Property vs pension

[TheCyclingProgrammer]

I think I started a thread on here earlier this year about long term planning and the fact I still have no pension. I still haven't sorted anything out.

Simplest option seemed to be start a SIPP, pay in whatever I can as a company contribution and forget about it. I worked out for a half decent return, I'd need to put £20k in a year over the next 30 years to end up with a decent pension pot, enough to generate an annual income of around £20-25k or so. This, combined with the fact that once the money's in the pot, it's gone for the next 20 years (I'm nearly 35) made me hesitant.

OTOH, it occurred to me that I could very easily save up enough money in 2-3 years time to buy a property and rent it out. Maybe over time I could afford to get a few. I've never really given much thought to being a landlord and I know the government keeps trying to make it less appealing in terms of tax efficiency but the idea of investing money in property seems more appealing and is probably a fairly safe bet long term.

This is of course all dependent on me being able to get a second mortgage and it's not without its risks.

An age old debate, I'm sure, but what would you do?

[d000hg]

Are you talking about buying for cash, or using your cash as a deposit and borrowing the rest?

There is also not a huge hit putting money into an ISA rather than a pension as a contractor; it is less effective as things stand but you have more flexibility. With the limit now being £20k that's going to mount up PDQ.

[TheCyclingProgrammer]

Are you talking about buying for cash, or using your cash as a deposit and borrowing the rest?

I'd have to borrow and use cash as the deposit.

There is also not a huge hit putting money into an ISA rather than a pension as a contractor; it is less effective as things stand but you have more flexibility. With the limit now being £20k that's going to mount up PDQ.

I probably ought to start throwing some money in an ISA but I can't afford to put away a massive amount out of my disposable income unless I withdraw funds from the company and pay higher rate tax - maybe £200 a month at most. The advantage of the SIPP is I can contribute directly from the company of course. I could probably safely contribute £1000 a month, maybe up to £1500/month in a good year.

[SueEllen]

Having this a discussion on this landlord - linky - on another thread.

It is very easy to run rings around landlords who don't know the law as a tenant, and so the landlord can easily end up out of pocket.

Best thing to do is a mixture of investments - pension, ISA and BTL if you can.

Also don't forget a pension generally can't be touched if you ever go bankrupt and doesn't count if you need to claim benefits while of working age. Quite a few people near the end of working age can't get work.

[scooterscot]

I'd buy £20k of Zencash. Do it soon. You'll have £500k+ before the end of next year.

[BrilloPad]

I'd buy £20k of Zencash. Do it soon. You'll have £500k+ before the end of next year.

Sasguru drew a nice picture earlier. Crayon of course. Yours for £25k. It will be worth £1m next year.

[scooterscot]

Sasguru drew a nice picture earlier. Crayon of course. Yours for £25k. It will be worth £1m next year.

You don't believe me?

How much do you want to bet?

[northernladyuk]

I'd buy £20k of Euros. Do it soon. You'll have £500k+ before the end of next year.

FTFY.

[b0redom]

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.

[b0redom]

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.