Pension contributions - how much?

2

Comments

  • Daz555
    Daz555 Posts: 3,976
    verylonglegs wrote:
    Don't think it would be the first time I've said on here but my stance is that to me pension plans via employers and their financial advisers make no sense. Why would you hand over money you'll be dependent on in your most vulnerable adult years to a what is ultimately a stranger who has just as much chance selecting decent investments as you do?
    Employer contribution. With my own job by contributing 6% of my own salary my company matches with 13%. Why on earth would anyone with the chance to "extract" some money from their employer not do so?

    I think the key here is not putting all your eggs in one basket. I don't put too much faith in my pension pot come retirement so I put money elsewhere also - share-saves, property, ISAs etc.
    You only need two tools: WD40 and Duck Tape.
    If it doesn't move and should, use the WD40.
    If it shouldn't move and does, use the tape.
  • bernithebiker
    bernithebiker Posts: 4,148
    verylonglegs wrote:
    Why would you hand over money you'lll be dependent on in your most vulnerable adult years to a what is ultimately a stranger who has just as much chance selecting decent investments as you do?

    This ^^

    I worked in the City and there are plenty of muppets. Think Apprentice style bravado, but well-connected.

    Both my company pensions were actively managed by investment funds. They managed a -ve return on 2 occasions.......muppets. (But they still got their juicy salaries and bonuses).

    I would much rather have control myself. Of course property is risky, but at least I only have myself to blame if it goes wrong. After a great 23 year run, things are currently looking pretty soggy, for us at least, but you have to take the rough with the smooth.

    (IMO - the UK, and London in particular are well over-valued, but there are bargains to be had in France and Spain; (just don't take up residency there).
  • VTech
    VTech Posts: 4,736
    Why is it that people still think property is risky ?
    That is media hype mixed with brainwashing.

    Value is controlled ONLY by demand and as long as more people are being born than that whom are dying, the value of property as a commodity will increase.
    Losses occur due to financial crisis where people struggle to get a loan for the property but those owning one for investment simply do not lose.

    I have seen a property of mine decrease by 30%, some would suggest that this is a bad investment but really ? is it ?

    I purchased several properties in my low 30's, I rent them all out and they wash their hands or cost me very little but either way its less than the several thousand a month I would need to invest for a half decent pension gamble.

    I bought my first home for £29,500, that property was worth £130,000 in 2008 and then £95,000 in 2011. I heard loads of people biatchin and complaining about their losses but these were from employees who had purchased a living home that had dropped in value but the truth was, they were actually better off as the interest rates dropped and they ended up paying less.
    The home I purchased for £29,500 is now back to around £125,000 so although it is worth less than it was at max level, it is still rented for £550/month with a mortgage of around £350/month.

    I am yet to find anyone who has lost money on a long term investment on a property (outside of other issues not to do with the original investment) and I have come across many who have invested this way.
    Living MY dream.
  • ugo.santalucia
    ugo.santalucia Posts: 28,273
    What I hate about pension funds and mine specifically is that I signed up to a deal and in 9 years they have changed the rules already 3 times... now they are even transforming it from a final salary to a career average... and it's not that I can have my money back if I wanted it...
    That's what I hate... they have the freedom to change the rules without giving me the chance to opt out if I don't like the new conditions. I can stop paying if I so preferred, but they will still keep the money... thank you very much, great doing business with you!
    left the forum March 2023
  • whoof
    whoof Posts: 756
    VTech wrote:
    Why is it that people still think property is risky ?
    .
    Property can work out very well but can also go very wrong.

    I know someone who bought a property and rented it out. The tenant stopped paying and it took 8 months to evict them. He had to find 8 months mortgage, pay legal fees and redecorate before he could rent it out again. Legally the tenant still owed him back rent plus costs, but he never saw his money. The majority of people could not take this hit from their savings and would either have to remortgage to pay the mortgage (not a great investment) or have it repossessed.
    Someone else I used to work with now does repossession, he's a busy man.
  • Anonymous
    Anonymous Posts: 79,667
    whoof wrote:
    Someone else I used to work with now does repossession, he's a busy man.

    I hear now is a good time to buy said re-possessed properties as banks are keen to get them off the balance sheet before year end.
  • pblakeney
    pblakeney Posts: 25,892
    VTech wrote:
    Why is it that people still think property is risky ?
    That is media hype mixed with brainwashing.
    One of my colleagues has a second home that he bought for £45k 15 years ago.
    It was valued at £150k two years ago.
    He tried selling it and failed.
    He dropped the price to £120k and still failed.
    He then dropped it to £90k.

    You may be thinking that he has doubled his money.

    But he still cannot sell it. Something that you cannot sell is worthless.

    Property as an investment may be safer or better than other options but it is not guaranteed.
    The above may be fact, or fiction, I may be serious, I may be jesting.
    I am not sure. You have no chance.
    Veronese68 wrote:
    PB is the most sensible person on here.
  • ballysmate
    ballysmate Posts: 15,921
    Was speaking to an elderly lady who has recently returned from Spain to live on a mobile home park. She bought a house in Spain 19 years ago and last year sold it at a loss.
  • bianchimoon
    bianchimoon Posts: 3,942
    my friend bought 7 properties during the boom in the hope of making money on the properties and as buy to lets, he ended up bankrupt, had to sell the family home and move into rented accommodation, all very sad for his wife and kids who just trusted him, how wrong he got it. It all sounded great at the time when he explained what he was doing, but the bubble burst!
    All lies and jest..still a man hears what he wants to hear and disregards the rest....
  • ugo.santalucia
    ugo.santalucia Posts: 28,273
    bianchimoon wrote:
    my friend bought 7 properties during the boom in the hope of making money on the properties and as buy to lets, he ended up bankrupt, had to sell the family home and move into rented accommodation, all very sad for his wife and kids who just trusted him, how wrong he got it. It all sounded great at the time when he explained what he was doing, but the bubble burst!

    That's because he thought he could play the big game with small money... if he had the money to buy properties in London, he would have been fine... but he didn't... he thought 6 properties in Alicante (or Scunthorpe) are better than one in Fulham... mistake!
    left the forum March 2023
  • bianchimoon
    bianchimoon Posts: 3,942
    spot on, borrowed too much, properties in glasgow, manchester, birmingham.
    A typical risk taker personality
    All lies and jest..still a man hears what he wants to hear and disregards the rest....
  • ugo.santalucia
    ugo.santalucia Posts: 28,273
    bianchimoon wrote:
    spot on, borrowed too much, properties in glasgow, manchester, birmingham.
    A typical risk taker personality


    I lived in Manchester 7-8 years ago.. they were building flats in the centre like crazy... the population wasn't growing anywhere near that rate... it was speculation fuelled by sudden availability of money, everybody knew that... Lots of foreign investors buying as a money laundering exercise, they didn't care if the price went up or down...
    left the forum March 2023
  • bdu98252
    bdu98252 Posts: 171
    The Tories have recently brought in some very flexible pension rules that have made me look into getting a pension as I am self employed. This is potentially pretty risky as some politician in the future may regard my savings as a good way to bail out the state ala Gordon Brown.

    For all of you claiming that housing is supply and demand then you also need to think about desirability as well. When people are choosing a house then the building itself does need to meet their needs. Currently people are only renovating old properties because the price of the house is disproportionate to the land cost. Otherwise that 1950's home would probably be bull dosed. Thinking about what building people will want in the next 50 years is a pretty risky business. particularly when you look at the long term viability of some of our current building methods.

    Societies can shun whole areas and development types which make those properties worth nothing. Often this is linked to employment prospects within an area which over a 50 year period is hard to predict. Would people in the 1960's have truly envisaged the destruction of certain Northern towns correctly without the benefit of hindsight?
  • VTech
    VTech Posts: 4,736
    I guess I should have realised that people here would miss my point but lately I've really had to take a look at how I deal with these events (used to get upset and rant with frustration but have suddenly realised that some people were never meant to be financially secure).

    I would not buy abroad as an investment because of rule changes, I know many who have lost an entire investment in spain with no chance of getting it back.

    Back to the UK though, wether you take onboard what I wrote or not doesn't matter, fact is that property in the uk is a great investment in the majority of cities, not subject to london alone.
    if you buy a house to flip it you can lose, thats not always a good investment as it relies on "chance"
    If you buy to let you should always do well. You can also take insurance for bad tenants which covers you fully, most don't take this out which is a risk.

    I could take anyone from any background and make them money, it isn't hard, it just requires dedication.
    Living MY dream.
  • Anonymous
    Anonymous Posts: 79,667
    The issue is, though, getting off the ground on day 1. You can't just get a buy-to-let with 5% of your salary each month!
  • bianchimoon
    bianchimoon Posts: 3,942
    VTech wrote:
    I guess I should have realised that people here would miss my point but lately I've really had to take a look at how I deal with these events (used to get upset and rant with frustration but have suddenly realised that some people were never meant to be financially secure).

    I would not buy abroad as an investment because of rule changes, I know many who have lost an entire investment in spain with no chance of getting it back.

    Back to the UK though, wether you take onboard what I wrote or not doesn't matter, fact is that property in the uk is a great investment in the majority of cities, not subject to london alone.
    if you buy a house to flip it you can lose, thats not always a good investment as it relies on "chance"
    If you buy to let you should always do well. You can also take insurance for bad tenants which covers you fully, most don't take this out which is a risk.

    I could take anyone from any background and make them money, it isn't hard, it just requires dedication.
    I think you're stating the obvious - as long as you have the capital to invest in property, it would be fairly difficult to make a bad property investment as long as you don't have to 'borrow' against said property in the UK and you're not trying to make a quick buck
    All lies and jest..still a man hears what he wants to hear and disregards the rest....
  • ugo.santalucia
    ugo.santalucia Posts: 28,273
    coriordan wrote:
    The issue is, though, getting off the ground on day 1. You can't just get a buy-to-let with 5% of your salary each month!

    You can't even get a 90-95% mortgage for a buy to let... unless you bend the rules and get a mortgage for a property you are supposed to live in and then you don't... which I assume people do all the time, as I can't see your bank coming to check.
    But yes, if you want to play the property game, you need a lump sum to start from
    left the forum March 2023
  • VTech
    VTech Posts: 4,736
    ugo.santalucia wrote:
    coriordan wrote:
    The issue is, though, getting off the ground on day 1. You can't just get a buy-to-let with 5% of your salary each month!

    You can't even get a 90-95% mortgage for a buy to let... unless you bend the rules and get a mortgage for a property you are supposed to live in and then you don't... which I assume people do all the time, as I can't see your bank coming to check.
    But yes, if you want to play the property game, you need a lump sum to start from

    Lets say you were the type of person who wanted to "take control" of their future.
    You take a loan, lets say for home improvements and you then decide to invest in a property. So you suddenly have £20,000 deposit for a £100,000 home. The mortgage would be around £420 and the loan around £350 a month.
    Average rental of £600/month so for the first 5 years you are personally investing £170/month into your pension.
    After that your investment is ZERO.
    You take nothing from the property until finalisation and your sitting on a stack.
    I would guesstimate that a 25 year length on a home is going to be roughly 3x purchase going on the past 100 or so year and your £10,200 investment (overpayment from first 5 years) is now worth £300,000.

    Im no genius so please feel free to ignore.
    Living MY dream.
  • Anonymous
    Anonymous Posts: 79,667
    You cant get a mortgage if you have a 20K loan and no deposit. They check all this fairly thoroughly.

    EDIT- I'm talking about 1st time buyers here
  • VTech
    VTech Posts: 4,736
    coriordan wrote:
    You cant get a mortgage if you have a 20K loan and no deposit. They check all this fairly thoroughly.

    How naive some people are.
    Living MY dream.
  • pblakeney
    pblakeney Posts: 25,892
    VTech wrote:
    coriordan wrote:
    You cant get a mortgage if you have a 20K loan and no deposit. They check all this fairly thoroughly.

    How naive some people are.
    Not necessarily.
    My Stepson and daughter-in-law were recently buying their first house.
    They saved some and borrowed some on the quiet from the family to get a 20% downpayment.
    Checks into their full financial history and current income/spending was carried out which lead to them requiring a further £20k more towards the down payment.
    The family dutifully stepped in to help. Legal documents had to be signed to show that the money given by the family was gifts and not loans.
    The slightest hint of a loan and the mortgage would be refused.
    Of course, you could lie. That wouldn't be naive, but it would be illegal.
    The above may be fact, or fiction, I may be serious, I may be jesting.
    I am not sure. You have no chance.
    Veronese68 wrote:
    PB is the most sensible person on here.
  • bianchimoon
    bianchimoon Posts: 3,942
    VTech wrote:
    ugo.santalucia wrote:
    coriordan wrote:
    The issue is, though, getting off the ground on day 1. You can't just get a buy-to-let with 5% of your salary each month!

    You can't even get a 90-95% mortgage for a buy to let... unless you bend the rules and get a mortgage for a property you are supposed to live in and then you don't... which I assume people do all the time, as I can't see your bank coming to check.
    But yes, if you want to play the property game, you need a lump sum to start from

    Lets say you were the type of person who wanted to "take control" of their future.
    You take a loan, lets say for home improvements and you then decide to invest in a property. So you suddenly have £20,000 deposit for a £100,000 home. The mortgage would be around £420 and the loan around £350 a month.
    Average rental of £600/month so for the first 5 years you are personally investing £170/month into your pension.
    After that your investment is ZERO.
    You take nothing from the property until finalisation and your sitting on a stack.
    I would guesstimate that a 25 year length on a home is going to be roughly 3x purchase going on the past 100 or so year and your £10,200 investment (overpayment from first 5 years) is now worth £300,000.

    Im no genius so please feel free to ignore.

    your assumptions are based on keeping the lowest mortgage rates in history for the next 25 years, full occupancy, no maintenance, no insurances... etc... you're being very naive
    All lies and jest..still a man hears what he wants to hear and disregards the rest....
  • mamba80
    mamba80 Posts: 5,032
    VTech wrote:
    Lets say you were the type of person who wanted to "take control" of their future.
    You take a loan, lets say for home improvements and you then decide to invest in a property. So you suddenly have £20,000 deposit for a £100,000 home. The mortgage would be around £420 and the loan around £350 a month.
    Average rental of £600/month so for the first 5 years you are personally investing £170/month into your pension.
    After that your investment is ZERO.
    You take nothing from the property until finalisation and your sitting on a stack.
    I would guesstimate that a 25 year length on a home is going to be roughly 3x purchase going on the past 100 or so year and your £10,200 investment (overpayment from first 5 years) is now worth £300,000.

    Im no genius so please feel free to ignore.

    Where can you buy a house that is going to treble in value, be in an area that will attract a high rental market and hence regular rent, all for a 100k ? perhaps 200k plus, its also a good idea to have commercial property insurance, household insurance will do you no good if some claims happy tenant sues you for that dodgy stair you were meaning to get fixed, this will add substantially to your costs.

    you also have to factor that avg house prices are at historical highs compared to salaries, so the chances of them rising 3 fold over 25years is nt a given.
    a buy to let mortgage will req a 50 to 60% deposit to get any sort of fixed rate deal, what I did was install my GF as tenant, told them I would be moving in shortly, once everything was signed up and reg payment coming in, they never check again.
    would I have done this with a punter... no chance, should we spilt up, I could be in the shitte!!!! but I ve got a water tight tenancy agreement, as much to protect her as me but it is not as simple or as cheap as vtech would make out.
  • Anonymous
    Anonymous Posts: 79,667
    mamba80 wrote:
    it is not as simple or as cheap as vtech would make out.

    funny that
  • VTech
    VTech Posts: 4,736
    Again, the naive seem to always presume that you need a house in nicer area to make it a good purchase, this is actually a falsehood in many cases.
    I once listed to an asian fella on the radio many years ago whilst stuck in traffic, this guy didn't realise but he made me a fortune because I listened to his words and my life changed.

    He said something along the lines of "an englishman will buy a house he can hardly afford and spend the next 25 years struggling to pay for it, whilst an asian man will purchase five houses, rent 4 out and live in one and then reap the rewards later in life"

    I guess as with many things, english people tend to remove risk, they like to follow the lead and go through life which is great but that isn't a decent method to achieve.
    Either choice is right, neither are wrong. its just personal choice.
    Living MY dream.
  • ugo.santalucia
    ugo.santalucia Posts: 28,273
    VTech wrote:
    Again, the naive seem to always presume that you need a house in nicer area to make it a good purchase, this is actually a falsehood in many cases.
    I once listed to an asian fella on the radio many years ago whilst stuck in traffic, this guy didn't realise but he made me a fortune because I listened to his words and my life changed.

    He said something along the lines of "an englishman will buy a house he can hardly afford and spend the next 25 years struggling to pay for it, whilst an asian man will purchase five houses, rent 4 out and live in one and then reap the rewards later in life"

    I guess as with many things, english people tend to remove risk, they like to follow the lead and go through life which is great but that isn't a decent method to achieve.
    Either choice is right, neither are wrong. its just personal choice.

    Blame wives... they are always needy and want to live above their means... I would be happy living in a crap area, as long as it has access to the outdoors... but women need trendy cafes, shops and all that stuff... ideally one should make a fortune and then get married, 'cause viceversa ain't gonna work
    left the forum March 2023
  • VTech
    VTech Posts: 4,736
    ugo.santalucia wrote:
    VTech wrote:
    Again, the naive seem to always presume that you need a house in nicer area to make it a good purchase, this is actually a falsehood in many cases.
    I once listed to an asian fella on the radio many years ago whilst stuck in traffic, this guy didn't realise but he made me a fortune because I listened to his words and my life changed.

    He said something along the lines of "an englishman will buy a house he can hardly afford and spend the next 25 years struggling to pay for it, whilst an asian man will purchase five houses, rent 4 out and live in one and then reap the rewards later in life"

    I guess as with many things, english people tend to remove risk, they like to follow the lead and go through life which is great but that isn't a decent method to achieve.
    Either choice is right, neither are wrong. its just personal choice.

    Blame wives... they are always needy and want to live above their means... I would be happy living in a crap area, as long as it has access to the outdoors... but women need trendy cafes, shops and all that stuff... ideally one should make a fortune and then get married, 'cause viceversa ain't gonna work

    Agreed :wink:

    I forgot to Finish what I wrote above.
    The best average investment is for the bottom of the ladder home, council estate etc.
    You will always get tenants, insurance is much cheaper with a council backed tenant and your guaranteed rent.
    OK, so they may not look after it like they should but for the majority I've found they do. I don't surprise my tenants with visits and allow them to think of the houses as their own. I find they look after them better if you do this.
    Living MY dream.
  • mamba80
    mamba80 Posts: 5,032
    VTech wrote:
    Again, the naive seem to always presume that you need a house in nicer area to make it a good purchase, this is actually a falsehood in many cases.
    I once listed to an asian fella on the radio many years ago whilst stuck in traffic, this guy didn't realise but he made me a fortune because I listened to his words and my life changed.

    He said something along the lines of "an englishman will buy a house he can hardly afford and spend the next 25 years struggling to pay for it, whilst an asian man will purchase five houses, rent 4 out and live in one and then reap the rewards later in life"

    I guess as with many things, english people tend to remove risk, they like to follow the lead and go through life which is great but that isn't a decent method to achieve.
    Either choice is right, neither are wrong. its just personal choice.

    Blimey! we are in a property house price collapse, we can now all buy 5 houses for our 20k deposit and 100k mortage :lol:
  • norvernrob
    norvernrob Posts: 1,447
    Daz555 wrote:
    verylonglegs wrote:
    Don't think it would be the first time I've said on here but my stance is that to me pension plans via employers and their financial advisers make no sense. Why would you hand over money you'll be dependent on in your most vulnerable adult years to a what is ultimately a stranger who has just as much chance selecting decent investments as you do?
    Employer contribution. With my own job by contributing 6% of my own salary my company matches with 13%. Why on earth would anyone with the chance to "extract" some money from their employer not do so?

    I think the key here is not putting all your eggs in one basket. I don't put too much faith in my pension pot come retirement so I put money elsewhere also - share-saves, property, ISAs etc.

    And the amount you pay is from your gross wages. So that 6% becomes around 4% for a basic rate taxpayer. So I get 17% paid into a pension and only pay for 4% of it. It'd be stupid not to.

    I'd really like to buy a buy to let house as an investment too and allow me to retire a little earlier, but like most people I haven't got a big deposit knocking around.
  • VTech
    VTech Posts: 4,736
    mamba80 wrote:
    VTech wrote:
    Again, the naive seem to always presume that you need a house in nicer area to make it a good purchase, this is actually a falsehood in many cases.
    I once listed to an asian fella on the radio many years ago whilst stuck in traffic, this guy didn't realise but he made me a fortune because I listened to his words and my life changed.

    He said something along the lines of "an englishman will buy a house he can hardly afford and spend the next 25 years struggling to pay for it, whilst an asian man will purchase five houses, rent 4 out and live in one and then reap the rewards later in life"

    I guess as with many things, english people tend to remove risk, they like to follow the lead and go through life which is great but that isn't a decent method to achieve.
    Either choice is right, neither are wrong. its just personal choice.

    Blimey! we are in a property house price collapse, we can now all buy 5 houses for our 20k deposit and 100k mortage :lol:

    This was many years ago when 110% mortgages were readily availible. This would have been an awesome investment opportunity and indeed very correct.

    Putting aside the thoughts of those apposed to my every word.

    Serious question. Who suffers more ?

    Someone who is loaded through clever/lucky opportunity or someone who is broke and spends their life biatchin at the well off ?
    Living MY dream.

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