Financial Planning

[sideways sid]

There are c.100 REITS listed on LSE, and at least as many in US.

[Ozzie Osmond]

Mezger said:

have managed to save equivalent of £150k in cash savings since working abroad.

gross income is now equivalent to £275k less 15% tax, however I will be in a position to save minimum £100k per annum potentially up to £150k pa.

....let it compound slowly over time + buy another rental property?

In your situation I, personally, would avoid BTL like the plague. The prospect of being a tuppenny landlord on the opposite side of the planet when you're already got money coming out of your ears doesn't look very attractive at all.

If you want to invest in property just buy property funds. Much easier to handle.

[superlightr]

we have a lot of overseas landlords we let properties for. Its not really a hassle if you get a good agent and get a suitable property.

Personally I have put most of my eggs in one basket - houses - I understand them, deal with them daily. own the business. I dont trust stocks and shares or pensions. I have a minimal pension.

So far 3x properties 1x house 1x commercial and 1x flat above said commercial. Income approx £38k a year. So will go towards my "pension". Hope to get 3x more over the 15 years and get close to £60k income. + small pension + govt pension with no debts.
Benefit also can always sell to realise cash if needed, can pass on my death.

[TFP]

superlightr said:

Benefit also can always sell to realise cash if needed, can pass on my death.

Interesting. I think I would say that you don't understand pensions and you should probably have another look given all of the changes to legislation.

Neither of these points represent attributes that a pension doesn't have, and probably more tax efficiently too.

[superlightr]

TFP said:

superlightr said:

Benefit also can always sell to realise cash if needed, can pass on my death.

Interesting. I think I would say that you don't understand pensions and you should probably have another look given all of the changes to legislation.

Neither of these points represent attributes that a pension doesn't have, and probably more tax efficiently too.

im already committed to property. rightly or wrongly. At least I control it. It not a drawdown asset like a pension/annuity.

So a pension income I can pass on my death? one I have pays 50% out to spouse for x years. great ! what about the capital built up into it? Its lost. ie I have to buy an annuity. if I die most of the income is lost as well. My children cant inherit it.

I agree I dont understand pensions that well. I dont trust things I cant understand, pensions are hard to understand in my view.
I also dont like things I cant control (subject to govt legislation anyway) which is also why im self employed.
I think we will see pensions as being the biggest rip off going. Annuity costs are already much higher now then they were 10 years ago. The govt keep altering my 'official' retirement age.

So as mentioned I invested in property which I do understand and work in. Eggs are all in one basket. I can't see that what I have planned and worked towards will fail to deliver the 'pension' I would like as its under my control when I want it.

If you can see a major fault that having 4-6 properties all paid off by retirement giving a good income is a large risk -v- a pension im all ears.

Edited by superlightr on Wednesday 21st October 14:23

Edited by superlightr on Wednesday 21st October 14:26

[Simpo Two]

^^ Well said that man.

[TFP]

superlightr said:

TFP said:

superlightr said:

Benefit also can always sell to realise cash if needed, can pass on my death.

Interesting. I think I would say that you don't understand pensions and you should probably have another look given all of the changes to legislation.

Neither of these points represent attributes that a pension doesn't have, and probably more tax efficiently too.

im already committed to property. rightly or wrongly. At least I control it. It not a drawdown asset like a pension/annuity.

So a pension income I can pass on my death? one I have pays 50% out to spouse for x years. great ! what about the capital built up into it? Its lost. ie I have to buy an annuity. if I die most of the income is lost as well. My children cant inherit it.

I agree I dont understand pensions that well. I dont trust things I cant understand, pensions are hard to understand in my view.
I also dont like things I cant control (subject to govt legislation anyway) which is also why im self employed.
I think we will see pensions as being the biggest rip off going. Annuity costs are already much higher now then they were 10 years ago. The govt keep altering my 'official' retirement age.

So as mentioned I invested in property which I do understand and work in. Eggs are all in one basket. I can't see that what I have planned and worked towards will fail to deliver the 'pension' I would like as its under my control when I want it.

If you can see a major fault that having 4-6 properties all paid off by retirement giving a good income is a large risk -v- a pension im all ears.

Edited by superlightr on Wednesday 21st October 14:23

Edited by superlightr on Wednesday 21st October 14:26

There is so much wrong with the above. You really are ignorant of how pensions work and the respective tax positions of the two retirement vehicles you have mentioned.

No need to be so defensive about what you have done to date. It's not a case of pensions good, property bad.

Basically, you know nothing about pensions. What you think you know is outdated and wrong.

you've made your choices. Fine. Surely better to make an informed choice based upon the facts rather than what you don't know ?

Happy days.

[Ozzie Osmond]

superlightr said:

If you can see a major fault that having 4-6 properties all paid off by retirement giving a good income is a large risk -v- a pension im all ears.

I suggest you explore a professional "risk assessment" of your investment portfolio.

[supersport]

We recently got some advice and it changed my nod about pensions, tax efficient and the pot can be inherited. Recent changes make hem very attractive. Of course nothing to say they won't change again.

At the end of the day, where else can you instantly make a 20 or 40% gain?

[superlightr]

Ozzie Osmond said:

superlightr said:

If you can see a major fault that having 4-6 properties all paid off by retirement giving a good income is a large risk -v- a pension im all ears.

I suggest you explore a professional "risk assessment" of your investment portfolio.

I would be pleased if anyone could outline the general risk of holding properties as a pension. -v- the risk of a pension.
I have outlined the main benefits of properties as I see it so am interested to have the other side outlined.

[superlightr]

supersport said:

We recently got some advice and it changed my nod about pensions, tax efficient and the pot can be inherited. Recent changes make hem very attractive. Of course nothing to say they won't change again.

At the end of the day, where else can you instantly make a 20 or 40% gain?

thats the rub - when I looked at pensions 20 yrs ago they looked pretty ste -v- properties. They were still pretty crap 10yrs ago with stock market ups and downs.

Is that the whole pension pot can be inherited?

[BoRED S2upid]

superlightr said:

im already committed to property. rightly or wrongly. At least I control it. It not a drawdown asset like a pension/annuity.

So a pension income I can pass on my death? one I have pays 50% out to spouse for x years. great ! what about the capital built up into it? Its lost. ie I have to buy an annuity. if I die most of the income is lost as well. My children cant inherit it.

I agree I dont understand pensions that well. I dont trust things I cant understand, pensions are hard to understand in my view.
I also dont like things I cant control (subject to govt legislation anyway) which is also why im self employed.
I think we will see pensions as being the biggest rip off going. Annuity costs are already much higher now then they were 10 years ago. The govt keep altering my 'official' retirement age.

So as mentioned I invested in property which I do understand and work in. Eggs are all in one basket. I can't see that what I have planned and worked towards will fail to deliver the 'pension' I would like as its under my control when I want it.

If you can see a major fault that having 4-6 properties all paid off by retirement giving a good income is a large risk -v- a pension im all ears.

Edited by superlightr on Wednesday 21st October 14:23

Edited by superlightr on Wednesday 21st October 14:26

Can't fault the numbers and your in control of your own destiny so to speak. Some slight diversification later on maybe when the loans are paid off wouldn't be a bad thing so your not too exposed.

[Ozzie Osmond]

superlightr said:

I would be pleased if anyone could outline the general risk of holding properties as a pension. -v- the risk of a pension.
I have outlined the main benefits of properties as I see it so am interested to have the other side outlined.

For instance,

• Concentration of market risk in a single asset class
• Concentration of risk in one country
• Political risk if a future government decides to clamp down on landlords
• Liquidity risk (properties are large lumps and take time to sell)
• Management risk as you get older and less able to cope with difficult tenants or agents
• and the list goes on.

[Jockman]

Ever thought of setting up a SIPP and putting your commercial property in it (subject to available cashflows)?

Your rent will grow tax free and can be eventually withdrawn in a more tax efficient manner.

Foot in both camps then.

[superlightr]

Ozzie Osmond said:

superlightr said:

I would be pleased if anyone could outline the general risk of holding properties as a pension. -v- the risk of a pension.
I have outlined the main benefits of properties as I see it so am interested to have the other side outlined.

For instance,

• Concentration of market risk in a single asset class
• Concentration of risk in one country
• Political risk if a future government decides to clamp down on landlords
• Liquidity risk (properties are large lumps and take time to sell)
• Management risk as you get older and less able to cope with difficult tenants or agents
• and the list goes on.

Thank you.
In my mind property has historically been a good investment. Look how much a property was in say 1850's 1900, 1950, 1970, 2000, 2015. All the properties I have looked at in my area have increased in value. ie 2 bed bungalow 1973 bought for £3k now worth £260 to £280k 2 bed house in 93 £82k now worth £255 2 bed house 2007 £207k now worth £260k
Sure its lumped into property but property will always be needed and thus be a demand. Risk that people wont want property - I doubt it.

All in the UK - pretty stable market for the asset I want to invest in? Are you thinking houses in other countries? or just other investments ie stocks/shares? I believe it would be more risky to put money in other countries that perhaps are not as stable as the UK. I dont trust stocks and shares as companies fold/drop value and is very volatile. I think the nature of properties in the UK is generally a stable and non volatile asset.

Clampdown on landlords - yes that is a risk I agree. I dont think many investments are risk free. To counter that as there is a massive housing shortage I dont think any govt will hit the PRS too hard. But yes a risk.

Liquidity - yes takes time to sell but relying on the income not the capital. 3-4 months to cash in if I had to or by auction if desperate. Not running that tight to have to sell up.

Management - own and run a letting business so it no issue.

My problem is control - and my risk adverse to things outside of my control ie money in stocks and shares, in pensions (stocks n shares)or bits of paper which may be worthless. houses are a physical thing, I can always live in one of them, they will always have an intrinsic value even if a currency is devalued.

I appreciate your comments and willing to learn. I formed my views over the last 20 odd years so may be out of date re pensions. I feel comfortable with properties and the property market hence my jump in that direction.

[superlightr]

I will take your advice and seek professional financial advice to update me on the current options. being informed is the best way to decide - may not change my risk view though !

[Ginge R]

superlightr said:

im already committed to property. rightly or wrongly. At least I control it. It not a drawdown asset like a pension/annuity.

So a pension income I can pass on my death? one I have pays 50% out to spouse for x years. great ! what about the capital built up into it? Its lost. ie I have to buy an annuity. if I die most of the income is lost as well. My children cant inherit it.

I agree I dont understand pensions that well. I dont trust things I cant understand, pensions are hard to understand in my view.
I also dont like things I cant control (subject to govt legislation anyway) which is also why im self employed.
I think we will see pensions as being the biggest rip off going. Annuity costs are already much higher now then they were 10 years ago. The govt keep altering my 'official' retirement age.

So as mentioned I invested in property which I do understand and work in. Eggs are all in one basket. I can't see that what I have planned and worked towards will fail to deliver the 'pension' I would like as its under my control when I want it.

If you can see a major fault that having 4-6 properties all paid off by retirement giving a good income is a large risk -v- a pension im all ears.

Edited by superlightr on Wednesday 21st October 14:23

Edited by superlightr on Wednesday 21st October 14:26

I'm not suggesting you are right or wrong. That's not the issue (imho). An up to date insight into the characteristics of the pension tax wrapper and the asset of physical property would allow you to make a more insightful assessment into the pros and cons of both. Property has worked for you though, it offers you peace of mind and security - who are any of us to argue?

[Mezger]

Quick update, we've been saving hard and reading up on options. I met a few "advisers" here, who when you do some digging are complete shysters peddling "offshore" pensions which are horrifically expensive when you analyse the costs over 25-30 years and the exit penalties! Had a lucky escape with one as I was thinking about investing, then I got tipped off about a couple of good books to read - Millionaire Teacher by Andrew Hallam and Global Expats guide to Investing by same author.

I have read through both books and they are very sensible and practical (none of this get rich quick crap) - essentially advocating Index Trackers and bond trackers allocated based on your risk appetite/age/closeness to retirement. Pound-cost average over time and let compounding work its magic - when you look at the biggest draws on performance, taxes and fees it looks a very solid approach. There will always be some fund managers who beat the indexes some years but nobody who does it consistently and if Index Trackers are what Mr Buffet would recommend thats good enough for me. Also most of the costs are well below 1% some as low as 0.15% when you look at Vanguard etc.

So we reduced the UK mortgage down to £80k and will be setting up monthly contributions plus lump sum to get things moving in a UK FTSE ETF index tracker (need to decide whether just the 100 or All-Share), global share ETF index tracker and Bond index tracker (AAA and first world government bonds) 40/40/20

Some interesting changes with regards to BTL in the last 6 months, we would need to get a wriggle on and buy before April I believe to avoid the new tax measures and higher stamp duties.

[GT03ROB]

Sounds a very sensible approach.

[Ginge R]

Merger,

Can I make an observation? The anticipated spread of investments that you mention is quite wide and still appears uncertain. You're going to experience a huge variety of volatility there (not nessesarily the same as risk) so bear these three points in mind when you address investment risk.

Risk required is the risk associated with the return required to achieve your goals from the financial resources you have available.
Risk capacity is the level of financial risk you can afford to take, and..
Risk tolerance is the level of risk you are comfortable with.

Well done for reading up and for avoiding the sharks.