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Property vs pension

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  • Fandango
    replied
    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?

    Leave a comment:


  • sasguru
    replied
    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”

    Leave a comment:


  • Lance
    replied
    Originally posted by TheCyclingProgrammer View Post
    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?

    Leave a comment:


  • TheCyclingProgrammer
    replied
    Originally posted by scooterscot View Post
    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.

    Leave a comment:


  • Lance
    replied
    Originally posted by TheCyclingProgrammer View Post
    (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....

    Leave a comment:


  • TheCyclingProgrammer
    replied
    Originally posted by scooterscot View Post
    You don't believe me?

    How much do you want to bet?
    Probably much less than £20k.

    Leave a comment:


  • scooterscot
    replied
    Originally posted by b0redom View Post
    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.

    Leave a comment:


  • b0redom
    replied
    OP, I've got an ISA and a B2L property in W. London but no SIPP. I did similar number crunching to you and worked out that I'd have to live for ~ 20 years before I'd exhausted the principle in a SIPP, never mind the compound interest. Then what happens if you shuffle off this mortal coil after 5 years? Nothing to give to the kids.

    I reckon I'll continue to try and max out the ISA, then pay off the residential mortgage (just about to remortgage with an offset mortgage). Once that's done I'll start to look at a SIPP.

    Leave a comment:


  • b0redom
    replied
    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.

    Leave a comment:


  • northernladyuk
    replied
    Originally posted by scooterscot View Post
    I'd buy £20k of Euros. Do it soon. You'll have £500k+ before the end of next year.
    FTFY.

    Leave a comment:

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