Too Old To Start Investing? Not If You Do This
Вставка
- Опубліковано 30 бер 2024
- //Investing Apps and Platforms I Use
💸 - Trading 212 - Get a Free share up to £100. Use Code: TOBY in your app if you do not receive your free share.
www.trading212.com/promocodes...
💸 - InvestEngine - Get between £10-50 when you sign up and deposit £100 (T&Cs Apply)*
investengine.pxf.io/x9YoO1
💸 - Lightyear (EU and UK)- Free Stock
bit.ly/TobyNewbatt-LightYear
//Want to speak with me 1:1?
Email me here with your needs and we can book a 1hr 1:1 call.
tobynewbatt.com/get-in-touch/
//Want to order the Wifi Smart Clock/ Stock Ticker seen behind my videos?
bit.ly/Wifi-Ticker
//My Favourite Credit Card for Points
💸 - American Express Gold Rewards Card - Get 30,000 Points - £0 First Year
bit.ly/Toby-Amex
Disclaimer: This video is provided for information and entertainment purposes only. Please seek the help of a qualified regulated financial professional for any advice. Capital is at risk. Some links are affiliates and I will earn a commission from using them.
*InvestEngine (UK) Limited is Authorised and Regulated by the Financial Conduct Authority (FRN: 801128)
The best time to plant a tree is 20 years ago. The second best time is now.
🙏
Second best time was 19 years 11 months if you get paid monthly and so on. This means now technically is 239th best time rather than 2nd place. Still best to do 239th best than wait few more months.
@@Gtbg641I am inviting you to my next party.😊
@@Gtbg641 I think you're missing the sentiment behind the post pal
@@DrDre999
He is, but is point is still valid nonetheless 😊
(Randomly assuming it’s a guy)
I think even if your 63 years old it's still worth investing, you may still have another 20 years left.
12 years of pension tax relief available, even if retired.
Or more 😊
Very encouraging, thank you Toby
Always great stuff Toby; clear, concise and some great info packed into 15 minutes. All the best mate
Thanks 👍
I am 52 and only started investing recenty and it is already paying off.
54 was my start once mortgage was paid
I started at 53.
Thank you for sharing!
It’s never too late 👍
Great ! What did you invest in ?
Great advice, really useful thank you!
Thanks so much for your videos .Better late than never as I am getting closer to 60. I managed to open SIPP a few days ago with 1000 pounds though I divided equally between FTSE All global cap index fund and S & P 500. All is new to me but I take a lot of notes which I go over and over again like I did when I was a student. I hope to open ISA this month.I am in DB pension scheme in the workplace but employer do not match additional pension contribution. and the 1.5 % that is normally added to the mandatory auto enrollment baseline employee pension contribution which gains both Employer contribution and CPI %PLUS 1.5% ..Pls do more videos on the SIPP. Thanks so much
00:00 💡 It's never too late to start investing, but consider key factors for success.
00:28 📊 Choose investments wisely; stocks offer long-term growth potential.
01:39 💰 Invest in index funds for simplicity and broad market exposure.
02:37 📉 Avoid frequent trading; stick with low-cost, passive investments for long-term growth.
03:05 🏦 Utilize tax-efficient accounts like pensions and ISAs.
04:30 💼 Take advantage of employer matching contributions to maximize savings.
05:51 📈 SIPs offer tax benefits, while ISAs provide tax-free growth.
07:57 ⏳ Longer investment horizons increase the likelihood of positive returns.
10:34 💸 Investing earlier yields better returns, but older investors can leverage higher income and fewer expenses.
12:54 📝 Plan tax-efficient withdrawals from investments during retirement.
Love the T-shirt and thats the answer to most of us.
Good information as usual Toby, nice shirt 😊
Thanks! 😃
Very interesting and great video as always Toby
Weee Val!!
Listening to these messages regularly is also a good strategy to keep yourself on the right path. You won't see your savings sky rocket in the short term, so reminding yourself of what the long game is, is invaluable! Cheers Toby
thanks Toby, very inormative
really helpful. Thank you
Welcome thanks for watching
Me in my 50 and bit more 😂great video. It not to do with being rich it’s just being smart with your money later on 😊
I started in January this year (I'm 41) I just place some money each month into the FTSE Global All Cap Index Fund Accumulation. No minimum investment so I round up each transaction as well I make to the nearest pound. And put them pennies into it as well.
Great video!!
Thanks as always 👍
Great video mate cheers 👍
Thanks 👍
As always, thanks toby.
I like your "index and chill" t-shirt, Toby 😎
😎
How can I get one?
Many thanks
Getting out of my company pension's default fund was the best thing I ever did. Those things are utterly useless for building wealth.
How did you do this? Tried to do this with my work pension they confused me so much it left me overwhelmed so didn't pursue it
@@samy5587
Make sure you have an online login registered for whoever the pension is with. From that, there should be an investment guide/option page you can navigate to which will show all the investment options available. Otherwise, phone the pension provider and get them to send you a fund guide for the available investment options.
@samy5587 mine was seriously easy to do with NEST took 5 minutes
@@scottm6018 You mean you moved it from Nest to your own chosen platform? Or you moved it to Nest? Suspecting it's the former.
@kw8757 still on nest, just no longer on the default fund. High risk all the way
Thanks toby , great advice 👌🏻
Excellent information Toby, thanks as always.
please make detailed video about pension. thanks.
@7:40 they only thing sure about leaving money in the bank...is that you will eventually run out of money...
Thank you#
Id love to get this guy a beer and have an hour of his time so i could run through my investing situation. Great content and easy to understand 👍
Can't you buy that through his website?
You can! It's £250 and the best money I've spent
Another great video thank you! Been investing 15 years now 39 years old but defo excited by what the next 15 years bring.
Making the most of work place pension and have changed my default pension contributions within in to more US and develop world focused 🙌
You're in very good shape. I didn't start investing until I was 30 and stopped working in 2019, aged 51.
You have an amazing flexibility to allocate time as you wish in a few years ... Your older self will definitely be grateful to your younger self for laying the foundations
@@ChrisShawUK thank you Chris! Just hit 6 figures in Jan and hoping the compounding line story’s going vertical soon 🙏🏻
Good luck in your quest for financial freedom too 🙌
@@alexmac2010 massive milestone ... It took me the best part of ten years to accumulate the first 100k ... Happy to say that more recent 100k additions occur at a far greater rate.
I know it's a cliche, but compounding really is the mutt's nuts
@@ChrisShawUK thanks and good luck with your adventure
I am 38, and just started investing in stock and shares junior isa for my 3 year old. Thank you for all your videos. I feel much more confident to start investing.
Great news welcome 👍😀
To get to 20k you can withdraw 16,760 from SIPP and the remainder from ISA. This make most of PTA rather than what is calculated in video. Usually sipp is larger pot so this way you can stretch out the tax free withdrawals from isa.
Yep, great video, but this was my thinking too when I saw the numbers.
The message behind it still stands though
Can you withdraw £16,760 from SIPP every tax year or is that only for the first time withdrawal. I’m wondering if 25% tax free from SIIP is for only one time or every tax year. Will appreciate your answer. Thank you.
@@Gurimpo Every tax year. Assuming your tax free allowance is £12,570 and you have no other income.
£4,190 is the 25% tax free, the remaining £12,570 is taxable.
There’s other considerations as well, in terms of whether the funds have been crystallised, but that’s a more complicated issue not for a UA-cam comment.
On the whole, assuming the above, then yes £16,760 can be tax free income every year
@@Gurimpo @banthah answered this well. The powerful thing about taking tax free cash gradually in this way is that you will leave much of the bulk of the pension invested and thus get even more tax free cash as the investments grow. Unless you need it don’t take more tax free cash than required.
@@Banthah thank you for your reply. As I have invested in index fund accumulation, is it better to switch to index fund income during withdrawal time at retirement? Your answer is greatly appreciated.
Been investing for a couple of months. When does the reinvested dividend kick in? Haven’t seen anything in the history as yet. I’m on an FWRG world fund.
İt's like you made this video for me 😮. I discovered investment very late last year at the age of 56. I have since then maxed out my work place pension and started investing in a passive index. No debt other than mortgage with 5 years left to be paid off, but I kick myself every day for not starting earlier
Nice work for getting it all sorted!
Hi when you say maxed out do you mean you changed to high risk with your work place pension?
Did you do one hundred percent salary sacrifice and are you in DC or DB pension scheme? How do part time workers in DB pension scheme max out work place pension and is it advisable when it has no inheritance factor?
Thank you for your video! I was hoping you would mention the 60ers who are just about to retire ( on a work pension at this stage ) and don’t know what’s best to invest in for the shorter / longterm 😅from now !? 😊
A 65 yo male in decent health = life expectancy of 85, with 25% chance of 92, 10% chance of 96!
A fair shout then is to consider that some investment can be focused on a a 20-30 year time horizon, whereby equities would be expected to see a high likelihood of outperforming bonds etc.
For the shorter term, say
Great Video
I am new to the channel
And this video is very Relevant to Me as I recently turned 46 and all I have so far is one Amazon Failed Business on my account
so looking to turn thing around and Learn and earn with Stocks, dividends, ETFs etc
Unfortunately still confused as to what my 1st Step should be.
Consider two tax-wrappers to use for investing: pensions and stocks & shares ISAs.
For most, private pension/workplace pension is going to be the best place to invest for retirement purposes.
By knowing your aims, time horizon and risk appetite, you can arm yourself with being able to calculate what you would need to invest each month, and in what, to try to realise your aims.
Although you're at an age whereby you should be able to at least consider 100% equities (global index tracker) if you're not going to need the money for 10+ years, to do that sort of investing requires understanding markets can and will fall, and sometimes dramatically. If this would make you sell low or stop investing then the risk level for 100% equities would then likely be unsuitable.
How much to invest again depends on aims of why you're investing. How big a pot may you need to give the retirement you envisage, for example?
Other than that, do make sure you check your state pension forecast as that's a very valuable (currently) inflation-linked pension, so it's important to know your record is in order.
Toby I work in education and have always believed that my pension should be a pretty good one. My sizeable contributions are matched by my employer. However I have no idea what my pension is invested in. Do you have any experience of pensions linked to the education sector?
Pension contributions are by far aome of the beat options people can do with their money, no only do you get employer contributions, you get the tax relief too.
So is win win,
The first thing I dis when starting my job was to increase my pension, I put in 5 percent and my employer puts an additional 10 percent. Totaling 15 percent contributions per annum
AVCs if you're paying 40% are a massive win, I pay an extra 30k AVC per year which brings me well back into the 20% bracket. Pretty much maxing out the 60k per year allowance into my pension.🙂
@@DrJohnners By AVC , You mean 'Additional Voluntary Contribution' which is different from your mandatory auto enrollment work place pension contribution .What kind of Pension scheme is it?I am in DB scheme and just opened SIPP so new to all this.In my scheme,additional pension scheme contribution does not gain employer contribution plus the added 1.5 percent that is normally added to CPI . BUT I don't know if it is the best decision..I pay over 25k per year in taxes.
How much of that historical 7% is based on cheap government debt and money printing and what happens to businesses if the country goes bust? Looking at the USA and UK it's getting up to scary numbers.
The 7% takes into account inflation and that’s the most important thing. Assets protect your wealth from inflation at the end of the day we can only control what we can 👍
The sp 500 has a 50 year track record of 8 to 9 percent return.
So I would say very little us due to government
@@TobyNewbatt Official inflation, at the least. We know the government has changed how it calculates this. The figure is highly aggregated and is based off a basket of goods with proxies for certain specific items, like rental costs.
Cheap debt/ corporate bonds? Well that explains a lot for the past decade and a half, but historically rates have been where we are now and the markets ploughed on for multiple decades prior at these rates no issues.
As for the debtloads, it's hard for the US to go bust when the rest of the world is doing it and they literally just vote to extend the ceiling every few months and so much of debt that's out there is in US denomination in the first place so keeps the dollar strong.
People were having the same conversation in the 1970s yet here we are.
If you look into the economics of it the printing of money just pushes up inflation,devaluing the value of each currency and the best way to weather that storm has and always will be to own assets. As money is printed and value of it devalued assets values get pushed up with it, thus be in assets, equities, bricks and mortar etc.
The big issue becomes when countries don't want your debt/don't think you'll pay it etc and thus hyperinflation ensues and becomes worthless. Struggle to see a case for that when so many commodities and even financial trades and debt are held in US and western currencies.
If only other jurisdictions had something as good as an ISA... 😞
You're a star Toby! I first saw one of your videos two and half years ago, and since then I took your advice to look at alternative investing opportunities, other than banks and building societies. I really had no idea about stocks and shares investing, but I set up an ISA with Vanguard with an initial lump sum and subsequent monthly investing, and my current rate of return is currently 22%. I know my investment may fall in future months, but overall I'm really pleased. Thank you so much!
Wlcome Nick and thanks for the support, you're one of the OG's :).
Like you said, anything can happen but it is nice to see when it goes up!
I changed my pension from the default fund into 90% all world ex-uk and 10% uk. The default fund over the past 10 years only gained 50% where the all world gained 200%. UK was about 70%. My horizon is latest another 34 years until 60. Unless the goal posts get changed again (which they will)
Crazy how poor the default is! I’m convinced we need to get this changed for 99% of people!
@@TobyNewbatt yep, it’s terrible. You can only tell to those who want to listen though mate. I bring it up to everyone at work, friends, family. 95% don’t care or think I’m a raving lunatic talking about pensions/investing
Hi josh
I have to say, I must be fortunate where I work, the vast majority or people seem to be very pension conscious, I suppose that's because we are all a bunch of numbers needs, being engineers and all.
In fact, we all seem to go out our way to help the new comers with their pensions when they first join, since the company, although being very generous with contributions, does seem to trail behind on sharing the information needed to get every started
@@MinkieWinkle hello, that’s good that you have like minded people at work. Feel like I’m talking to a brick wall when I’m at work.
Our place is decent with contributions to in my opinion. They match up to 7%. Soon I’ll be upping mine to 10% and if that’s doable I’ll be going for 13% so 20% of my yearly wage will be going into the pension. That may be a couple years yet.
We aren’t engineers but we are all tradesmen, I’m a plumber so we all like to make as much money as possible. Some of the older blokes have a couple properties and investments but just don’t trust the pensions
I did something similar.
How to best arrange investments as you get closer to retirement? Eg some buffer in cash but still move some investment to bonds or lower risk? I’d expect some can still remain fully in index funds for later in retirement. Do you have a video on that?
Depends on how you want to access your pension, do you want to buy a fixed annuity (sell your pension pot in return for a guaranteed income for life) or do you want to go via drawdown? Again depends how aggressive you want to be in regards to make up of said pot. It could easily still be being utilised 3 decades later so having some exposure to equities may be prudent for the continued growth and then bonds/fixed income for less volatility (unless the last couple of years happens again 😂)
Some people like to have 2 or 3 years cash available with no intention of spending it, basically having it there as a buffer to defend against sequencing risk early in retirement, in essence utilise the 4% rule for withdrawals in good markets but in a downturn use the cash to weather the storm until markets begin to recover.
Dollar cost ravishing can wreak havoc early on in retirement if not careful, thats the sequencing risk danger to be aware of
Added to the above, are there any DB pensions, is there family that the person wants to leave money to... many variables for each individual circumstance that will lead to things being 'best' (or at least good options) for them when they would be poor options for others.
@@adrianl5899 if people are really struggling, it's times like these and when tax implications are involved that it might actually be worth seeing a financial advisor to help you assess your own situation. Like you've said, there's lots of intricacies and individual circumstances that make it very personal. Lots of stuff the average person wouldn't be aware of.
Although if they do make sure it's a fee based one where you pay strictly for their time.
I started investing a bit 5 years ago at 60. I didnt know what to do so i invested bits at a time, all for accumulation. Had an incredible few years of course but I keep paying in when I have spare cash. Its really worth doing.
What a wild ride it's been in just that 5 years but so glad you got started :)
Hey Toby great video and advice I didn’t start investing until later on, just didn’t have the money. On the ISA front any thoughts on the flexible stock and shares Isa, not many on offer that can see and they’re quite expensive fee wise, unless you (anyone) knows differently, thanks
Have you considered Vanguard (0.15% platform)?
Thanks, i was searching for a specific flexible Isa, the one that allows you to withdraw and put back money in the account if you’ve already used the max allocation. They’re a good idea, but rare, I’ve seen a few cash ones, but not the S&S flavour that’s not ridiculously expensive in fees,
@@drjanemccartney Understood. As this may be something a lot would ask about, I'll just post up the FAQ on Vanguard's site:
"Is the Vanguard Stocks and Shares ISA a flexible ISA?
Yes - which means that you can take money out and then put it back in again later in the same tax year, without it affecting your ISA allowance. All you need to do is make sure you stay within the annual ISA allowance. "
Good luck with your investing. 😃
Adrian beat me to it as always :)
Yes there are fewer flexible stocks and shares ISA than traditional ISAs. Vanguard do offer one and Barclays smart invest as well. Vanguard is probably your best bet if you really need that function, I presume you want to use it as you will be taking money out and putting it back in often?
Thanks Adrian and Toby, I didn’t realise Vanguard did one, as ever they keep it quiet 🤫
Where is this index and chill shirt from?
I had it made maybe one day I’ll make some for sale 😎
If you have a workplace pension and an ISA, is there any benefit to having a SIPP as well?
Yes, it can be worthwhile.
Perhaps the workplace pension has limited offerings for investments and a personal pension or SIPP provides the investments you actually want and at a low cost.
Having different pensions is a bit of protection against very practical issues, such as a provider suffering IT outage etc. at the point you need access.
Many large providers do generous cashback offers for pension transfers, and this cashback can mean your platform fees get covered for some time.
If wanting to access taxable pension money without triggering MPAA (when you would then be limited to a max £10k gross pension contribution pa), having a few small pensions pots (
Does the 60k pension allowance include the employer contributions and automatic top-up by pension provider?
Yes
Any money that is paid into your pension counts towards this allowance, including contributions from yourself, your employer and tax relief.
1 investmoney. 2. enable leverage.3 Buy option. that will return 3X. 4. Collect your winnings. Repeat till you are millionaire. Alternatively go back in time and invest like Warren Buffet.
Gold doesn't come close but its still a great hedge in my opinion. There's a reason world banks are busy buying the stuff.
Yup, I think it has a place in any well rounded portfolio.
Bitcoin > Gold ???
1:10 look where gold is on the graph, don't waste your money. I know people who actually think Rolex watches are investments too 😂😂😂
A 10.5% increase in price asa hedge versus the UK currency, average for the last 20years is ok. It's a wealth preserver not a money maker, extremely safe and not a volatile investment. It will continue to do well for all time given it's a commodity. Safer than investing in a business, property and keeping that wealth in any currency. I'm happy with >10%, it's also CGT free if you buy coins.
@picksahole you forget in that graph that up until 1971 (at the end of bretton woods) gold was the same price/pegged to the dollar. So it obviously isn't going to perform better than $1, that graph is fooling you my friend.
I started with my work placed pension at 20. I started with the minimum contribution (2%) but increased it as i earned more until i had the max (6%) by 25. My company double match this (12%) which is decent for a DC pension. My biggest issue was i left it all default until early 30's and didnt start a S&S ISA until i was 34. I've since done a complete overhaul of my finances and so feel like i have only just started at 37 (albeit with a reasonable lump in my pension pot - £205k).
Well done on what you've achieved. That you continued to develop and learn is a key message for us all.
Can you use man maths to tell me if I'm better buying cars n stuff in cash or borrowing and investing in the tax free(or otherwise) ISA? I'm assuming I'm paying more than I'd likely get back so buy stuff in cash and save the rest?
Since 1998 when I began investing, I only owned three cars (all bought with cash and the last one a couple of months ago).
I stopped work in 2019 aged 51, so it worked out well for me.
But ... If you keep swapping cars regularly, you're unlikely to accumulate much wealth, regardless of how you pay for them.
They are a terrible way to deplete wealth. Buy as few as possible over your lifetime.
That's a great video, thank you.I am wondering though whether someone can benefir only if thy plan to retire to the UK. Does this account have any value when retiring abroad ( while not being a UK tax resident) . You do lose the advantage of free tax from what I read because the funds must be taxed upon transferring to the new country. I know that you aren't a financial advisor but any help from anyone in a similar position would be appreciated.
If you know the country you'll likely move to you might be able to find out what their position is in relation to ISAs, for example.
I'm paid weekly but contributions added to my pension monthly that can't be helpful 😮
For example:If you have a 100k pension, 25k can be taken free (25%). Do you have to remove that 25% when you 1st access the Pension? Otherwise, as the rest of the pension remains invested, surely that % grows with the pot growth? If you can take monthly slices of the 25%, , is it 25% of the Pension pot value at the time of accessing Pension, and if so, how do prove to HMRC that you are drawing from the tax free 25% and not from the taxable pot??
It’s a little complicated to explain in a comment but basically you drawdown your pension in parts and it can remain invested when you do this. Have a quick read online for the details 👍
@TobyNewbatt thanks, will do. Great video too!
Very good recommendation but doesn’t help if you live in the United States, ISA, SIPP????
Same rules apply but you just make sure to use your tax-advantaged account. a SIPP is like a 401K and the ISA is like a Roth IRA :)
Thank you for a great informative video, was worried I left it too late to invest! But for your calculations, when you mentioned compound growth/interest - does that exist for stocks and shares in the same way as it does for savings accounts?
Compounding does not care whether you are saving or investing - it's just math :)
What happens if you inadvertently exceed your 60k pension allowance and you don’t have any carry forward allowance?
It’s becomes taxable once you exceed the £60k check the pension rules on the HMRC website
Ideally, I'd not want to sell any investments and have a dividend income. Seams difficult to get a good dividend income from ETFs or invest trusts. Any ideas?
I'm mean index funds.
There's loads of dividend focussed ETFs but my question would be why do you want dividend income when you can just sell what you need? You might miss out on further growth by only focussing on dividends
So long term, if inflation is approx. 3%, has the stock market returned 10% to give an overall of 7%? If so, that's cool - I was using equities at 5% and inflation at 3% in my projections so think I might have been too conservative. Love the videos.
Yep 6-7% is the amount taking into consideration inflation. If you want to be conservative I think 5% is also something you can use 👍
I also use 5/3 in my projections.
I think it's helpful to be conservative as it gives you more headroom during volatile years of drawdown
Cash is KING
😂😂😂
5:51 Shouldn't that tax claim be £40 and not £50? As the lower rate tax is 20% and not 25%?
No, because to have £200 to contribute you would have paid £50 in tax (20% of £250). £40 would just represent 20% of £200, which does not relate to tax relief calculations.
@@adrianl5899Ok, go it, thx for the explanation.
Please make a video on hiw we can change our workplace pension. The returns vs a stocks and shares ISA index fund is no where near as good!
Good video suggestion thanks.
Is lgps a good pension fund? I’m not sure what they invest in
LGPS is a defined benefit scheme
As a very general guide, for the guaranteed benefits of the LGPS, it might cost around 25%-30% of salary being put into a private pension (like a SIPP) by the member just to hope to achieve what they are being guaranteed by being in the LGPS.
I'm in a lgps scheme defined benefits it's one of the best pensions you can have .mine will pay out a generous lump sum if I choose to take it and a guaranteed pension for life in line with inflation .
How do you know what LGPS invests in
@@abz0909 your fund should have a investment strategy statement.
There's no video links buddy
I popped them as cards right at the end 😎
Given how important time is to investments, is there a way to invest for a newborn child's retirement for them so it can have that extra 20-30 years?
Yep. Junior ISA and Junior SiPP accounts 😎
@@TobyNewbatt I wonder, how much does one need to invest for a newborn child to secure their retirement? I bet it's a ridiculously small amount, maybe even just 4 figures. You wonder why it's not done more often.
So, if your allowed to add £60k maximum to your pension (in case you are earning £60k per annum), does that include the 20% tax relief, or the 40 % tax relief if you are a higher rate taxpayer? In case you are a higher rate taxpayer and you get the 20% tax relief and you claim the remaining 20% via self-assessment, does that count into the £60k allowance?
Forgive me, I didn't read the question completely!
Any money that is paid into your pension counts towards this allowance, including contributions from yourself, your employer and tax relief.
@@TobyNewbatt Yes, it did, thank you
@@TobyNewbatt
Are you sure? I’m almost sure the £60,000 AA limit includes the tax relief?
Please reference me if I’m wrong though ✌🏻
Any money that is paid into your pension counts towards this allowance, including contributions from yourself, your employer and tax relief.
As I understand it.
@@gordonjames8233
They’d hope in understand it too. The annual allowance is gross contributions, not net.
Problem with pensions is you can only access it when youre 57. When youre no longer young to enjoy life. You also have no guarantee that age wont go up as the government sees fit. You also have little control over where the money goes, i think the default is some goes to bonds and some stocks depending on your age. Generally I see the uk pension scheme only positively impacting the government as buying bonds lends the government money, and when you can finally access the money it will he worth less. Its yet another stealth tax. You might think "but they contribute money to the pension". Do they? Where do they get that money from? printed money? All I see is numbers on a screen that represent a promise of future value. I dont believe in government promises. For this reason I contribute the minimum amount to my pension and divert it to my ISA, where I can access it when I like and where I have more control of where my money goes. In the fiat world, "the time value of money" applies strongly. The gov get the money now while i get it in 30 years? I will pass
I've been deliberating over this issue for a while, and find myself in agreement with you. There's a case to be made that you can make slightly larger long term gains in a pension, but I don't trust the government to keep tax rates the same over the coming decades, so a tax free ISA is more palatable for me.
@@kmg2480For almost all people, the maths very clearly supports investing in pensions over ISAs for investing towards an improved retirement, even accounting for tax on the way out.
There are then other benefits, such as pensions not being subject to IHT like ISAs are, and not disqualifying from pre-retirement benefits like ISAs do once above £16k.
Whilst I appreciate people worry access age will rise, ultimately one only needs to look at life expectancy to know most of us should plan to have long lives and than pensions are for retirement years and/or efficiently leaving wealth to our loved ones.
If anyone worries their money in a pension will have little value in the future, why the value of the same money in a different tax wrapper (ISA) would be exempt from that worry, I cannot work out.
While the pensions allowance was raised to £60k, and there have been changes to allow people to take their pots in ways they could not previously do so, the ISA allowance has remained at £20k.
None of this is to downplay the value of ISAs, because they do have great value - for example bridging early retirement, for pre-retirement expenditure etc. but I worry too many lose out significantly by overpaying income tax/NI/IHT, opting out of workplace pensions, for 'fear' of this,that or the other, rather than working off the 'knowns' as presented to them at the time.
But if you are thinking of generational wealth, then as far as I am aware, and perhaps Toby can verify this, pensions are out of your estate for inheritance tax purposes.. So if you have isa and sipp, then draw on the sipp last of all.
@@johndoh539Pensions sit outside the estate, yup. The order of how to take income from different pots (pension, LISA, ISA), as you've alluded, really depends on aims.
Once without income and before SPA, some draw £16760 tax free from pensions to use up their income tax allowance. They then use the tax-free access accounts (LISA/ISA) when SPA kicks in and the SP is using most of their income tax allowance.
Many, like you say, use some/all their pensions to be able to pass on.
Yeah the SIPP seems a bit like a long con to me. Only 25% of it is tax free, and you get heavily taxed on the way out for the remaining majority of 75% of your pot. If it was tax free like the ISA it would be different. Unfortunately the taxes in UK are waaay too high, probably better off moving to more tax-friendly countries for retirement tbh.
I'm currently able to contribute just £20 a month to my Stocks & Shares ISA.
I do have a pension pot of around £10k from my previous job. I get a letter annually about it but have done nothing. Next time I receive the letter I'll see about transferring it.
I started with £10 a month to my S&S ISA. Anything is better than nothing and if you can increase it if you come in to more money then happy days. Just have to commit to it.
No amount of money is too small in my view - being able to save anything and invest anything puts you in a great spot
I was under the impression you could max out different accounts? I’ve maxed out my stocks and shares but I pay into my child’s junior isa. Can someone clarify please?
The child's junior ISA belongs to them and uses their ISA allowance, not yours. The allowance is £9k. You just can't put money in your own cash and S&S ISA that exceeds £20k in total.
What you've said you've done is absolutely fine.
@@sensaidoom thank you
@@adrianl5899 thank you
How can you put more than your income into SIPP
The example that comes to mind is specific to those who either do not earn at all or those with earnings under £3600. In each case they can put £2880 into pensions each tax year until they are 75, and receive £720 tax relief per year.
@@adrianl5899 ah I see understand now
Can i tranfer all of my work place pension into a sipps and have the company pay their contribution into the sipp each month
No - but you can transfer your OLD workplace pensions to a SIPP as this is your money to do what you want with. AND you can transfer some of your current pension - BUT depending on the scheme you might have to leave some in there to make sure you keep getting your employee contribution.
Here is when you need to speak with your employer AND your pension provider to understand how this works fully.
Thx
I can take 25% lump some tax free. Cash remaing pension but have to pay 20% . If that takes my earnings for year over 50k would I have to pay higher tax bracket. I could then put that money in a sipp but would then be taxed again when wanting to draw any money in the future.
@@notwkrailIf you're 50 or over, you can make a free appointment with Pension Wise. Although they don't give advice, they can help with points of fact and help you understand the pros and cons of particular things.
For example, once you take the entire 25% tax free amount from a pot, regardless of how big the pot grows thereafter, it will all be taxable. Whatever taxable money you take is added to your other taxable income, yes, so if it pushes you into a higher tax bracket then one would question if that's a good idea.
There are alternatives to taking the entire 25% tax free lump sum.
Also, unless taken in particular ways, once taxable money is taken you are limited to £10k gross pension contributions thereafter as you trigger MPAA. So if you were planning to put back into pensions some of what you've taken out, you need to be aware you've then limited yourself to £10k pa, regardless of what you earn. You would also need to not fall foul of recycling rules once tax free cash has been taken if you're still paying into a pension.
Often, unless there's a strong reason, it's questionable to remove a large sum of money from a tax-free wrapper such as a pension when only some of that can be put into another tax-free wrapper that tax year.
So plenty of things to try to understand before taking from the pension, as once it's done it's done.
Good luck.
The best feeling (financially) I had was when my investments started to earn more than me.
It was at this point I knew I was close to calling it a day and relaxing for the rest of my life…
Wow, that is a great position to be in. Well done.
Yes, that happened to me a few years ago. I carried on working for a bit until stopping in 2019 aged 51
Not looked back since. The satisfaction really comes from knowing that you did something to make a difference to your future life.
The problem I have with the proved to work system is that I have the confirmation bias of having my dad dying at work one year before he managed to get the pension. I know it's does not have to be for me like this but knowing my pension date is supposed to be 5 years older than my dad's would have been does not help. Memento Mori
Sorry to hear that. It’s a tough call investing we have to find a careful balance with the tools we have available 👍
@@TobyNewbatt thank you because your content is one of them! Much appreciated 🙌
But didn't his pension pass to your mother?
@@djfearross4144 good to mention. Yes it did
Utilise all your buckets, ISA for the closer term and pension for the longer term. Sorry to hear about your dad. But at the same time also wouldn't want to be in the situation where you are destitute at 72 because you feared the worst would happen to yourself.
Perhaps try and make the best of both options available to you? At least get your employer match and the tax relief that you'll get on your match as thats free money right there whatever way you look at it.
S&P500 has averaged over 11% returns for the past 50 years!
Yep around that pre inflation adjusted though.
I’m 52 this year and have no savings or investments and don’t own a house. I will no doubt retire on a gov pension if there is one and feel even if I invest now it is too little too late as a low earner, gutted.
Retire on state pension and move to a cheap Easter European country. With uk state pension you can live decent life in 🇷🇴 🇧🇬.
You've still got 15 years to retirement. A tiny amount invested regularly over that period is a whole lot more than zero.
@@gyundoanyumer1800 unfortunately we decided to leave the EU, so you can't just go and decide to live where you want in retirement.
Those cheap European countries you mention are highly unlikely to be issuing visas to old people who don't work and only have a UK state pension.
And even if they did, their health care premium that they'd demand would put it out of reach.
@@ChrisShawUK you are right. I just completely forgot about Brexit.
@@gyundoanyumer1800 lucky you. I wish I could forget about Brexit.
A lot of EU pensioner expats are returning back to us now because they can't afford healthcare over there. Which piles more pressure on the NHS.
All this getting bogged-down avoidance and not wanting to go into detail on THIS and many other videos. One day the piper will request payment.
You’re welcome to make a 2 hour long video if you like Keith 😂
Yo have to put some effort in yourself as well!
Hi. if I had 20K, would you suggest $k in an S&S LISA and 16K in a S&S ISA? Or all 20K in an S&S ISA? I had a look at the S&S LISA (e.g. 0.15% Dodl vs 0.45% H&L), but wondering if S&S ISA e.g. invest engine/trade212 may be better?
Actually, BTC has out performed everything you have mentioned…
Great stuff. Could you do a video on best lifetime ISA and normal S&S ISA for 2024/25?
That’s a video coming very soon for best isa look out for it 👍
@@TobyNewbatt thanks. I really want to move away from HL for my LISA but struggling so looking forward to the video