Reply to: warchest etc

[mogga71]

I wouldn't count too much on state pension either.

Personal pension, sure, you can start taking it when you're 55 so that's going t be ok, but state pension? Just forget it.

I'd focus on other source of income for when you retire, and for now rental income seems to still be the better option.

All good questions. Had a similar argument a few weeks before lockdown. My friends have rental properties and some were thinking about selling them due to the constant measures imposed by governments .... tax etc. Personally I think if you choose the best tech stocks (put them in ISA and/or SIPPs) and hold your nerve and stick with them for 20 years I reckon they will way outperform property investments....but thats just me.

I think a mixture of property and share investments is probably the best advice.

[PCTNN]

I wouldn't count too much on state pension either.

Personal pension, sure, you can start taking it when you're 55 so that's going t be ok, but state pension? Just forget it.

I'd focus on other source of income for when you retire, and for now rental income seems to still be the better option.

[ShandyDrinker]

Hmmmmm ... not sure you are being serious here.

1. Pensions are just about the only tax benefit contractors have left when caught by ir35 (ie. most contractors next year IMHO).
2. 70 ? Thats the state pension you are talking about isn't it? Totally different from when you can take personal pension..still 55 I believe?
3. It's a good chance that most people will be living way past 70 in the future.

I certainly wish I had put more in my pension when I was a young contractor. If I would have put 40k (160k in 4 consecutive years) into Apple, Microsoft, Amazon and Alphabet 15 years ago I could have now retired.

I don't necessarily agree with this. Life expectancy was reported to be falling in 2019. You have to wonder if the retirement age will then be reduced? Not a chance of course. We're heading for work until you drop.

[mogga71]

Forget pensions

Live your life now, could be deed next week

Or if you live to 70 (new retirement age) you will get 2 years life of pondering about garden centers until you snuff it form latest pandemic- best case


Sent from my iPhone using Contractor UK Forum

Hmmmmm ... not sure you are being serious here.

1. Pensions are just about the only tax benefit contractors have left when caught by ir35 (ie. most contractors next year IMHO).
2. 70 ? Thats the state pension you are talking about isn't it? Totally different from when you can take personal pension..still 55 I believe?
3. It's a good chance that most people will be living way past 70 in the future.

I certainly wish I had put more in my pension when I was a young contractor. If I would have put 40k (160k in 4 consecutive years) into Apple, Microsoft, Amazon and Alphabet 15 years ago I could have now retired.

[ladymuck]

There's also SDLT relief for first time buyers, if you're eligible

Stamp Duty Land Tax: relief for first time buyers - guidance note - GOV.UK

[ResistanceFighter]

Contracting for 10 years, only had two spells of no work which include the last 2 months of this pandemic.

Warchest for me needs to be around 6 months minimum

If you want to get on the housing ladder quickly and it's your first place, take a look at the help to buy scheme - 5% deposit with a low mortgage payment for 5 years before the interest on the loan part kicks in.
Do research around it first though as it's not for everybody

[Old Greg]

You're not scootysnot's literate twin are you?

I have better taste in hotels as well.

[xenomorph]

a lot of my money at the moment goes towards rent in London and bills. 60% dividends I pay myself goes on just that!

[PCTNN]

well there is a good chance that I go back to being a permie after buying like I mentioned.

Or you can go permie before you buy. Last time I checked, banks had different rates for permies and contractors (with contractors' rates being higher) and some banks wouldn't even offer mortgages to contractors.

As for myself, I have a 24 month warchest, which I admit is a lot, but that's just because I don't have an expensive lifestyle so it didn't take long to get there. 12 months should be big enough, even in this challenging time.

I've got it spread around a couple of easy access / ISA's accounts. Virtually no interest earned but quick and easy to take the money out.

[xenomorph]

well there is a good chance that I go back to being a permie after buying like I mentioned.
yes I can loose my job still as a permie but risk are less then with contracting as usual
only issue with 12 month warchest is it will take a long time build that up and thus not make it possible to purchase a property.
Seeing as house prices are very likely to drop next year will be best time to do this.

[LondonManc]

Agreed, except for the missed opportunity of buying it cheaper, if you can time it right...

You're not scootysnot's literate twin are you?

[ladymuck]

Unless you are out off work for a year, and need to sell


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Rent a room before selling! Or rent the whole property out and move in with family if you really need to. Selling should be a last resort.

[GhostofTarbera]

Only an issue if you're considering selling any time soon. If you're in your "forever home" and don't have to sell, it doesn't matter.

Unless you are out off work for a year, and need to sell


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[mjcp]

will look into loans instead if I come to buying property time and I not got enough for deposit withdraw plus 6 months leftover.

Consider who the loan is to and from. An off the shelf loan from a lender to you will show on your credit rating, just when you're going through the mortgage process...

A loan from family/friend/PSC to you need not. A loan to your PSC (hint.. Bounce back loan scheme) wouldn't either.

M

[Old Greg]

Only an issue if you're considering selling any time soon. If you're in your "forever home" and don't have to sell, it doesn't matter.

Agreed, except for the missed opportunity of buying it cheaper, if you can time it right...