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Previously on "Property vs pension"

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  • ukltdcon
    replied
    the BTL tax incentives are still in place for those purchased via a company. It's probably not worth doing unless you looking at a HMO either. I've recently purchased my first HMO to rent out to contractors, it's up north so house prices haven't really rocketed and are not likely to dramatically collapse either.

    Leave a comment:


  • scooterscot
    replied
    Originally posted by DimPrawn View Post
    Zencash is a fork from Zclassic, which was a fork from Zcash.

    And look at Zcash.

    https://coinmarketcap.com/currencies/zcash/

    So when they get bored of Zencash, and create Zencrap as the next iteration, what do you think will happen to Zencash?

    The only way you can improve a blockchain is the fork it, well expect for Tezos and BOS.

    People said the same thing about Stellar after it forked from Ripple, now Stellar has gone from .02c to .09 in a month or so, albeit with much help from BTC.

    I buy into projects / people, I don't speculate on currencies. For this reason Zencash will be a success.

    Now if you want to get rich quick (clearly you do, you sound so bitter messing around with BTLs - money down a black hole), buy marijuana stocks (I can tell you exactly which ones) before California makes the industry legal on January 1st.

    Leave a comment:


  • DimPrawn
    replied
    Originally posted by scooterscot View Post
    I'd buy £20k of Zencash. Do it soon. You'll have £500k+ before the end of next year.
    Zencash is a fork from Zclassic, which was a fork from Zcash.

    And look at Zcash.

    https://coinmarketcap.com/currencies/zcash/

    So when they get bored of Zencash, and create Zencrap as the next iteration, what do you think will happen to Zencash?

    Leave a comment:


  • contractorinatractor
    replied
    Originally posted by vwdan View Post
    Good evening!

    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.
    Good evening! Exclamation!

    You need to do the calculations yourself - but it is often advised to ignore the 25 years default offered by the banks. There's a reason why they default to this! Interest is exponential.

    Try to stick to 20 years, base your calculations on this, see how much extra you would save in interest payments. It could be more worthwhile for a cheaper property.

    Leave a comment:


  • WTFH
    replied
    Originally posted by wantacontract View Post
    interesting viewpoint, depends on your attitude to risk I suppose. I plonk in £40 a month, and that gets me health and life insurance, cover 250k.....i think it's more than reasonable......the health insurance covers the kids too....
    I changed my strategy after having friends die in their early 50s and saw what happened to their family finances.

    Leave a comment:


  • wantacontract
    replied
    Originally posted by WTFH View Post
    My point being, while mortgage rates are still low, that's when you should be clearing that debt, rather than paying more when the rates rise. Some people seem to think that low rates means borrow more, but really it's the best time to clear your debts. Once you're debt free then you can look at taking riskier investments and you can put your money into savings (with the likely increase in interest rates).

    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.
    interesting viewpoint, depends on your attitude to risk I suppose. I plonk in £40 a month, and that gets me health and life insurance, cover 250k.....i think it's more than reasonable......the health insurance covers the kids too....

    Leave a comment:


  • BlandResponsibleName
    replied
    Originally posted by b0redom View Post
    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.
    If you shuffle off this mortal coil after 5 years your SIPP would be passed on to your chosen beneficiaries. If you're considerate enough to die before you're 75, it would be tax-free. (https://www.youinvest.co.uk/pensions...ipps-and-death). Anyway, you should probably be buying life insurance if you're worried about the kids.

    Because of the tax breaks it's more efficient to pay into a SIPP than to pay off a mortgage. It depends on your mortgage rate but with the current level of pension tax relief it would take a pretty high mortgage rate for the opposite to be true. I stopped overpaying my mortgage a while ago because of this. That's true even for a basic rate permie. If you're a higher rate taxpayer (or would be if you took all your profits), the pension payment is even more efficient.

    Of course, going the B2L and ISA way you have access to leverage on a mortgage and liquidity and certainty that a future government aren't going to change the pension rules.

    But B2L landlords are an even more popular target for governments who see lots of voters angry about not being able to afford a house. House prices are at such an insane high that 40% of Brits are thinking of voting for a man who thinks Venezuela is a good economic example to follow.

    If you're buying to let now you're going to pay a higher rate of stamp duty and, assuming you're not a cash buyer, soon you're not going to be able to get tax relief on interest payments. Moneyweek reckon the game is over: https://moneyweek.com/the-buy-to-let...t-happens-now/
    Last edited by BlandResponsibleName; 14 November 2017, 17:59.

    Leave a comment:


  • lukemg
    replied
    Ok, I am in no way saying the insurance is part of the investment. You take out insurance to cover the really big potential losses, car, house, life. You don't expect a return, it is there JIC.
    SO, it is not either insurance OR pay off the mortgage OR invest the money.
    It is Insurance PLUS a decision to invest or pay off the mortgage and my choice is clear. I also said this would not suit everyone and most would be better clearing the mortgage for peace of mind. Same as I won't touch BTL, I would hate the grief involved but it does work for some.

    I am also not telling people what to do, only presenting an alternative view to those who think clearing the mortgage is the only way to go.
    I am 50 and no longer need to work so naturally I think my plan works !

    Leave a comment:


  • WTFH
    replied
    Originally posted by FrontEnder View Post
    It's not at all. Insurance != Investment.
    His investment strategy is:
    1. Don't pay off mortgage, but take out insurance to cover the mortgage if he dies.
    2. Make financial investments

    Because of his option not to pay off the mortgage (as part of his investment strategy) he is paying for a life insurance policy, so that insurance policy is part of his strategy.
    If he changes what he does with his money, then he wouldn't need as much life insurance.

    Back in the old days of endowment mortgages, the lenders were very keen for people to take out life insurance as part of the mortgage package. I suspect they are still keen to do it with people who take out interest-only mortgages.

    If the OP considers buying a home as part of his investment strategy, then having a life insurance policy to clear the mortgage is part of that investment strategy.

    Leave a comment:


  • FrontEnder
    replied
    Originally posted by WTFH View Post
    Nope, not what I said and you know it, so please stop twisting my words.
    Sorry, I thought the use of satire was obvious.

    Originally posted by WTFH View Post
    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.
    It's not at all. Insurance != Investment.

    Leave a comment:


  • FrontEnder
    replied
    Originally posted by WTFH View Post
    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.
    If it costs £50 a month for the level of cover you require, then you need to pay it. Mortgage rates shouldn't come into the equation at all. Paying a few quid extra a month on your mortgage isn't going to reduce it by much, but could mean a significant amount less for your family if you die.

    Leave a comment:


  • WTFH
    replied
    Originally posted by FrontEnder View Post
    Why 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"
    Nope, not what I said and you know it, so please stop twisting my words.

    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:


  • WTFH
    replied
    Originally posted by FrontEnder View Post
    Comparing 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.
    My point being, while mortgage rates are still low, that's when you should be clearing that debt, rather than paying more when the rates rise. Some people seem to think that low rates means borrow more, but really it's the best time to clear your debts. Once you're debt free then you can look at taking riskier investments and you can put your money into savings (with the likely increase in interest rates).

    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:


  • FrontEnder
    replied
    Originally posted by WTFH View Post
    So why bother with the life insurance? It's just throwing money away - never mind 11% or 2%, it's a minus 100% investment.
    Why 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"

    Leave a comment:


  • FrontEnder
    replied
    Originally posted by WTFH View Post
    OK, 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?
    Comparing 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.

    Leave a comment:

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