| Twtd investors 08:58 - May 5 with 2230 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 12:47 - May 5 with 486 views | J2BLUE |
| Twtd investors on 12:38 - May 5 by bluelagos |
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) |
Completely agree. Happy to let them do it. Overall it's about 1% of my portfolio in these and 3% in other similar ones. I use the dividends to buy other things so each month that percentage goes down as well. |  |
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| Twtd investors on 15:02 - May 5 with 403 views | textbackup |
| 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? |
Ta, will have a look |  |
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| Twtd investors on 15:04 - May 5 with 406 views | textbackup |
| Twtd investors on 11:36 - May 5 by Guthrum |
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. |
Many of those things I hadn’t considered! So thanks for the advice.
Whilst I really like the idea of it, I think the market is be looking at is a single person working in the town, so this could be a church of people. And as you say more hard work than if a long term couple/family etc. | |
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| Twtd investors on 15:20 - May 5 with 395 views | PrideOfTheEast |
| Twtd investors on 15:04 - May 5 by textbackup |
Many of those things I hadn’t considered! So thanks for the advice.
Whilst I really like the idea of it, I think the market is be looking at is a single person working in the town, so this could be a church of people. And as you say more hard work than if a long term couple/family etc. |
It’s a hassle mate and far harder to make £ out of nowadays. Taxed on the income, restrictions on deducting costs against that income for tax, and lots of protection afforded to tenants, for good reason of course, but can be a nuisance if something goes wrong/you want to get out.
There are many other ways to generate income with less risk in my view, some of which are tax free - eg isas for which you and your partner could each invest £20k each per year and generate tax free income. |  | | |
| Twtd investors on 15:24 - May 5 with 377 views | ronnyd |
| Twtd investors on 10:57 - May 5 by Keno |
I thought it was a bit flash |
I see you've dipped in there. | | | |
| Twtd investors on 16:40 - May 5 with 341 views | mellowblue |
| Twtd investors on 10:06 - May 5 by 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. |
re the annuity. It is possible to arrange a joint annuity with spouse to provide whoever doesn't die first with financial protection. Downside is that the annuity rate you receive is lower which is understandable as you are doubling up the chance of someone living to a ripe old age. | | | |
| Twtd investors on 18:06 - May 5 with 294 views | textbackup |
| Twtd investors on 15:20 - May 5 by PrideOfTheEast |
It’s a hassle mate and far harder to make £ out of nowadays. Taxed on the income, restrictions on deducting costs against that income for tax, and lots of protection afforded to tenants, for good reason of course, but can be a nuisance if something goes wrong/you want to get out.
There are many other ways to generate income with less risk in my view, some of which are tax free - eg isas for which you and your partner could each invest £20k each per year and generate tax free income. |
Yeah it certainly seems like a ship that’s sailed.
I know the sensible thing would be for me to use any disposable income and make mortgage over payments… but that just sounds so dull… even though it’s by far the best thing to do! | |
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| Twtd investors on 18:17 - May 5 with 280 views | Swansea_Blue |
| Twtd investors on 15:20 - May 5 by PrideOfTheEast |
It’s a hassle mate and far harder to make £ out of nowadays. Taxed on the income, restrictions on deducting costs against that income for tax, and lots of protection afforded to tenants, for good reason of course, but can be a nuisance if something goes wrong/you want to get out.
There are many other ways to generate income with less risk in my view, some of which are tax free - eg isas for which you and your partner could each invest £20k each per year and generate tax free income. |
Although get in quick on cash ISA’s, as Reeves is likely to drop the annual limit to £4 or 5k. I realise you’re talking about investment ISAs but thought Imd mention it as ISAs popped up. I wonder if they may even increase the limit for investment ISAs given they want to push more people to use them.
I’ve got zero interest in money, none whatsoever and know I wouldn’t keep on top of any investments if I was to do them myself. So I have a managed bond arranged through an IFA. It cost a bit to set up but the ongoing charges aren’t to bad and was running at about 6% pa before Trump arrived (I’ve not dared look since - I’ll play the long game!). |  |
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| Twtd investors on 18:29 - May 5 with 262 views | PrideOfTheEast |
| Twtd investors on 18:06 - May 5 by textbackup |
Yeah it certainly seems like a ship that’s sailed.
I know the sensible thing would be for me to use any disposable income and make mortgage over payments… but that just sounds so dull… even though it’s by far the best thing to do! |
Generally only if your interest rate is high. If you’ve got a decent fixed rate then it’s often better to invest the £ but very subjective and obviously interest rates have gone up on most of our mortgages over the last couple of years. | | | |
| Twtd investors on 18:37 - May 5 with 246 views | Swansea_Blue |
| Twtd investors on 18:06 - May 5 by textbackup |
Yeah it certainly seems like a ship that’s sailed.
I know the sensible thing would be for me to use any disposable income and make mortgage over payments… but that just sounds so dull… even though it’s by far the best thing to do! |
I’d certainly do mortgage first, but that isn’t advice! Given that any overpayments takes off the capital and not the interest, it seems like a no brainer to me. An overpayment of equivalent to one year will take far more than one year off your term.
As the previous poster said though, if you’re locked in to a very low rate you’ll likely get better terms investing. I was on 1.9% for example, so wasn’t fussed too much about overpaying. That changed when my renewal came in at over 5% (thanks Liz!). | |
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| Twtd investors on 19:01 - May 5 with 215 views | J2BLUE |
| Twtd investors on 18:06 - May 5 by textbackup |
Yeah it certainly seems like a ship that’s sailed.
I know the sensible thing would be for me to use any disposable income and make mortgage over payments… but that just sounds so dull… even though it’s by far the best thing to do! |
Depends on your mortgage rate. If you can get a higher rate in an ISA or savings account that would be better. Then you can pay a chunk off at the end of your current deal. | |
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| Twtd investors on 19:27 - May 5 with 169 views | OldFart71 |
It can be lucrative buying individual shares in Companies through a broker, but as they say shares can go down as well as up. I for instance believe CCL shares (Carnival Corporation ) still have a way to go.
They are currently around £13 per share, but during covid went down to around £6. Before covid they were £40 per share. But they are around 27 billion in debt and have to finance that debt although they are filling their ships, have cut out a lot of things that they used to do and are charging for everything they can. Amongst their cruise lines are P&O, Cunard, Princess, Carnival and Holland America. Also if you hold 100 of their shares you can get up to £150 onboard credit. This depends on the length of a cruise. THIS ISN'T ADVICE OR A TIP. | | | |
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