£100,000 cash

[sidicks]

drainbrain said:

The funny thing with property is that at first it's the 'investment dump'. And during boom times it's a bit annoying because it only 'makes what it makes' whereas businesses can be rapidly grown and expanded. Then during bad times when businesses are slumping it's great, because that steady old income just plods on. Then one day the dump's grown to the point where it's actually becoming the business producing the profits which need invested. Oh dear!

By then it's agency time. Owning one, I mean. And that horizontal diversification leads to all the new contacts which starts the next one into sales. Then into building….

Just seems a bit more fun than putting money into a pension plan (and far more profitable )

Invalid comparison, as explained on numerous occasions..

[CockAroach]

Take a look at VCTs (Venture Capital Trusts)...I have several that are yielding an average of 8% tax free (that's the average of my portfolio..the spread is from 5 - 10%). They may or may not be suitable for your particular circumstances and obviously I'm no financial advisor but they are extremely tax efficient and a lot less hassle than a rental property (I own property too so I am qualified to comment on that as well). Property has been very good over the years but Osbourne's ill conceived taxes on it have rendered it, to my mind at least, a far less tempting investment proposition. Good luck.

[sidicks]

CockAroach said:

Take a look at VCTs (Venture Capital Trusts)...I have several that are yielding an average of 8% tax free (that's the average of my portfolio..the spread is from 5 - 10%). They may or may not be suitable for your particular circumstances and obviously I'm no financial advisor but they are extremely tax efficient and a lot less hassle than a rental property (I own property too so I am qualified to comment on that as well). Property has been very good over the years but Osbourne's ill conceived taxes on it have rendered it, to my mind at least, a far less tempting investment proposition. Good luck.

Anything but 'very low risk', which is what the OP was asking for.

[Jockman]

drainbrain said:

Just seems a bit more fun than putting money into a pension plan (and far more profitable )

Our SIPPS receive £80,000 pa in rent.

Tax Free.

On one property.

[drainbrain]

Jockman said:

The Pension is the wrapper, so it must have been the underlying assets that didn't work out for you.

I have commercial property INSIDE a pension wrapper. Seems ok.

Well people are more sophisticated now.

Back then you were 30 and doing ok so you thought you'd better start saving in a pension for your old age. So out came the 'suit' from the Household Name Institution. And 15 minutes later you had the warm feeling that you'd sorted your old age out. Of course you knew jack so the money went into the managed fund. And you had the warm feeling that some Warren Buffet type chap with brains pouring out of his wig was sitting in front of a bank of screens in some Victorian building in Liverpool or London watching as figures flashed by and manipulating your monthly contribution to turn it into vastly more…….

….then reality intruded.

I was raging when I discovered that after contributing for 15 years or so I had managed to "accumulate" almost exactly the amount I'd put in!! Flippin' ragin'! So I phoned them and ended up talking directly to a fund manager at one of them (I had two). And it was only then that I discovered what a load of bks it all was. A world of restriction and legislation and some very very strange thinking which tbh made it completely unsurprising why it was turning out to be a waste of time. At about the same time I decided to find out a bit more about the annuity part of it as well. And that was that. Contributions ceased immediately. Annuities taken as soon as possible (50 back then). And never again even one penny put into any form of financial instrument.

Investment forthwith was into things that did grow and did accumulate and did eventually form retirement income.

Recently I've poked my nose into what financial instrument I can put surplus income into. Can't get a 10% return. I'm stunned by that. Because I can get 10% without risk, other than fanciful risk.

Of course an annuity ends with the total loss of the funds that purchased it. That isn't attractive to many savers/investors. And there just isn't enough information readily available to Joe Average to enable him to use the more sophisticated means of making financial instruments worthwhile.

[CockAroach]

Apologies. Just reread the OP..forget VCTs...you'll be locked in for minimum 3 years so no easy access to cash. Property will give you a good yield, but not exactly liquid if you need to get the funds quickly and very tax inefficient (taxes and fees on the way in and out, not to mention tax on the income). I'd still look at corporate bonds or VCT's if you can live with having the cash tied up for a length of time.

[drainbrain]

Jockman said:

drainbrain said:

Just seems a bit more fun than putting money into a pension plan (and far more profitable )

Our SIPPS receive £80,000 pa in rent.

Tax Free.

On one property.

Goodness! That's almost twice what I get a month per hundred!

But I notice you say "our". Is that a joint Sipp with a partner or a spouse?

And I notice you say the Sipp receives it. Does that mean you take that home from it?

[sidicks]

drainbrain said:

Well people are more sophisticated now.

Back then you were 30 and doing ok so you thought you'd better start saving in a pension for your old age. So out came the 'suit' from the Household Name Institution. And 15 minutes later you had the warm feeling that you'd sorted your old age out. Of course you knew jack so the money went into the managed fund. And you had the warm feeling that some Warren Buffet type chap with brains pouring out of his wig was sitting in front of a bank of screens in some Victorian building in Liverpool or London watching as figures flashed by and manipulating your monthly contribution to turn it into vastly more…….

….then reality intruded.

I was raging when I discovered that after contributing for 15 years or so I had managed to "accumulate" almost exactly the amount I'd put in!! Flippin' ragin'! So I phoned them and ended up talking directly to a fund manager at one of them (I had two). And it was only then that I discovered what a load of bks it all was. A world of restriction and legislation and some very very strange thinking which tbh made it completely unsurprising why it was turning out to be a waste of time. At about the same time I decided to find out a bit more about the annuity part of it as well. And that was that. Contributions ceased immediately. Annuities taken as soon as possible (50 back then). And never again even one penny put into any form of financial instrument.

Investment forthwith was into things that did grow and did accumulate and did eventually form retirement income.

Recently I've poked my nose into what financial instrument I can put surplus income into. Can't get a 10% return. I'm stunned by that. Because I can get 10% without risk ,other than fanciful risk.

Priceless - once again you show your lack of understanding of risk!

Drainbrain said:

Of course an annuity ends with the total loss of the funds that purchased it. That isn't attractive to many savers/investors. And there just isn't enough information readily available to Joe Average to enable him to use the more sophisticated means of making financial instruments worthwhile.

No, you misunderstand what an annuity does.

[Jockman]

drainbrain said:

Goodness! That's almost twice what I get a month per hundred!

But I notice you say "our". Is that a joint Sipp with a partner or a spouse?

And I notice you say the Sipp receives it. Does that mean you take that home from it?

3 brothers in total.

We aren't old enough to draw from it yet.

[Ginge R]

drainbrain said:

Well people are more sophisticated now.

Back then you were 30 and doing ok so you thought you'd better start saving in a pension for your old age. So out came the 'suit' from the Household Name Institution. And 15 minutes later you had the warm feeling that you'd sorted your old age out. Of course you knew jack so the money went into the managed fund. And you had the warm feeling that some Warren Buffet type chap with brains pouring out of his wig was sitting in front of a bank of screens in some Victorian building in Liverpool or London watching as figures flashed by and manipulating your monthly contribution to turn it into vastly more…….

….then reality intruded.

I was raging when I discovered that after contributing for 15 years or so I had managed to "accumulate" almost exactly the amount I'd put in!! Flippin' ragin'! So I phoned them and ended up talking directly to a fund manager at one of them (I had two). And it was only then that I discovered what a load of bks it all was. A world of restriction and legislation and some very very strange thinking which tbh made it completely unsurprising why it was turning out to be a waste of time. At about the same time I decided to find out a bit more about the annuity part of it as well. And that was that. Contributions ceased immediately. Annuities taken as soon as possible (50 back then). And never again even one penny put into any form of financial instrument.

You wouldn't be the first person conned and suckered - I was, I lived in the Middle East in the eighties for four years, and bought two endowments.

It was legalised theft; I could quite easily have ended up seriously out of pocket if I hadn't had a change of circumstances in my life which compelled an early look. I sold them on the secondary market nearly twenty years ago and came out of it quite well. I read the paperwork that came with the sale and I laugh at the bullst lies and the assumptions. I shouldn't of course, because the sector that I'm now a part of which stole left right and centre from decent people, and the salesmen that perpetuated it, guffawed behind the marks' backs.

But, it's a lot, lot better now. I can say that hand on heart. It's a tough job, things take forever to get done, clients are cynical and you're only as good as the last bond bubble or stock market plummet. But I really enjoy it. You're providing some quite complex solutions to decent people who trust you explicitly to do the right thing. It's humbling sometimes, a responsibility and a privilege. They might not always realise or appreciate it, but hey, we're paid to do work, not be patted on the back. In summary, the sector has some really, really good people in it.

[drainbrain]

Jockman said:

3 brothers in total.

We aren't old enough to draw from it yet.

Well there you go. Hadn't a clue you could even have a joint one. Guess that carries the same potential 'risks' as all partnerships do.

And if there's an age barrier to taking anything out, doesn't that leave the 'risk' that (god forbid) you never attain that age and thus become one of the richer men in the graveyard? Or attain it when you're past doing much with it, or can't?

I HATE future gratification. It's a total con. Like upper caste hindus telling lower castes that if they behave like good little serfs they'll be born into a higher caste next time round. 'Sufficient unto the day is the evil thereof' is wisdom to me. And it sounds like you aren't getting any benefit at all from your hard earned investment, other than the idea that you might benefit from it one day.

Surely you're allowed to take a little out of it to enjoy in the present? Or if you do that is it taxed to a ridiculous degree?

Scary.

[drainbrain]

Ginge R said:

You wouldn't be the first person conned and suckered - I was, I lived in the Middle East in the eighties for four years, and bought two endowments.

It was legalised theft; I could quite easily have ended up seriously out of pocket if I hadn't had a change of circumstances in my life which compelled an early look. I sold them on the secondary market nearly twenty years ago and came out of it quite well. I read the paperwork that came with the sale and I laugh at the bullst lies and the assumptions. I shouldn't of course, because the sector that I'm now a part of which stole left right and centre from decent people, and the salesmen that perpetuated it, guffawed behind the marks' backs.

But, it's a lot, lot better now. I can say that hand on heart. It's a tough job, things take forever to get done, clients are cynical and you're only as good as the last bond bubble or stock market plummet. But I really enjoy it. You're providing some quite complex solutions to decent people who trust you explicitly to do the right thing. It's humbling sometimes, a responsibility and a privilege. They might not always realise or appreciate it, but hey, we're paid to do work, not be patted on the back. In summary, the sector has some really, really good people in it.

You're being a bit harsh, Ginge. I think the salesmen were just that, but only had the most basic training in what many would see as sophisticated and complicated products. Don't think they knew enough about what they were selling to know they were conning people or doing anything deliberately adverse. Don't think most of them knew much more than the customers.

Not so sure about the upper echelons at the companies though. Or that much has changed. The 'trick' is just being presented in a different fashion.

The advisors themselves are now better educated in the products IN SOME WAYS and of course require formal qualifications, not that that guarantees anything. But I bet there are still advisors who are completely unwittingly getting signatures on contracts which are going to seriously disappoint the signatories, and there are companies which know they perform poorly and have no reason to believe that's going to change.

All this makes things very tricky for the man in the street.

Edited by drainbrain on Friday 26th August 13:06

[Jockman]

drainbrain said:

Jockman said:

3 brothers in total.

We aren't old enough to draw from it yet.

Well there you go. Hadn't a clue you could even have a joint one. Guess that carries the same potential 'risks' as all partnerships do.

And if there's an age barrier to taking anything out, doesn't that leave the 'risk' that (god forbid) you never attain that age and thus become one of the richer men in the graveyard? Or attain it when you're past doing much with it, or can't?

I HATE future gratification. It's a total con. Like upper caste hindus telling lower castes that if they behave like good little serfs they'll be born into a higher caste next time round. 'Sufficient unto the day is the evil thereof' is wisdom to me. And it sounds like you aren't getting any benefit at all from your hard earned investment, other than the idea that you might benefit from it one day.

Surely you're allowed to take a little out of it to enjoy in the present? Or if you do that is it taxed to a ridiculous degree?

Scary.

They are 3 individual SIPPS though with a central SIPP bank account to connect them.

The age limit is the same for everyone - 55. Unlikely I will touch it before 65.

As we are our own tenant, we get corp tax relief on the rent so it costs us £64,000 to put in £80,000.

Rent is a Return on Investment so does not interfere with our Annual Allowances.

We have permission to sublet part of the site to Telefonica which substantially reduces the actual rent cost again.

Tax free growth and 25% of value at zero tax when ready to draw it.

If i pop my clogs the kids can have it. I'll get a free coffin.

[sidicks]

drainbrain said:

You're being a bit harsh, Ginge. I think the salesmen were just that, but only had the most basic training in what many would see as sophisticated and complicated products. Don't think they knew enough about what they were selling to know they were conning people or doing anything deliberately adverse. Don't think most of them knew much more than the customers.

Not so sure about the upper echelons at the companies though. Or that much has changed. The 'trick' is just being presented in a different fashion.

The advisors themselves are now better educated in the products IN SOME WAYS and of course require formal qualifications, not that that guarantees anything. But I bet there are still advisors who are completely unwittingly getting signatures on contracts which are going to seriously disappoint the signatories, and there are companies which know they perform poorly and have no reason to believe that's going to change.

I think the exact opposite, unsurprisingly.

An endowment is simply an investment product that incorporates a life insurance element. They are not that complicated and an entirely appropriate vehicle to repay a capital lump sum at maturity (or earlier death) providing you understand the risks involved.

In my view the key issues were:
- Salesman misleading customers that the mortgages were guaranteed to be repaid - suggesting there was no downside, only upside
- poor oversight of sales methods (and poor alignment of remuneration and value)
- individuals not understanding what they were buying (or only hearing what they wanted to hear!)
- over-optimistic projection rates, based on the high inflation / high interest rate economy in progress at the time
- product providers (and individuals) reacting too slowly and too late when the economy changed and interest rates fell.

It shouldn't be a difficult concept - you can either have a repayment mortgage and fix the cost of your mortgage or you can take some investment risk and target a 'profit' at the end of the period, but risking a shortfall.

Edited by sidicks on Friday 26th August 13:29

[Jockman]

sidicks said:

In my view the key issues were:
- Salesman misleading customers that the mortgages were guaranteed to be repaid - suggesting there was no downside, only upside
- poor oversight of sales methods
- individuals not understanding what they were buying (or only hearing what they wanted to hear!)
- over-optimistic projection rates, based on the high inflation / high interest rate economy in progress at the time
- product providers (and individuals) reacting too slowly and too late when the economy changed and interest rates fell.

Sounds about right. There was always a mention of a 'yacht' for some reason. Never understood why.

Poor oversight of sales methods I guess would cover the failure to undertake a thorough fact find / profile of the purchaser. I seem to recall the Ombudsman ruling in favour of a lot of claimants who were young, free and single, with no real need for life cover at that time.

Edit - I've seen your edit.

[sidicks]

Jockman said:

Sounds about right. There was always a mention of a 'yacht' for some reason. Never understood why.

Poor oversight of sales methods I guess would cover the failure to undertake a thorough fact find / profile of the purchaser. I seem to recall the Ombudsman ruling in favour of a lot of claimants who were young, free and single, with no real need for life cover at that time.

Edit - I've seen your edit.

Wouldn't the mortgage company want some form of life cover in place? I'm sure that was a requirement for our first mortgage.

[Jockman]

sidicks said:

Wouldn't the mortgage company want some form of life cover in place? I'm sure that was a requirement for our first mortgage.

You could well be right that life cover per se is a preference for lenders but I'm not sure it was ever a requirement. Even now (happy to be corrected as usual)

I personally wouldn't be without it now, though I would never buy it through an endowment

Edit: Also realised you bought your house with a partner which may be a different matter in a joint & several liability? I bought on my own.

Edited by Jockman on Friday 26th August 14:03

[drainbrain]

Jockman said:

They are 3 individual SIPPS though with a central SIPP bank account to connect them.

The age limit is the same for everyone - 55. Unlikely I will touch it before 65.

As we are our own tenant, we get corp tax relief on the rent so it costs us £64,000 to put in £80,000.

Rent is a Return on Investment so does not interfere with our Annual Allowances.

We have permission to sublet part of the site to Telefonica which substantially reduces the actual rent cost again.

Tax free growth and 25% of value at zero tax when ready to draw it.

If i pop my clogs the kids can have it. I'll get a free coffin.

Way way too complicated for moi, though I dimly perceive some form of 'sale and leaseback' venture in there.

What I think is that you are getting nothing out of this other than a sense of deferred gratification. And that's a pity. Because SOMEONE'S getting something out of your money unless it's just gathering dust in a safe.

As to leaving it to the kids, are you sure they'd want it rather than have the pleasure of watching you splurge it? I loved watching my old man spending 'my inheritance' on all the things he'd always wanted and never had. We both agreed that he should have started enjoying the rewards of his own labours much much sooner. Plus, of course, I got to sell what he'd spent on tangibles and then respent it on different ones!

I mean, suppose your son took the proceeds of this plan and invested them in a plan of his own. And his son did the same. Is this some kind of 'prudence' or 'wisdom'?

Earn it, pay such tax on it as can't be legally avoided, and spend it. And tell the kids to do the same. And if it all goes tong then remember that the people you met on the way up are the same ones you'll meet on the way back down.

Here's to prudence:

https://uk.finance.yahoo.com/news/paying-0-01pc-br...

[Jockman]

drainbrain said:

Jockman said:

They are 3 individual SIPPS though with a central SIPP bank account to connect them.

The age limit is the same for everyone - 55. Unlikely I will touch it before 65.

As we are our own tenant, we get corp tax relief on the rent so it costs us £64,000 to put in £80,000.

Rent is a Return on Investment so does not interfere with our Annual Allowances.

We have permission to sublet part of the site to Telefonica which substantially reduces the actual rent cost again.

Tax free growth and 25% of value at zero tax when ready to draw it.

If i pop my clogs the kids can have it. I'll get a free coffin.

Way way too complicated for moi, though I dimly perceive some form of 'sale and leaseback' venture in there.

What I think is that you are getting nothing out of this other than a sense of deferred gratification. And that's a pity. Because SOMEONE'S getting something out of your money unless it's just gathering dust in a safe.

As to leaving it to the kids, are you sure they'd want it rather than have the pleasure of watching you splurge it? I loved watching my old man spending 'my inheritance' on all the things he'd always wanted and never had. We both agreed that he should have started enjoying the rewards of his own labours much much sooner. Plus, of course, I got to sell what he'd spent on tangibles and then respent it on different ones!

I mean, suppose your son took the proceeds of this plan and invested them in a plan of his own. And his son did the same. Is this some kind of 'prudence' or 'wisdom'?

Earn it, pay such tax on it as can't be legally avoided, and spend it. And tell the kids to do the same. And if it all goes tong then remember that the people you met on the way up are the same ones you'll meet on the way back down.

Here's to prudence:

https://uk.finance.yahoo.com/news/paying-0-01pc-br...

There is an idea in there for you but no worries - thanks for your thoughts

[Ginge R]

Jockman said:

You could well be right that life cover per se is a preference for lenders but I'm not sure it was ever a requirement. Even now (happy to be corrected as usual)

I personally wouldn't be without it now, though I would never buy it through an endowment

There isn't.

I was a young lad, working my ass off and I trusted the geezer with all his talk of equities and bonds. I still have the paperwork; illustrating 11% growth. Hey, I was once young with £60 to invest, what did I know? When I chat with clients now, especially ignorant ones, I remember that I too, once knew the square root of sod all.