Time to grow up - pensions / retirement / IFA's...
Discussion
Cheers Lloyd - email recieved and appreciated - very useful.
In response to your question, if (when) I rent the house out, I intend to buy another one to live in (my "rest-of-life") house, then pay that off over 15-20 years whilst using the rental income from the other property as an investment fund, and then as a monthly income when I retire.
From what you are saying it seems to make more sense to leave the property on a BTL mortgage for tax purposes - could I get the outstanding mortgage down to £15k or so and then remortgage that as BTL? My thinking is this would mean it has a "mortgage" on it (for tax purposes), but not so much that the interest is swallowing up my rent?
Hope that makes sense, my head isn't geared towards this responsibility lark...
edited because I can't spell
In response to your question, if (when) I rent the house out, I intend to buy another one to live in (my "rest-of-life") house, then pay that off over 15-20 years whilst using the rental income from the other property as an investment fund, and then as a monthly income when I retire.
From what you are saying it seems to make more sense to leave the property on a BTL mortgage for tax purposes - could I get the outstanding mortgage down to £15k or so and then remortgage that as BTL? My thinking is this would mean it has a "mortgage" on it (for tax purposes), but not so much that the interest is swallowing up my rent?
Hope that makes sense, my head isn't geared towards this responsibility lark...
edited because I can't spell
Edited by Bob Fossil on Wednesday 7th October 16:46
Nice income dude.
A SIPP might suit you. Check out the low cost providers. You can get all your income tax back for every pound you put in your SIPP up to the total amount of your salary. Plus then you can invest in what you like tax free of capital gains etc. Of course you will pay tax at the other end on your drawdown/annuity.
That means if you think residental rentals or commercial leases are where the cash is why not invest in them via your sipp and do it tax free?
Max out your ISA's as well.
Paying down your motgage is also a good idea. Investment areas will be a bit dodgy for a while. Residential property may not regain its heights for a while and returns may be depressed. So it might be worth diversifying out a little into stuff like emerging markets and commodities etc or ideally with foresight something awsomely cheap and sell it really overpriced
Some good websites to read up on are seekingalpha.com, plus FT.com etc. Some SIPP providers also have some good basic into on SIPPs etc. Check out H&L for example.
Bottom line is tax eats almost half your earnings (assuming you are on a salary), so legal avoidance of tax should be your aim in the long run.
A SIPP might suit you. Check out the low cost providers. You can get all your income tax back for every pound you put in your SIPP up to the total amount of your salary. Plus then you can invest in what you like tax free of capital gains etc. Of course you will pay tax at the other end on your drawdown/annuity.
That means if you think residental rentals or commercial leases are where the cash is why not invest in them via your sipp and do it tax free?
Max out your ISA's as well.
Paying down your motgage is also a good idea. Investment areas will be a bit dodgy for a while. Residential property may not regain its heights for a while and returns may be depressed. So it might be worth diversifying out a little into stuff like emerging markets and commodities etc or ideally with foresight something awsomely cheap and sell it really overpriced
Some good websites to read up on are seekingalpha.com, plus FT.com etc. Some SIPP providers also have some good basic into on SIPPs etc. Check out H&L for example.
Bottom line is tax eats almost half your earnings (assuming you are on a salary), so legal avoidance of tax should be your aim in the long run.
Thanks to all for your responses - some great thinking fodder in there.
In answer to your questions, earnings are a mixture of salary / bonus so the although the total is a reasonable amount, the month-by-month amounts can vary, so looking for something that won't commit me to £xx per month, but that allows me to deposit large sums every now and then. I'm on PAYE so yes, legal tax "avoidance" would be very interesting...
The SIPP thing looks interesting, will read up on that. Will also look into BTL offsets once the mortgage is down to around £20k (the aim being to keep the interest down on the mortgage).
Now, how does one go about finding a good IFA in the South / West Yorks area?
In answer to your questions, earnings are a mixture of salary / bonus so the although the total is a reasonable amount, the month-by-month amounts can vary, so looking for something that won't commit me to £xx per month, but that allows me to deposit large sums every now and then. I'm on PAYE so yes, legal tax "avoidance" would be very interesting...
The SIPP thing looks interesting, will read up on that. Will also look into BTL offsets once the mortgage is down to around £20k (the aim being to keep the interest down on the mortgage).
Now, how does one go about finding a good IFA in the South / West Yorks area?
The IFA business is getting a shakeup. Loads of sharks are being fished. FSA is banning the practice of paying commission on sales from the fund providers for obvious reasons. Given that by definition half of all fund managers fail to beat the market you want someone who thinks outside the box and not some idiot IFA who blindly shoves some s
te fund paying him a nice commission in front of you. Of course there will be some good IFA's around, but unless they can guarantee to outperform the market for you then you are wasting your money with them as their fees will eat the first part of any outperformance (if such a thing even exists) and a simple FTSE ETF will undercut almost any fund manager's fees and guarantee to TRACK the market.
Look at entry and annual costs and TER for any funds recommended to you etc. Caveat Emptor.
Personally I do my own reasearch these days and recon looking for under valued sectors for long term returns etc is a good idea.
Stuff like tech, biotech, alternate energy, "some" emerging markets, oils etc.
Forget crap like retail and luxury stuff for now. They are dead for a long while IMO.
The consensis is that the market is currently 20% overvalued on historical basis and is pricing in a large and sustainable redound. Maybe its only the govt printing presses that are inflating prices. Might be good to look towards inflation hedges, like commodities etc.
Of course this is all my opinion, but its not exactly rare.
te fund paying him a nice commission in front of you. Of course there will be some good IFA's around, but unless they can guarantee to outperform the market for you then you are wasting your money with them as their fees will eat the first part of any outperformance (if such a thing even exists) and a simple FTSE ETF will undercut almost any fund manager's fees and guarantee to TRACK the market. Look at entry and annual costs and TER for any funds recommended to you etc. Caveat Emptor.
Personally I do my own reasearch these days and recon looking for under valued sectors for long term returns etc is a good idea.
Stuff like tech, biotech, alternate energy, "some" emerging markets, oils etc.
Forget crap like retail and luxury stuff for now. They are dead for a long while IMO.
The consensis is that the market is currently 20% overvalued on historical basis and is pricing in a large and sustainable redound. Maybe its only the govt printing presses that are inflating prices. Might be good to look towards inflation hedges, like commodities etc.
Of course this is all my opinion, but its not exactly rare.
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