract awards. I have purchased a few ODX & Open Orphan shares, not a recommendation just my investment strategy. Jury’s out on RMS in my opinion although got a few of those as well.
Oil prices on the up so maybe worth a punt on oil producing stocks, as the world moves out of C19 (I know it might be 12-18 months away) demand for oil with grow & thus the $ price per barrel.
@Rob7Lee, I know you sold your Tullow Oil shares, hopefully for a few bob, but they are on the move & looking to raise $7bn of operational cash flow for next 10 years.
Pension Tax Relief will go as it's an easy win short term, i've only just started paying in again
25% will be handy though as i'll keep filling my wife's up instead with 100% of her salary and she doesn't really pay any tax due to low earnings.
Income tax will almost certainly go up, just a matter of how much and where/what level. I'd expect 50p level either at the existing 45p level or another tier. Maybe 40 will increase also, can't see the lower level changing.
I'd definitely agree on education at school. Over the past 15 years i've employed a fair number of graduates/School leavers, most are pretty blind when it comes to finances, even the real basics.
The Chancellor also stated he’d be spending £55bn on beating C19, & that’s just the UK, on vaccines, testing, (failed) track & trace, PPE etc.....
Keep an eye out on C19 Pharmas that manufacture, PPE, Testing products & vaccinations, subject of course to country wide approvals, UK is MHRA & US is FDA, their share prices will only go one way with contract awards. I have purchased a few ODX & Open Orphan shares, not a recommendation just my investment strategy. Jury’s out on RMS in my opinion although got a few of those as well.
Oil prices on the up so maybe worth a punt on oil producing stocks, as the world moves out of C19 (I know it might be 12-18 months away) demand for oil with grow & thus the $ price per barrel.
@Rob7Lee, I know you sold your Tullow Oil shares, hopefully for a few bob, but they are on the move & looking to raise $7bn of operational cash flow for next 10 years.
Winners and losers in these beastly C19 times.
When it comes to spending on PPE, diagnostics and testing it's hard to work out who will get contracts. The British government has made some terrible decisions this year - very poor value for money and some poor quality products/tests. Presumably if your company has an MP as a lobbyist you will head up the queue.
Wanted to post this separate to the "are we all doomed" thread......
Indications coming out from The Treasury that pension tax relief will be changed in the March Budget. A flat rate for all of 25%, instead of the current 20% & 40% rates. Will obviously be a small benefit to basic rate taxpayers but may deter higher rate taxpayers from putting more into their pensions than necessary.......especially if they are going to be paying higher rate tax in retirement.
Thought I would bring it up in case anyone wanted to make use of the 40% relief before the end of the tax year. Use it before you lose it
(think my old pension salesman traits are coming out there !!)
The removal of higher rate relief has been rumoured for at least the last 20 years!
I have a feeling that the pandemic is the excuse the Treasury have been looking for and will happen this year. I wish they would introduce a contributions cap and remove the lifetime allowance, though. That would be much more equitable, transparent and remove one of the many uncertainties from pensions planning.
But there is already a contributions cap. £40k.
Wholeheartedly agree about getting rid of the Lifetime Allowance - or at least increasing it by more than inflation. But the LA is one big way the Treasury is bringing in tax and so I dont see that changing anytime soon.
Golfie, for clarity, am I right in thinking that the £40k annual contribution includes the tax relief you get, so you don't personally shall out £40k , e.g. as a 25% tax payer should you pay into a pension £32k the tax relief is £8k thus making up the total £40k .
Also if you are paying into a private pension & a SIPP the £40k limit is split across both.
Golfie, for clarity, am I right in thinking that the £40k annual contribution includes the tax relief you get, so you don't personally shall out £40k , e.g. as a 25% tax payer should you pay into a pension £32k the tax relief is £8k thus making up the total £40k .
Also if you are paying into a private pension & a SIPP the £40k limit is split across both.
£40k is the amount that can go into the pension, so including tax relief and whether 1 or 5 pensions, including defined benefit. Tapers away above a certain salary.
The FTSE at 9400 !!!!!! Jeff Prestige must be on drugs. It might finish the year around 6500 & hit 7000 next year but over 9000 ?? The highest it's ever been is 7600-odd.
I did notice the DOW hit it's all time high this evening & finished above 30,000 for the first time ever. Whereas the FTSE is still almost 20% off it's all time high.
I read that and thought I am not going to bother with an article from someone called “Jeff Prestige”,😂 fortunately its not his name, and there are a range of forecasts and viewpoints there. You can be sure that first week in Jan we will open another forecasting competition here. :-) I’m just slightly bothered that we do it based on FTSE100, because it seems to me that the makeup of the index is problematic, but then again its the one the media always starts with.
FWIW, I certainly expect some growth next year and have allocated a chunk of cash that I had in a local property bond that was paid off early. But right now, I doubt I’ll be calling it higher than about 7500 ( for the whole year) since I think some “vaccine optimism” is already priced in, whereas the short term Brexit effect, even if there is a “deal” , will be a psychological shock. I thought about specifically backing UK stocks because the index lags the others, but as one of the guys in “Jeff Prestige’s” article says, there are good reasons for that lag.
Golfie, for clarity, am I right in thinking that the £40k annual contribution includes the tax relief you get, so you don't personally shall out £40k , e.g. as a 25% tax payer should you pay into a pension £32k the tax relief is £8k thus making up the total £40k .
Also if you are paying into a private pension & a SIPP the £40k limit is split across both.
Yes, £40k in total......whether that is DB, DC or both. To make matters worse the £40k figure for a DB scheme is the amount of "growth" it achieves from one year to the next - nothing to do with employee or employer contributions. Over the past 5 years I have advised virtually all my clients that are in DB schemes to stop any contributions they may be making to DC arrangements. Just too much hassle & not knowing until 6 months after the end of the tax year what they have actually "put in" to their DB scheme.
And PS...... a SIPP is a private pension. Just a fancy name that has stuck over recent years. 90% of people with a "Sipp" dont invest in anything but collectives or insured funds.
The FTSE at 9400 !!!!!! Jeff Prestige must be on drugs. It might finish the year around 6500 & hit 7000 next year but over 9000 ?? The highest it's ever been is 7600-odd.
I did notice the DOW hit it's all time high this evening & finished above 30,000 for the first time ever. Whereas the FTSE is still almost 20% off it's all time high.
I read that and thought I am not going to bother with an article from someone called “Jeff Prestige”,😂 fortunately its not his name, and there are a range of forecasts and viewpoints there. You can be sure that first week in Jan we will open another forecasting competition here. :-) I’m just slightly bothered that we do it based on FTSE100, because it seems to me that the makeup of the index is problematic, but then again its the one the media always starts with.
FWIW, I certainly expect some growth next year and have allocated a chunk of cash that I had in a local property bond that was paid off early. But right now, I doubt I’ll be calling it higher than about 7500 ( for the whole year) since I think some “vaccine optimism” is already priced in, whereas the short term Brexit effect, even if there is a “deal” , will be a psychological shock. I thought about specifically backing UK stocks because the index lags the others, but as one of the guys in “Jeff Prestige’s” article says, there are good reasons for that lag.
Given how light the FTSE is in technology and companies leading the way in innovation it seems highly unlikely that it will stop the lag and then you have to throw the effects of Brexit into the mix. The Dow Jones simply has better companies in it.
Wanted to post this separate to the "are we all doomed" thread......
Indications coming out from The Treasury that pension tax relief will be changed in the March Budget. A flat rate for all of 25%, instead of the current 20% & 40% rates. Will obviously be a small benefit to basic rate taxpayers but may deter higher rate taxpayers from putting more into their pensions than necessary.......especially if they are going to be paying higher rate tax in retirement.
Thought I would bring it up in case anyone wanted to make use of the 40% relief before the end of the tax year. Use it before you lose it
(think my old pension salesman traits are coming out there !!)
One thing I would introduce at schools as part of the curriculum is education re personal finance. Many of us waste a huge amount of money out of ignorance.
Many financial institutions (including the government) might see that as a good reason not to introduce personal finance into the school curriculum!
Wanted to post this separate to the "are we all doomed" thread......
Indications coming out from The Treasury that pension tax relief will be changed in the March Budget. A flat rate for all of 25%, instead of the current 20% & 40% rates. Will obviously be a small benefit to basic rate taxpayers but may deter higher rate taxpayers from putting more into their pensions than necessary.......especially if they are going to be paying higher rate tax in retirement.
Thought I would bring it up in case anyone wanted to make use of the 40% relief before the end of the tax year. Use it before you lose it
(think my old pension salesman traits are coming out there !!)
One thing I would introduce at schools as part of the curriculum is education re personal finance. Many of us waste a huge amount of money out of ignorance.
Many financial institutions (including the government) might see that as a good reason not to introduce personal finance into the school curriculum!
Golfie, for clarity, am I right in thinking that the £40k annual contribution includes the tax relief you get, so you don't personally shall out £40k , e.g. as a 25% tax payer should you pay into a pension £32k the tax relief is £8k thus making up the total £40k .
Also if you are paying into a private pension & a SIPP the £40k limit is split across both.
Yes, £40k in total......whether that is DB, DC or both. To make matters worse the £40k figure for a DB scheme is the amount of "growth" it achieves from one year to the next - nothing to do with employee or employer contributions. Over the past 5 years I have advised virtually all my clients that are in DB schemes to stop any contributions they may be making to DC arrangements. Just too much hassle & not knowing until 6 months after the end of the tax year what they have actually "put in" to their DB scheme.
And PS...... a SIPP is a private pension. Just a fancy name that has stuck over recent years. 90% of people with a "Sipp" dont invest in anything but collectives or insured funds.
Golfy, is this a new ruling regarding the £40,000 limit per annum being the growth in the year. An how is the growth measured, it’s obviously not in actual pension to be paid. As, there is not an actual pension pot I’m intrigued as to how this is measured.
I retired in 2017 and was in Lloyds Bank DB scheme (non contributory) . In my last few years I used salary sacrifice to pay thousands into my AVC. In the last year I think it was over £30,000 into the AVC. Is this no longer possible... ?
I do seem to remember some calculation of the annual pension increase multiplied by some X factor being part of your annual allowance, but buggered if I can remover what this was.
Golfie, for clarity, am I right in thinking that the £40k annual contribution includes the tax relief you get, so you don't personally shall out £40k , e.g. as a 25% tax payer should you pay into a pension £32k the tax relief is £8k thus making up the total £40k .
Also if you are paying into a private pension & a SIPP the £40k limit is split across both.
Yes, £40k in total......whether that is DB, DC or both. To make matters worse the £40k figure for a DB scheme is the amount of "growth" it achieves from one year to the next - nothing to do with employee or employer contributions. Over the past 5 years I have advised virtually all my clients that are in DB schemes to stop any contributions they may be making to DC arrangements. Just too much hassle & not knowing until 6 months after the end of the tax year what they have actually "put in" to their DB scheme.
And PS...... a SIPP is a private pension. Just a fancy name that has stuck over recent years. 90% of people with a "Sipp" dont invest in anything but collectives or insured funds.
Golfy, is this a new ruling regarding the £40,000 limit per annum being the growth in the year. An how is the growth measured, it’s obviously not in actual pension to be paid. As, there is not an actual pension pot I’m intrigued as to how this is measured.
I retired in 2017 and was in Lloyds Bank DB scheme (non contributory) . In my last few years I used salary sacrifice to pay thousands into my AVC. In the last year I think it was over £30,000 into the AVC. Is this no longer possible... ?
I do seem to remember some calculation of the annual pension increase multiplied by some X factor being part of your annual allowance, but buggered if I can remover what this was.
The contributions into a DB scheme only matter if you are an active member, if you are a deferred member then that has no bearing on what you can pay onto a PP, although obviously will have an impact on the Lifetime Allowance.
The way to calculate the "pension savings" amount for a DB scheme is to start with the opening figure for the previous year, so say an Annual salary on 6th April 2019 of £60k. Then you use the number of years of service to date (say 20/60ths) to get your current pension. You then multiply this by 16 & then multiply the answer by last September's CPI figure. This gives your opening figure. You then take the salary & years of service on the 5th April 2020 - say £63kpa and multiply that by 21/60ths (as you have now worked a year) and times that answer by 16.
Eg
£60k x 20/60 = £20k x 16 = £320,000 x 102% = £326,400
£63k x 21/60 = £22,050 16th = £352,800
£352,800 - £326,400 = £26,400
This makes your annual contribution for pension purposes £26,400. Nothing to do with what you or your employer pays, and only known after the end of the tax year.
No idea which clever civil servant dreamed that one up !!
Golfie, for clarity, am I right in thinking that the £40k annual contribution includes the tax relief you get, so you don't personally shall out £40k , e.g. as a 25% tax payer should you pay into a pension £32k the tax relief is £8k thus making up the total £40k .
Also if you are paying into a private pension & a SIPP the £40k limit is split across both.
Yes, £40k in total......whether that is DB, DC or both. To make matters worse the £40k figure for a DB scheme is the amount of "growth" it achieves from one year to the next - nothing to do with employee or employer contributions. Over the past 5 years I have advised virtually all my clients that are in DB schemes to stop any contributions they may be making to DC arrangements. Just too much hassle & not knowing until 6 months after the end of the tax year what they have actually "put in" to their DB scheme.
And PS...... a SIPP is a private pension. Just a fancy name that has stuck over recent years. 90% of people with a "Sipp" dont invest in anything but collectives or insured funds.
Golfy, is this a new ruling regarding the £40,000 limit per annum being the growth in the year. An how is the growth measured, it’s obviously not in actual pension to be paid. As, there is not an actual pension pot I’m intrigued as to how this is measured.
I retired in 2017 and was in Lloyds Bank DB scheme (non contributory) . In my last few years I used salary sacrifice to pay thousands into my AVC. In the last year I think it was over £30,000 into the AVC. Is this no longer possible... ?
I do seem to remember some calculation of the annual pension increase multiplied by some X factor being part of your annual allowance, but buggered if I can remover what this was.
The contributions into a DB scheme only matter if you are an active member, if you are a deferred member then that has no bearing on what you can pay onto a PP, although obviously will have an impact on the Lifetime Allowance.
The way to calculate the "pension savings" amount for a DB scheme is to start with the opening figure for the previous year, so say an Annual salary on 6th April 2019 of £60k. Then you use the number of years of service to date (say 20/60ths) to get your current pension. You then multiply this by 16 & then multiply the answer by last September's CPI figure. This gives your opening figure. You then take the salary & years of service on the 5th April 2020 - say £63kpa and multiply that by 21/60ths (as you have now worked a year) and times that answer by 16.
Eg
£60k x 20/60 = £20k x 16 = £320,000 x 102% = £326,400
£63k x 21/60 = £22,050 16th = £352,800
£352,800 - £326,400 = £26,400
This makes your annual contribution for pension purposes £26,400. Nothing to do with what you or your employer pays, and only known after the end of the tax year.
No idea which clever civil servant dreamed that one up !!
Golfy, Thanks I remember now, and yes not the easiest. I also now remember that I used the carried forward rule. I hadn’t used all my annual allowance in previous years. I was therefor able to go over the £40,000 using carried forward allowance from previous years. Hence why I could get large sums into the AVC.
Golfie & Rob7Lee (he was possibly my fav ever player in an Addicks shirt) thanks both for confirming what I thought I knew & understood, love this thread honest comments - much appreciated Gents 👍👍
Wanted to post this separate to the "are we all doomed" thread......
Indications coming out from The Treasury that pension tax relief will be changed in the March Budget. A flat rate for all of 25%, instead of the current 20% & 40% rates. Will obviously be a small benefit to basic rate taxpayers but may deter higher rate taxpayers from putting more into their pensions than necessary.......especially if they are going to be paying higher rate tax in retirement.
Thought I would bring it up in case anyone wanted to make use of the 40% relief before the end of the tax year. Use it before you lose it
(think my old pension salesman traits are coming out there !!)
The removal of higher rate relief has been rumoured for at least the last 20 years!
I have a feeling that the pandemic is the excuse the Treasury have been looking for and will happen this year. I wish they would introduce a contributions cap and remove the lifetime allowance, though. That would be much more equitable, transparent and remove one of the many uncertainties from pensions planning.
But there is already a contributions cap. £40k.
Wholeheartedly agree about getting rid of the Lifetime Allowance - or at least increasing it by more than inflation. But the LA is one big way the Treasury is bringing in tax and so I dont see that changing anytime soon.
Sorry, to clarify, I meant replacing the lifetime allowance with a lifetime contributions cap.
Golfie & Rob7Lee (he was possibly my fav ever player in an Addicks shirt) thanks both for confirming what I thought I knew & understood, love this thread honest comments - much appreciated Gents 👍👍
Not a bad player was he....... Golfie is the expert, i'm just the young, amateur pretender
Just wondered. I took out a 25 yr Savings Plan with Teachers Assurance when I was 20 which matured a few years ago. I know they sold out and are no longer in business, but wondered if anyone knows if there are still With Profits plans (or similar) available.
My daughter is now 24 and asked me for advice on what's best for a long term monthly investment (20 yr+). Is there still something like this available. Sorry for asking what may seem an annoying question.
Yes they are still around, but wouldn't say they are the best;
What else does your 24 yr old daughter have, ISA's or anything? Does she own her own home etc.
A 20yr plan at her age seems a long investment as life can change considerably. If she's not using her ISA allowance a stocks and shares ISA may be better. Or if she's not bought her first house yet (but is planning to) a LISA.
Lots of options but need more background info really.
So she's not a home owner. Has no investments. Have just started a full-time job, so has a steady income. I was suggesting she puts away £50 a month as a minimum for a long term investment. Something that she doesn't touch for a long time. She doesn't have any lumps of cash hanging around so looking for a long haul thing.
My Teachers Assurance one was £18.50 pcm / 25 yrs. Lucky for me they sold out to Liverpool with a year to go. I got a 60% bonus on maturity to go on top of all the other annual bonuses. Which have me a nice £21k.
I'd love to set her on track for something similar. Not sure what would be the best.
So she's not a home owner. Has no investments. Have just started a full-time job, so has a steady income. I was suggesting she puts away £50 a month as a minimum for a long term investment. Something that she doesn't touch for. Long time. She doesn't have any Lumos of cash hanging around so looking for a long haul thing.
My Teachers Assurance one was £18.50 pcm / 25 yrs. Lucky for me they sold out to Liverpool with a year to go. I got a 60% bonus on maturity to go on top of all the other annual bonuses. Which have me a nice £21k.
I'd love to set her on track for something similar. Not sure what would be the best.
That was a good return, roughly 9% per annum.
If she has nothing else i'd open up a Stocks & Shares ISA. That way if needed it is easy to increase or decrease the monthly payment, you can get at the money if you really needed to for emergencies etc.
There are lots of options, but for a basic beginners one Nutmeg are pretty good and you don't have to trawl over which of the 1000's of available funds you want to invest in.
If she has any idea of buying her own home i'd also suggest opening a LISA, you can pay in up to £4k a year and the government pay in a 25% bonus. However you can only use the money for buying your first home or as a pension (you can withdraw the cash but you lose 25% of whatever the value is so could lose money).
The old adage of building up a cash reserve if she can also.
Lastly, not wishing to teach anyone to suck eggs or interfere too much but something I was taught and has stood me in very good stead;
Whatever she earns (assuming she is not on the breadline) then if possible she needs to imagine she only earns 80% of what she really does. This isn't always possible of course but a much as she can.
Having that 20% buffer will really help her build her wealth and not get into debt. Do that as her career progresses and in 10 years time she'll be quite comfortable.
The mistake I see so many do is believe they earn 105% of what they do!
I've heard that tip before or similar. Wish I'd had that said to me at 20, my ex-wife could have taken even more, lol. Actually my dad was a bank manager and always taught me to keep a rainy day fund. Just trying to pass on the best 'current' advice, so all tips very much appreciated. I will check out Nutmeg. Thanks.
So she's not a home owner. Has no investments. Have just started a full-time job, so has a steady income. I was suggesting she puts away £50 a month as a minimum for a long term investment. Something that she doesn't touch for a long time. She doesn't have any lumps of cash hanging around so looking for a long haul thing.
My Teachers Assurance one was £18.50 pcm / 25 yrs. Lucky for me they sold out to Liverpool with a year to go. I got a 60% bonus on maturity to go on top of all the other annual bonuses. Which have me a nice £21k.
I'd love to set her on track for something similar. Not sure what would be the best.
That was a good return but that was over the "golden years" of with profit investments where you could get annual bonuses of 6% -8%. Sadly those days are long gone & due to the disclosure rules & the myriad of charges that you have to show nowdays even companies like The Prudential have ditched the with-profirlt endowment.
As @Rob7Lee has said, best thing for your daughter is an ISA. Much more flexible & over a 15-20 year timespan will do just as well, if not better, than the old style endowment......once she has built up an emergency fund of 6 months expenditure that is.
So she's not a home owner. Has no investments. Have just started a full-time job, so has a steady income. I was suggesting she puts away £50 a month as a minimum for a long term investment. Something that she doesn't touch for a long time. She doesn't have any lumps of cash hanging around so looking for a long haul thing.
My Teachers Assurance one was £18.50 pcm / 25 yrs. Lucky for me they sold out to Liverpool with a year to go. I got a 60% bonus on maturity to go on top of all the other annual bonuses. Which have me a nice £21k.
I'd love to set her on track for something similar. Not sure what would be the best.
That was a good return but that was over the "golden years" of with profit investments where you could get annual bonuses of 6% -8%. Sadly those days are long gone & due to the disclosure rules & the myriad of charges that you have to show nowdays even companies like The Prudential have ditched the with-profirlt endowment.
As @Rob7Lee has said, best thing for your daughter is an ISA. Much more flexible & over a 15-20 year timespan will do just as well, if not better, than the old style endowment......once she has built up an emergency fund of 6 months expenditure that is.
Another vote for the L/ISA, drip feeding into a basket of pooled investments (index ETFs of the big markets, or investment trusts with a long track record).
The return you made was fantastic (9.1%) but you wouldn't get that again these days, as Golfie says. My wife used to sell them years ago and wouldn't touch them now.
Comments
Indications coming out from The Treasury that pension tax relief will be changed in the March Budget. A flat rate for all of 25%, instead of the current 20% & 40% rates. Will obviously be a small benefit to basic rate taxpayers but may deter higher rate taxpayers from putting more into their pensions than necessary.......especially if they are going to be paying higher rate tax in retirement.
Thought I would bring it up in case anyone wanted to make use of the 40% relief before the end of the tax year. Use it before you lose it
(think my old pension salesman traits are coming out there !!)
The removal of higher rate relief has been rumoured for at least the last 20 years!
25% will be handy though as i'll keep filling my wife's up instead with 100% of her salary and she doesn't really pay any tax due to low earnings.
Income tax will almost certainly go up, just a matter of how much and where/what level. I'd expect 50p level either at the existing 45p level or another tier. Maybe 40 will increase also, can't see the lower level changing.
I'd definitely agree on education at school. Over the past 15 years i've employed a fair number of graduates/School leavers, most are pretty blind when it comes to finances, even the real basics.
Wholeheartedly agree about getting rid of the Lifetime Allowance - or at least increasing it by more than inflation. But the LA is one big way the Treasury is bringing in tax and so I dont see that changing anytime soon.
Also if you are paying into a private pension & a SIPP the £40k limit is split across both.
FWIW, I certainly expect some growth next year and have allocated a chunk of cash that I had in a local property bond that was paid off early. But right now, I doubt I’ll be calling it higher than about 7500 ( for the whole year) since I think some “vaccine optimism” is already priced in, whereas the short term Brexit effect, even if there is a “deal” , will be a psychological shock. I thought about specifically backing UK stocks because the index lags the others, but as one of the guys in “Jeff Prestige’s” article says, there are good reasons for that lag.
And PS...... a SIPP is a private pension. Just a fancy name that has stuck over recent years. 90% of people with a "Sipp" dont invest in anything but collectives or insured funds.
The way to calculate the "pension savings" amount for a DB scheme is to start with the opening figure for the previous year, so say an Annual salary on 6th April 2019 of £60k. Then you use the number of years of service to date (say 20/60ths) to get your current pension. You then multiply this by 16 & then multiply the answer by last September's CPI figure. This gives your opening figure. You then take the salary & years of service on the 5th April 2020 - say £63kpa and multiply that by 21/60ths (as you have now worked a year) and times that answer by 16.
Eg
£60k x 20/60 = £20k
x 16 = £320,000
x 102% = £326,400
£63k x 21/60 = £22,050
16th = £352,800
£352,800 - £326,400 = £26,400
This makes your annual contribution for pension purposes £26,400. Nothing to do with what you or your employer pays, and only known after the end of the tax year.
No idea which clever civil servant dreamed that one up !!
My daughter is now 24 and asked me for advice on what's best for a long term monthly investment (20 yr+). Is there still something like this available. Sorry for asking what may seem an annoying question.
What else does your 24 yr old daughter have, ISA's or anything? Does she own her own home etc.
A 20yr plan at her age seems a long investment as life can change considerably. If she's not using her ISA allowance a stocks and shares ISA may be better. Or if she's not bought her first house yet (but is planning to) a LISA.
Lots of options but need more background info really.
So she's not a home owner. Has no investments. Have just started a full-time job, so has a steady income. I was suggesting she puts away £50 a month as a minimum for a long term investment. Something that she doesn't touch for a long time. She doesn't have any lumps of cash hanging around so looking for a long haul thing.
My Teachers Assurance one was £18.50 pcm / 25 yrs. Lucky for me they sold out to Liverpool with a year to go. I got a 60% bonus on maturity to go on top of all the other annual bonuses. Which have me a nice £21k.
I'd love to set her on track for something similar. Not sure what would be the best.
If she has nothing else i'd open up a Stocks & Shares ISA. That way if needed it is easy to increase or decrease the monthly payment, you can get at the money if you really needed to for emergencies etc.
There are lots of options, but for a basic beginners one Nutmeg are pretty good and you don't have to trawl over which of the 1000's of available funds you want to invest in.
If she has any idea of buying her own home i'd also suggest opening a LISA, you can pay in up to £4k a year and the government pay in a 25% bonus. However you can only use the money for buying your first home or as a pension (you can withdraw the cash but you lose 25% of whatever the value is so could lose money).
The old adage of building up a cash reserve if she can also.
Lastly, not wishing to teach anyone to suck eggs or interfere too much but something I was taught and has stood me in very good stead;
Whatever she earns (assuming she is not on the breadline) then if possible she needs to imagine she only earns 80% of what she really does. This isn't always possible of course but a much as she can.
Having that 20% buffer will really help her build her wealth and not get into debt. Do that as her career progresses and in 10 years time she'll be quite comfortable.
The mistake I see so many do is believe they earn 105% of what they do!
As @Rob7Lee has said, best thing for your daughter is an ISA. Much more flexible & over a 15-20 year timespan will do just as well, if not better, than the old style endowment......once she has built up an emergency fund of 6 months expenditure that is.
The return you made was fantastic (9.1%) but you wouldn't get that again these days, as Golfie says. My wife used to sell them years ago and wouldn't touch them now.