Reply to: DOOM: Annuity rates

[NotAllThere]

One man's junk is another man's treasure.

27/11/16 to 27/11/17
Annual return 16.69%

Please remember past performance is not a guide to future returns. This information is provided to help you choose your own investments, remember they can fall as well as rise in value so you may not get back the original amount invested.

27/11/19 to 27/11/20 Annual return 0.66%

[Andy2]

One man's junk is another man's treasure.

27/11/16 to 27/11/17
Annual return 16.69%

As Nassim Taleb said do not pick pennies in front of a steamroller

[_V_]

70% junk bonds, the rest BBB.

I'll pass.

One man's junk is another man's treasure.

27/11/16 to 27/11/17
Annual return 16.69%

[NotAllThere]

Yep, plenty of those globally available.

Royal London Sterling Extra Yield Bond (Class Y) Income Fund Price & Information

70% junk bonds, the rest BBB.

I'll pass.

[Whorty]

Yes, that is the plan.

Cool. I was worried you planned to take the pension out completely and get hit with a 40% tax bill (after the 25% is taken tax free). You'd be surprised how many people don't realise that - I worked for a pensions advisors co and we had loads of clients who thought they could take their pension pot all tax free and wanted to buy a BTL - they were royally shocked to learn that only 25% was tax free and they would get smashed by a 40% tax bill on the rest of it.

There is so little understanding out there on some pretty important, but simple, financial matters. No wonder scammers find some easy targets!

[_V_]

I assume you're keeping your capital (after tax free lump sum) within your pension pot? So your bonds/stocks are all part of the remaining pension capital?

Yes, that is the plan.

[Whorty]

If an annuity works for you, then fine, hand over the hundreds of thousands of £££ and sit back and get 3.5% return until you die.

For me, I would be happy to manage property at 55 years old and bond and stock portfolio and let me family inherit the wealth I've accumulated. I reckon I can get nearer 5% return overall and possibly some capital gains too.

You might buy the annuity and die 2 years later and your family get nothing.

I assume you're keeping your capital (after tax free lump sum) within your pension pot? So your bonds/stocks are all part of the remaining pension capital?

[_V_]

why would a pensioner buy property and deal with the hassle of problem tenants
bonds and shares are all time high and may go pop
bank interest is pitiful 0.5 %
i checked on a website and it seems annuity provides 3.5% return which is not bad

If an annuity works for you, then fine, hand over the hundreds of thousands of £££ and sit back and get 3.5% return until you die.

For me, I would be happy to manage property at 55 years old and bond and stock portfolio and let me family inherit the wealth I've accumulated. I reckon I can get nearer 5% return overall and possibly some capital gains too.

You might buy the annuity and die 2 years later and your family get nothing.

[Andy2]

I cannot see why anyone would convert a large sum of money into an annuity rather than buy property and high yield bonds and shares and live off the rent + dividends + interest?

At least that way when you pop off you can leave the wealth to family / Battersea dogs home.

why would a pensioner buy property and deal with the hassle of problem tenants
bonds and shares are all time high and may go pop
bank interest is pitiful 0.5 %
i checked on a website and it seems annuity provides 3.5% return which is not bad

[AtW]

Sounds like you have it all sorted. AMD to the moon, then sell up and buy an annuity.

By the time of my retirement in post Brexit Britain getting a rat trap will be deemed as the best retirement option in exchange for 100000000 bottle caps...

[_V_]

What does class W mean?

These bonds look like a bigger scam than annuities - at least with those they can just repay you back your own money and then keep some, less chance they’ll scam whole capital

Sounds like you have it all sorted. AMD to the moon, then sell up and buy an annuity.

[AtW]

What does class W mean?

These bonds look like a bigger scam than annuities - at least with those they can just repay you back your own money and then keep some, less chance they’ll scam whole capital

[_V_]

And how do they guarantee yield?

Don’t forget HL fees

In any case 3% is rather pathetic when capital is a risk

Well, you can have no risk in a bank and get 0.1%

[_V_]

Fidelity MoneyBuilder Income (Class W) Income Fund Price & Information

Distribution yield : 2.93%
Income paid: Monthly
Type of payment: Interest


Return 27/11/18 to 27/11/19 10.08%
Return 27/11/19 to 27/11/20 5.86%

[AtW]

You buy them for the yield generally. If you want to make money on capital appreciation, buy AMD shares.

And how do they guarantee yield?

Don’t forget HL fees

In any case 3% is rather pathetic when capital is a risk