Property vs pension

[scooterscot]

Do you remember the Dot Com bang? Loads of IPOs of stuff like Pets.com with no business plan, was of generating income, or intrinsic value - the share prices went bonkers and then there was a massive massive crash.

I suspect the same will happen with these new virtual currencies.

Maybe a handful of them will still be around in a few years, but I'd not be sticking my pension in them.

It's great that you're a paper billionaire Scooter, but until it's in hard cash/real tangible assets, that's all it is. Paper.

Exactly what I've been banging on about in the crypto thread. Don't you read?

We're in the grip of a massive bull market. It has a good 12-18 months in it. It'll become clearer which remain by the end, bitcoin for sure and a few others I'm keeping close to my chest.

I'm more shocked how so many tech savvy chaps like yourselves seem totally eclipsed by blockchain technology.

[TheCyclingProgrammer]

You don't believe me?

How much do you want to bet?

Probably much less than £20k.

[Lance]

(I'm nearly 35)

"compound interest is the most powerful force in the universe" - Albert Einstein.

At your age put money into a pension regularly. Just enough that you notice it's missing but not by much.
It will mount up over 20-30 years significantly.

Bricks and mortar is safe. Rental income is tulip (compared to what you can earn).

If I was you I'd do both. Eggs and baskets....

[TheCyclingProgrammer]

I'm more shocked how so many tech savvy chaps like yourselves seem totally eclipsed by blockchain technology.

I must admit, as somebody who is tech savvy the whole cryptocurrency thing has completely passed me by. Other than getting irritated by people referring to it as "crypto", which means something entirely different to me, I really haven't got the foggiest.

[Lance]

Other than getting irritated by people referring to it as "crypto", which means something entirely different to me, I really haven't got the foggiest.

It is based on cryptography, so it's a reasonable description.
What does it mean to you that's different?

[sasguru]

Personally I think the BTL boat has sailed.
Brexit is a big uncertainty, but more than that a Corbyn govt. will obviously impose punitive taxes on landlords.
Landlords, like contractors, are an easy cash cow that the majority of the population don’t identify with, so easy to shaft.
I would go with others in this thread who recommend standard pensions. Dont get an actively managed one though, get a SIPP.
Do some reading around it, I recommend Malkiels “A Random Walk down Wall Street”

[Fandango]

I'm not sure how BTL can be profitable unless your just banking on the property being worth more at the point of selling it years down the line?

We rent out our first house (and have done for about the past 5 years, owned it for 10years) although I'm strongly thinking of selling it now due to the changes in the ability to offset your mortgage interest.

We bought the house in 2008 right at the peak of the housing bubble and paid £225k for it and I envisage it probably worth about that now (but I've not had a valuation). As we're in a little village in Derbyshire its not going to be worth a massive amount more I doubt even if we held onto it for another 20 years.

So the thinking/sums behind getting rid are as follows
Rental Income £700/month
Mortgage Interest £350/month
Insurance costs etc £30/month
"Profit" £320/month (less anything that needs fixing)

However with the recent changes to offsetting mortgage payments and being in the 40% tax bracket it means that now I'll be taxed approx. £ £270/month on the £700 month income leaving me with approx. £50/month "profit".

and for £50/month(best case scenario) I could do without the hassle of having to manage it if and when things fixing. TBH the tenants are pretty good but its just a hassle and a worry I could do with out. Certainly when its for such a tiny amount of return.

Has anyone else found themselves thinking/doing the same?

[vwdan]

Good evening! So I'm basically the same boat as you - 31 and no pension worth mentioning. We do own our own home (with a mortgage, not outright) and we were able to get a great deposit down it. It's something I worry about a LOT, though I know I'm far from alone in this boat and at least I've managed to do some great life things til now so there's that.

Right now I've basically come to the conclusion that property will be my first call. I'm juuuuuust coming to the point where I can seriously start considering getting a deposit down on something modest (£25k ish on a £100kish property) to let out.

My plan is to get a 25 year mortgage and aim to break even on the property over that time. The theory being that in 25 years time I then have a fully paid for asset, which I can then do as I please with. I've not looked at proper proper figures, but it should be pretty much doable.

Contentious opinion alert: I agree that the major boom years of BTL are probably over, but I don't care what anyone says. We're on a small island - at best our population will stagnate to a degree, but in essence property and land is always going to be a valuable commodity. Absolute worst case, I think I'll end up owning a property that's simply gone up with inflation - i.e., have the equivalent of £100k in todays money. Personally, I suspect things will work out far better than that over the years.

That said, once I've done that, my plan is very much to start piling something into a pension. I can't bring myself to chuck in crazy amounts, but diversification is definitely important.

Beyond that, like you, I figure I can do it once I can maybe do it again.

[scooterscot]

Agree. BTL is dead.

Not specifically because of Brexit or government policy. But more the realisation the housing market is overinflated and a correction is likely. As such potential yield is now at a minimum. Plus there's the risk your BTL mortgage might be worth more than the asset in the coming years. Sod that.

There's far less risker investments out there. I'm not going to say it.

[TheCyclingProgrammer]

It is based on cryptography, so it's a reasonable description.
What does it mean to you that's different?

Crypto has always been an abbreviation of cryptography to me, not crypto currency.