Originally posted by WTFH
View Post
- Visitors can check out the Forum FAQ by clicking this link. You have to register before you can post: click the REGISTER link above to proceed. To start viewing messages, select the forum that you want to visit from the selection below. View our Forum Privacy Policy.
- Want to receive the latest contracting news and advice straight to your inbox? Sign up to the ContractorUK newsletter here. Every sign up will also be entered into a draw to WIN £100 Amazon vouchers!
Property vs pension
Collapse
X
-
-
Originally posted by FrontEnder View PostWhy are you looking at life isnurance like an investment. They're different things for different purposes.
OP: "I'm wondering if property or stocks are a better investment"
WTFH: "Do you have a car? Why bother with a car, It's just throwing money away - never mind 11% or 2%, it's a minus 100% investment"
The guy said he was more interested in investments than paying his mortgage. He then said he had life insurance to cover. So the money he is spending on life insurance is part of his investment strategy.
I'm suggesting that his chosen strategy might not be the best use of his investments at a time when interest rates are low and a mortgage could be paid off quickly.
If you think/hope/believe that interest rates will stay < 1% for the next 10+ years (or whatever time is left on your mortgage), then it's less of a risk. If you think interest rates are going to rise, then the money which could be used clearing the mortgage down now will end up being spent servicing the interest on the mortgage.Leave a comment:
-
Originally posted by FrontEnder View PostComparing apples and oranges there, surely.
Life insurance is there to provide for the family if you die. The payout would presumably pay off the mortgage, therefore taking away a significant financial commitment from the bereaved wife and kids. At least that's why I have life insurance.
If your life insurance is £10 a month and covers £500k, then go for it. If it's closer to £50 a month, then I'd say use some of your cash to clear your mortgage, then you don't need as much life cover and with the mortgage gone you can invest more.Leave a comment:
-
Originally posted by WTFH View PostSo why bother with the life insurance? It's just throwing money away - never mind 11% or 2%, it's a minus 100% investment.
OP: "I'm wondering if property or stocks are a better investment"
WTFH: "Do you have a car? Why bother with a car, It's just throwing money away - never mind 11% or 2%, it's a minus 100% investment"Leave a comment:
-
Originally posted by WTFH View PostOK, so how much do you pay per month into life insurance (which has a zero return while you are alive), compared with how much you pay in interest on the mortgage?
You said you saw paying off the mortgage as a waste, but you pay into an insurance policy instead.
For someone focused on the returns, is paying into an insurance policy a better investment than paying down the mortgage?
Life insurance is there to provide for the family if you die. The payout would presumably pay off the mortgage, therefore taking away a significant financial commitment from the bereaved wife and kids. At least that's why I have life insurance.Leave a comment:
-
Originally posted by lukemg View PostYes, it's much better because it is cover for a small but potential catastrophe. Paying a few hundred quid off the mortgage will in no way provide the same cover.
My mortgage is a couple of % interest, I am averaging 11% from investments, I think its the right choice.Leave a comment:
-
Yes, it's much better because it is cover for a small but potential catastrophe. Paying a few hundred quid off the mortgage will in no way provide the same cover.
My mortgage is a couple of % interest, I am averaging 11% from investments, I think its the right choice.Leave a comment:
-
Originally posted by lukemg View PostIf I croak suddenly, my life insurance pays off the house and provides a ready surplus, this is structured to pay direct to my partner, not the estate.
You said you saw paying off the mortgage as a waste, but you pay into an insurance policy instead.
For someone focused on the returns, is paying into an insurance policy a better investment than paying down the mortgage?Leave a comment:
-
Originally posted by WTFH View PostI'm guessing from this you don't have a partner or dependents (or haven't seen high interest rates or spent a long time on the bench).
With others in your life, it's useful to have your finances in such a way that they will not suffer should something happen to you, but if all your money is locked away in long term investments and they can't easily access them (or it goes to probate), then their family home may well be repossessed.
If I croak suddenly, my life insurance pays off the house and provides a ready surplus, this is structured to pay direct to my partner, not the estate.
Similarly, the SIPP is externally held outside my estate for obvious reasons and covers longer term requirements.
While not ready to retire I am keen to be financially independent so that I can maintain my lifestyle immune to needing to work.
For me, that entails taking some calculated risk and investing in global markets as I cannot find a better way to generate the returns needed.
I see this as my plan B and have spent a long time getting to grips with it.
I would see property as the only reasonable alternative but BTL would definitely not suit me, I would just use a REIT or Commercial property trust (e.g. FCPT) to increase my exposure.
Good Luck all...Leave a comment:
-
Originally posted by scooterscot View PostReminds me of the time I questioned my IFA, what's the point of this Accident, Sickness and Unemployment Insurance? I never use it!Leave a comment:
- Home
- News & Features
- First Timers
- IR35 / S660 / BN66
- Employee Benefit Trusts
- Agency Workers Regulations
- MSC Legislation
- Limited Companies
- Dividends
- Umbrella Company
- VAT / Flat Rate VAT
- Job News & Guides
- Money News & Guides
- Guide to Contracts
- Successful Contracting
- Contracting Overseas
- Contractor Calculators
- MVL
- Contractor Expenses
Advertisers
Contractor Services
CUK News
- Streamline Your Retirement with iSIPP: A Solution for Contractor Pensions Sep 1 09:13
- Making the most of pension lump sums: overview for contractors Sep 1 08:36
- Umbrella company tribunal cases are opening up; are your wages subject to unlawful deductions, too? Aug 31 08:38
- Contractors, relabelling 'labour' as 'services' to appear 'fully contracted out' won't dupe IR35 inspectors Aug 31 08:30
- How often does HMRC check tax returns? Aug 30 08:27
- Work-life balance as an IT contractor: 5 top tips from a tech recruiter Aug 30 08:20
- Autumn Statement 2023 tipped to prioritise mental health, in a boost for UK workplaces Aug 29 08:33
- Final reminder for contractors to respond to the umbrella consultation (closing today) Aug 29 08:09
- Top 5 most in demand cyber security contract roles Aug 25 08:38
- Changes to the right to request flexible working are incoming, but how will contractors be affected? Aug 24 08:25
Leave a comment: