| Twtd investors 08:58 - May 5 with 2147 views | bluelagos |
So you get old and are lucky enough to be looking at income options from your savings..
(apologies to the younguns - appreciate this thread will highlight how much harder things are for you - and I genuinely empathise with how much harder things are your generation with regards to housing costs etc.)
Traditionally annuities were an option - you buy a guaranteed income with a chunk of cash, maybe around 5-6% dependent on age and a range of other factors (escalating etc.)
One option seems to be preference shares - that pay around the same amount - but you don't lose your initial wedge. So the money is still around for your loved ones as/when you kick the bucket.
So why would anyone buy an annuity when a preference share offers a similar return without losing your investment?
Some risks that the provider could go bust/default - but when we are talking BP or Santander - would think you can spread around and manage that risk.
What am I missing? Why would anyone buy an annuity instead of just ploughing into preference shares at the time of retirement? |  |
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| Twtd investors on 09:16 - May 5 with 1573 views | Keno |
Two comments
Annuities are fully protected by the Financial Services Compensation Scheme (FSCS), covering 100% of the claim with no upper limit, so totally risk free
Whatever the merits of preference shares they do carry both investment risk, the value can go up and down, and institutional risk in the the company you are investing in could go bust. |  |
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| Twtd investors on 09:19 - May 5 with 1548 views | NeedhamChris |
Bluecoin will be along any minute... |  |
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| Twtd investors on 09:29 - May 5 with 1493 views | bluelagos |
| Twtd investors on 09:16 - May 5 by Keno |
Two comments
Annuities are fully protected by the Financial Services Compensation Scheme (FSCS), covering 100% of the claim with no upper limit, so totally risk free
Whatever the merits of preference shares they do carry both investment risk, the value can go up and down, and institutional risk in the the company you are investing in could go bust. |
Cheers Keno
Any tax implications? Annuity income is taxed as normal income? Are preference share payments taxed like dividends? | |
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| Twtd investors on 09:30 - May 5 with 1490 views | nodge_blue |
People buy annuities for the peace of mind. Especially if they don't feel they need to pass the asset to any dependents. They are guaranteed for life and come with options of inflation escalation (at an initial lower starting annuity). Although you can argue they aren't totally guaranteed if countries defaulted on national debts as most annuities are underpinned by government debt.
Shares, preference shares and bonds all can offer dividends that pay equivalent amounts and the remaining capital can be passed on to dependents. But they carry more risk, companies can go bust and all shares cancelled. Markets can collapse and dividends reduced.
I personally think the second option is better but there are pros and cons both ways. |  |
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| Twtd investors on 09:42 - May 5 with 1462 views | Keno |
| Twtd investors on 09:29 - May 5 by bluelagos |
Cheers Keno
Any tax implications? Annuity income is taxed as normal income? Are preference share payments taxed like dividends? |
Yes annuities are taxed as income
Preference shares are different. Tax treatment compared to other types of investment income. These dividends fall into two categories: qualified and non-qualified, each with distinct tax implications. Qualified dividends benefit from lower capital gains tax rates, ranging from 0% to 20%, depending on the investor’s income level. In contrast, non-qualified dividends are taxed at ordinary income tax rates, which can be significantly higher, as they align with the investor’s regular tax bracket. Understanding the classification of preferred stock dividends is essential for investors seeking to optimize their tax liabilities and maximize returns. | |
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| Twtd investors on 09:45 - May 5 with 1447 views | blueasfook |
| Twtd investors on 09:16 - May 5 by Keno |
Two comments
Annuities are fully protected by the Financial Services Compensation Scheme (FSCS), covering 100% of the claim with no upper limit, so totally risk free
Whatever the merits of preference shares they do carry both investment risk, the value can go up and down, and institutional risk in the the company you are investing in could go bust. |
Hey Keno,
Do you do pensions advice? If so, I may call upon your services. |  |
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| Twtd investors on 09:48 - May 5 with 1420 views | bluelagos |
| Twtd investors on 09:45 - May 5 by blueasfook |
Hey Keno,
Do you do pensions advice? If so, I may call upon your services. |
I'll be expecting a referral fee | |
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| Twtd investors on 09:57 - May 5 with 1391 views | Keno |
| Twtd investors on 09:45 - May 5 by blueasfook |
Hey Keno,
Do you do pensions advice? If so, I may call upon your services. |
Feel free!!
Laggy is expecting a payment so you’ll have to give him one | |
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| Twtd investors on 10:06 - May 5 with 1345 views | hoppy |
| Twtd investors on 09:57 - May 5 by Keno |
Feel free!!
Laggy is expecting a payment so you’ll have to give him one |
Surely they could come to a financial agreement instead? |  |
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| Twtd investors on 10:06 - May 5 with 1341 views | Churchman |
This is very much my view.
If I didn’t have final salary pensions, other savings etc, I’d have looked to buy an Annuity with a Money purchase/private pension scheme pot. Why? To give a regular, regulated safe income.
The downside is that what you get for your money (you literally buy a pension) depends on annuity rates which for some years have been poor. A basic annuity pays asset amount. That’s it. No increase for inflation and nothing for dependents. It ends when you die.
You can add on things like index linking, money for the misses etc if you fall off your perch, but that’ll seriously affect the pension you receive. Annuity rates do vary between companies and you are not obliged to take one with the company you saved with.
Alternatively, you can move your pension pot to Drawdown. Money goes into a fund and you can take it when you need it or wish. Or you can buy an annuity later with all or part of the money. 25% is tax free, of course. Should you peg out, the remaining money will go to your relations. That’s what I did with two of my little pension pots, because quite frankly I didn’t need the money with the other stuff I had coming in.
The last option is to take all the cash and stick it on the 2.30 at Chepstow. Not the best idea in my view. A chum of mine did cash his pension in because he couldn’t be bothered - despite my tax inspector buddy offering to show him alternatives. That laziness cost him a lot of money as he was taxed at 40% on a percentage of it.
Regarding shares, the old recommended principle used to be the older you get the less risk you should expose yourself to and shares are just that. From an overview perspective, history says over time the markets are a good way of investing, but that a very general statement. There are good and bad investments, as with everything in life.
Pension funds are invested in the markets of course, but you can decide what level of risk you wish to take and the funds will be more diversified and better managed than most amateurs could do.
With all of this, if you are talking about something as serious as funding your retirement and you are not clear on what to do, I’d see a Financial Advisor. Might cost a bit, but might save you a heck of a lot too. But each to their own. |  | | |
| Twtd investors on 10:09 - May 5 with 1321 views | blueasfook |
| Twtd investors on 10:06 - May 5 by hoppy |
Surely they could come to a financial agreement instead? |
I have an old Saab headlight I can give him. | |
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| Twtd investors on 10:15 - May 5 with 1282 views | bluelagos |
| Twtd investors on 10:09 - May 5 by blueasfook |
I have an old Saab headlight I can give him. |
I've had some proper sh1t cars in my time and I won't be rude about Saab as I always wanted one and then when I could afford one they had stopped making them ffs.
My favourite exchange a few years back to a kid when parking up near the footie
Scrote "A quid to look after yer car mate"
Me "It's not worth a quid"
Scrote "There's loads of joy riders round here"
Me "What self respecting joy rider is going to knick that?"
Scrote "Fair comment" | |
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| Twtd investors on 10:23 - May 5 with 1241 views | textbackup |
On investments, currently considering a flat/apartment in Ipswich to rent out.
With tax etc is it worth it these days? If anyone else does this… |  |
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| Twtd investors on 10:31 - May 5 with 1201 views | Keno |
| Twtd investors on 10:09 - May 5 by blueasfook |
I have an old Saab headlight I can give him. |
Blueas euphemism of the day | |
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| Twtd investors on 10:33 - May 5 with 1184 views | bluelagos |
| Twtd investors on 10:31 - May 5 by Keno |
Blueas euphemism of the day |
Well done for shining a light on his post. | |
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| Twtd investors on 10:57 - May 5 with 1122 views | Keno |
| Twtd investors on 10:33 - May 5 by bluelagos |
Well done for shining a light on his post. |
I thought it was a bit flash | |
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| Twtd investors on 11:36 - May 5 with 1052 views | Guthrum |
| Twtd investors on 10:23 - May 5 by textbackup |
On investments, currently considering a flat/apartment in Ipswich to rent out.
With tax etc is it worth it these days? If anyone else does this… |
It's fine if everything goes ok. But there are a lot of things to think of which might not.
If you plan to use an agency, they may be rubbish - charging you fees while doing nothing to ensuring good upkeep, rent and bills paid, etc.
Bad tenants who don't stay very long (costing you time and money/agency fees to find new ones), who mess the place up, don't pay rent and bills. I'm continually shocked at how common this kind of behaviour is.
Maintenance - boilers/heating, white goods (if supplied), showers can be endlessly problematic, water leaks (both internal and from outside), doors and locks, electrics and so on.
Regulations - the new stuff coming in on energy efficiency and insulation.
Not trying to put you off, just warning of potential pitfalls based on my experience doing maintenance and decorating for rental landlords over many years.
I think the key is probably getting good and stable tenants who stay for years rather than months. But for that the place has to be in a good location and nice - with visible effort from the landlord to keep it that way, but not too much interference if people want to make it more of their home. |  |
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| Twtd investors on 11:46 - May 5 with 1012 views | J2BLUE |
| Twtd investors on 10:23 - May 5 by textbackup |
On investments, currently considering a flat/apartment in Ipswich to rent out.
With tax etc is it worth it these days? If anyone else does this… |
Have you looked at REITs? Decent ones pay 6-7% per year without messing about with having to manage the properties. Obviously they vary, some are good, some aren't but if you find one that specialises in property with a long term trend (healthcare for example, ageing population) which has a solid balance sheet they can be very good IMO.
Not financial advice, etc etc.
On a separate note, has anyone dabbled in income shares? https://incomeshares.com/en-eu
I have small amounts in 5-6 of different ones. Dividends are high but they obviously have negatives but anyone else taken a look? |  |
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| Twtd investors on 11:50 - May 5 with 989 views | hoppy |
| Twtd investors on 10:57 - May 5 by Keno |
I thought it was a bit flash |
There’d been no indication of something like that coming from you. | |
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| Twtd investors on 11:52 - May 5 with 974 views | J2BLUE |
| Twtd investors on 09:19 - May 5 by NeedhamChris |
Bluecoin will be along any minute... |
You will likely hold Bitcoin soon! | |
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| Twtd investors on 12:18 - May 5 with 900 views | Bluecoin |
| Twtd investors on 09:19 - May 5 by NeedhamChris |
Bluecoin will be along any minute... |
Sui. | | | |
| Twtd investors on 12:21 - May 5 with 880 views | J2BLUE |
| Twtd investors on 12:18 - May 5 by Bluecoin |
Sui. |
Some big players moving into Bitcoin. Looks like it's going mainstream. | |
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| Twtd investors on 12:23 - May 5 with 865 views | bluelagos |
| Twtd investors on 11:46 - May 5 by J2BLUE |
Have you looked at REITs? Decent ones pay 6-7% per year without messing about with having to manage the properties. Obviously they vary, some are good, some aren't but if you find one that specialises in property with a long term trend (healthcare for example, ageing population) which has a solid balance sheet they can be very good IMO.
Not financial advice, etc etc.
On a separate note, has anyone dabbled in income shares? https://incomeshares.com/en-eu
I have small amounts in 5-6 of different ones. Dividends are high but they obviously have negatives but anyone else taken a look? |
What do they offer that you can't get through either share ownership or through trading (IG index) if either of those is your thing?
One rule I always abide by is don't invest in anything I don't understand - and am struggling to see what they offer to me? They seem to be little more than a fund that takes investors money, buys some shares and then takes positions on those same shares?
If so it does seem quite high risk too compared to normal share ownership. | |
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| Twtd investors on 12:28 - May 5 with 839 views | J2BLUE |
| Twtd investors on 12:23 - May 5 by bluelagos |
What do they offer that you can't get through either share ownership or through trading (IG index) if either of those is your thing?
One rule I always abide by is don't invest in anything I don't understand - and am struggling to see what they offer to me? They seem to be little more than a fund that takes investors money, buys some shares and then takes positions on those same shares?
If so it does seem quite high risk too compared to normal share ownership. |
They use covered call options to generate income. They are risky but it's a very small part of my overall portfolio. Results vary but the best ones are returning very high dividends. Certainly not recommending them, just interested if anyone else has looked into them. I think they are relatively new to the UK market. You can't buy them until you can pass a test to prove you have enough knowledge of how they work.
Trading isn't something I have any knowledge of and probably wouldn't attempt. | |
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| Twtd investors on 12:38 - May 5 with 818 views | bluelagos |
| Twtd investors on 12:28 - May 5 by J2BLUE |
They use covered call options to generate income. They are risky but it's a very small part of my overall portfolio. Results vary but the best ones are returning very high dividends. Certainly not recommending them, just interested if anyone else has looked into them. I think they are relatively new to the UK market. You can't buy them until you can pass a test to prove you have enough knowledge of how they work.
Trading isn't something I have any knowledge of and probably wouldn't attempt. |
Yet you are happy to give them money to trade on your behalf?
Am playing devils advocate here and they are defo not for me. But we are all different and appreciate you will have a different attitude to risk/return etc.
But do be clear - call options are basically a gamble - you are giving them your money to place bets (and hopefully get a decent return) on whether a share goes up or down. Of course some funds like that will have decent returns - that's just the maths of it - some will be a success.
I am much more of a long term and steady investor - and it has worked for me but that's not to say other ways of playing the markets won't work too.
My honest thoughts would be to treat these funds like a trip to the bookies - do your research, only bet what you can afford to lose, and enjoy it. But don't be relying on it (which it sounds like your not) | |
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