How to save for retirement?

[Paul in the woods]

40 minutes ago, Woodworks said:

How much do you need to invest to be worth having a managed fund? Presuming it's nonsense with just a few k in it

I think the amount of time you have free to manage it might be more of an issue with a small amount.

 

Cost wise, using the iWeb company mentioned earlier, if you opened and Stocks and Shares ISA it would cost you £25 to open an account and then £5 when you bought a fund assuming there's no initial commission. If you put in £3000 and the annual charge of the fund/s you invest in is 1% then you'll be paying about £90 a year which will rise or fall depending on the growth.

 

Carefully choosing your provider and funds will take time though, so I think it is only worth doing if you intend to invest a fair bit or over time.

[sandspider]

www.monevator.co.uk is a useful website. Keen on passive investing - reasonable returns with minimal fees.

[daveindales]

4 hours ago, Paul in the woods said:

I think the amount of time you have free to manage it might be more of an issue with a small amount.

 

Cost wise, using the iWeb company mentioned earlier, if you opened and Stocks and Shares ISA it would cost you £25 to open an account and then £5 when you bought a fund assuming there's no initial commission. If you put in £3000 and the annual charge of the fund/s you invest in is 1% then you'll be paying about £90 a year which will rise or fall depending on the growth.

 

Carefully choosing your provider and funds will take time though, so I think it is only worth doing if you intend to invest a fair bit or over time.

If your just dealing in shares, £5 a trade is great. I use it all the time. With regard to funds, you can set up a monthly direct debit. I'm not sure, but I think the minimum might be around £25 a month. 

 

Im late 40's now. If I was early 20's, then funds and dividend paying shares over the long term would be my preferred choice.

[Fozzie]

I've looked through the posts, and what does not seem to have been given much prominence is the tax saving by paying into a pension scheme. You get tax relief on what you pay in, so that's at least a 20% (could be 40%...) benefit before the scheme you pay into is invested for growth anywhere. Whatever profits the scheme accrues over time remains tax free, up to the point you start drawing on it. 25% of the entire fund can be withdrawn from age 55 without paying tax on it, then you pay tax on whatever you receive monthly, assuming that amount is in excess of the annual tax allowance. Therefore even if you have left it a little late in life to start a fund, pay as much of your income into a scheme as soon as you can so that you don't pay income tax on it, then draw a chunk out tax free.

[swinny]

42 minutes ago, Fozzie said:

I've looked through the posts, and what does not seem to have been given much prominence is the tax saving by paying into a pension scheme. You get tax relief on what you pay in, so that's at least a 20% (could be 40%...) benefit before the scheme you pay into is invested for growth anywhere. Whatever profits the scheme accrues over time remains tax free, up to the point you start drawing on it. 25% of the entire fund can be withdrawn from age 55 without paying tax on it, then you pay tax on whatever you receive monthly, assuming that amount is in excess of the annual tax allowance. Therefore even if you have left it a little late in life to start a fund, pay as much of your income into a scheme as soon as you can so that you don't pay income tax on it, then draw a chunk out tax free.

Thought this only works if ltd conpany not a sole trader

[spudulike]

46 minutes ago, Fozzie said:

I've looked through the posts, and what does not seem to have been given much prominence is the tax saving by paying into a pension scheme. You get tax relief on what you pay in, so that's at least a 20% (could be 40%...) benefit before the scheme you pay into is invested for growth anywhere. Whatever profits the scheme accrues over time remains tax free, up to the point you start drawing on it. 25% of the entire fund can be withdrawn from age 55 without paying tax on it, then you pay tax on whatever you receive monthly, assuming that amount is in excess of the annual tax allowance. Therefore even if you have left it a little late in life to start a fund, pay as much of your income into a scheme as soon as you can so that you don't pay income tax on it, then draw a chunk out tax free.

I did mention this when comparing Pensions and ISAs, worth another mention though as many have a mental block with investments.

[spudulike]

6 minutes ago, swinny said:

Thought this only works if ltd conpany not a sole trader

NO, it works for all pensions as far as I am aware. I am self employed and my earnings are taxed through self assesment then I pay some in to my pension and they then get the tax back and pay it in to my pension.

The other method is to pay earnings in to the pension, don't get the pension company to retrieve the tax element and then declare the pension payment on your self assessment and you won't get taxed on that part of your earnings.

If you do both the above, it is fraud and you may get done if caught so make sure you only get a single dollop of tax relief!

[Fozzie]

10 minutes ago, spudulike said:

NO, it works for all pensions as far as I am aware. I am self employed and my earnings are taxed through self assesment then I pay some in to my pension and they then get the tax back and pay it in to my pension.

The other method is to pay earnings in to the pension, don't get the pension company to retrieve the tax element and then declare the pension payment on your self assessment and you won't get taxed on that part of your earnings.

If you do both the above, it is fraud and you may get done if caught so make sure you only get a single dollop of tax relief!

Definitely - there is a tax advantage to a company's contribution, but for the individual, you do not pay tax on whatever you personally put in to a scheme.

[spudulike]

9 minutes ago, Fozzie said:

Definitely - there is a tax advantage to a company's contribution, but for the individual, you do not pay tax on whatever you personally put in to a scheme.

Not sure if you are asking a question but that is correct, any money paid in to a pension will get tax relief with pension payments to a maximum of £40K. Anything over that will not incur tax relief.

If you are self employed, as I am, any payment in to your personal pension will get tax relief using the methods as I have already stated. I was PAYE employee for many years so had to go through how pensions and self employment work.

[aspenarb]

Long term property purchases are the way to go,I have not seen anything outperform property purchases over a 30 year period and the assets will always be tangible.

 

Bob