[deeege]

Finance talk is interesting. I’m not big on it, but I think it’s wise to have savings.

So for those who think it’s pointless…….Stocks and shares ISA.

This is something I’ve only just started understanding, and is very good for savings as long as you know what your doing, and it’s also tax free!

I’ve never been big on pension schemes, the fact that they could collapse, or the fact that actually a company is just taking your money and using it to make money and then give you a fraction of that back. Plus you get taxed when you pay into the pension, then taxed again on the way out.

I’ve currently gained 20% over the last year, which I know will not continue, but based on historic average It should yield about 10% growth. Even through economic crashes the stock market has bounced back, and it’s how all the pension schemes make their billions anyway.

Here’s an example of “compound interest” for an average working man based on the figures of 10%.

Start at age 20 putting away £250 a month each and every month, a very affordable amount.

By age 50 you would have contributed £90,000 total into the tax free ISA account, the total value of the account? ……. Over £500,000.

That would mean each year at 50 year old you could take out £50,000 to live on,  pay zero tax on it, and the £500,000 stays there, never reducing because of the compound interest.

Why on earth is basic finance not taught at schools??? Instead we get to learn x over y in algebra or what the capital of Thailand is. 

To be fair though, finances can all disappear in the blink of an eye anyway, and health is wealth, but it is an interesting subject.

Excellent post Jonny. Investing through a S&S ISA is my preferred method also. I know you don’t get the tax relief when paying in, but it’s all tax free on the way out and more importantly for me, I can control the investments within the ISA and it’s not locked away until later in life like a pension is.

It’s obviously not risk free, but investing in pre packaged funds or even better on full index trackers much lessens the risks.

Saving money into a bank account these days with interest at 0.10% and inflation up near 5% means your money will be effectively worth a lot less year on year.

Good points on the compound interest too, as you say it’s criminal that this isn’t taught in schools. I linked the compound interest calculator above and the power of compounding is really unbelievable.

[Jonny 87]

Finance talk is interesting. I’m not big on it, but I think it’s wise to have savings.

So for those who think it’s pointless…….Stocks and shares ISA.

This is something I’ve only just started understanding, and is very good for savings as long as you know what your doing, and it’s also tax free!

I’ve never been big on pension schemes, the fact that they could collapse, or the fact that actually a company is just taking your money and using it to make money and then give you a fraction of that back. Plus you get taxed when you pay into the pension, then taxed again on the way out.

I’ve currently gained 20% over the last year, which I know will not continue, but based on historic average It should yield about 10% growth. Even through economic crashes the stock market has bounced back, and it’s how all the pension schemes make their billions anyway.

Here’s an example of “compound interest” for an average working man based on the figures of 10%.

Start at age 20 putting away £250 a month each and every month, a very affordable amount.

By age 50 you would have contributed £90,000 total into the tax free ISA account, the total value of the account? ……. Over £500,000.

That would mean each year at 50 year old you could take out £50,000 to live on,  pay zero tax on it, and the £500,000 stays there, never reducing because of the compound interest.

Why on earth is basic finance not taught at schools??? Instead we get to learn x over y in algebra or what the capital of Thailand is. 

To be fair though, finances can all disappear in the blink of an eye anyway, and health is wealth, but it is an interesting subject.

Excellent post Jonny. Investing through a S&S ISA is my preferred method also. I know you don’t get the tax relief when paying in, but it’s all tax free on the way out and more importantly for me, I can control the investments within the ISA and it’s not locked away until later in life like a pension is.

It’s obviously not risk free, but investing in pre packaged funds or even better on full index trackers much lessens the risks.

Saving money into a bank account these days with interest at 0.10% and inflation up near 5% means your money will be effectively worth a lot less year on year.

Good points on the compound interest too, as you say it’s criminal that this isn’t taught in schools. I linked the compound interest calculator above and the power of compounding is really unbelievable.

Great points Deege. Good to know I haven’t missed something Obvious too.
I’ve only just started, But doing similar, index funds etc. it’s just like a savings account but with much better interest.

That’s a good point about it not being tax free on the way in, but like you say the benefits definitely outweigh the negatives. 

I really don’t know why this isn’t taught? I’m not a conspiracy theorist, but it really does make you think it’s like the top dogs wanting to keep the little guys down. Mayb it’s just my pessimism coming out as I get older. 

[DJW]

High risk = high returns …….. if nothing goes wrong. 

You two sound just like my pension and mortgage advisors did forty years ago. Unfortunately both twats got it wrong.
My endowment policy was going to make me rich and my company pension was going to be incredible.
Endowments turned out to be useless and my company pension got put into a pension protection fund as it failed when the company went bust.
Property however has steadily increased in value.

[Jonny 87]

High risk = high returns …….. if nothing goes wrong. 

You two sound just like my pension and mortgage advisors did forty years ago. Unfortunately both twats got it wrong.
My endowment policy was going to make me rich and my company pension was going to be incredible.
Endowments turned out to be useless and my company pension got put into a pension protection fund as it failed when the company went bust.
Property however has steadily increased in value.

 

It may sound that way, but from
The research I’ve done the stocks and shares isa is one of the safest ways to save money.

 The difference with your situation is that you didn’t have control of your money. If anything starts going wrong in a stocks and shares isa you just pull the money out, your in complete control, rather than a pension fund or manager that really does go high risk. They want to make 20% plus percent per year, so they make money off your money and still can give you what’s promised. If you cut out the middle man it’s much safer.

Your right about property though. It just comes with its own headaches as does everything I suppose.

I’m no financial advisor though thats for sure. Don’t take my word for it. 

[Splash & dash]

Finance talk is interesting. I’m not big on it, but I think it’s wise to have savings.

So for those who think it’s pointless…….Stocks and shares ISA.

This is something I’ve only just started understanding, and is very good for savings as long as you know what your doing, and it’s also tax free!

I’ve never been big on pension schemes, the fact that they could collapse, or the fact that actually a company is just taking your money and using it to make money and then give you a fraction of that back. Plus you get taxed when you pay into the pension, then taxed again on the way out.

I’ve currently gained 20% over the last year, which I know will not continue, but based on historic average It should yield about 10% growth. Even through economic crashes the stock market has bounced back, and it’s how all the pension schemes make their billions anyway.

Here’s an example of “compound interest” for an average working man based on the figures of 10%.

Start at age 20 putting away £250 a month each and every month, a very affordable amount.

By age 50 you would have contributed £90,000 total into the tax free ISA account, the total value of the account? ……. Over £500,000.

That would mean each year at 50 year old you could take out £50,000 to live on,  pay zero tax on it, and the £500,000 stays there, never reducing because of the compound interest.

Why on earth is basic finance not taught at schools??? Instead we get to learn x over y in algebra or what the capital of Thailand is. 

To be fair though, finances can all disappear in the blink of an eye anyway, and health is wealth, but it is an interesting subject.

Without being controversial how do you come up with those figures How do you get 20% growth the interest rate on an isa is no ware near that , the interest rate on £0-1,00000 is 0:02 % interest not 20%  according to most banks .

[deeege]

Finance talk is interesting. I’m not big on it, but I think it’s wise to have savings.

So for those who think it’s pointless…….Stocks and shares ISA.

This is something I’ve only just started understanding, and is very good for savings as long as you know what your doing, and it’s also tax free!

I’ve never been big on pension schemes, the fact that they could collapse, or the fact that actually a company is just taking your money and using it to make money and then give you a fraction of that back. Plus you get taxed when you pay into the pension, then taxed again on the way out.

I’ve currently gained 20% over the last year, which I know will not continue, but based on historic average It should yield about 10% growth. Even through economic crashes the stock market has bounced back, and it’s how all the pension schemes make their billions anyway.

Here’s an example of “compound interest” for an average working man based on the figures of 10%.

Start at age 20 putting away £250 a month each and every month, a very affordable amount.

By age 50 you would have contributed £90,000 total into the tax free ISA account, the total value of the account? ……. Over £500,000.

That would mean each year at 50 year old you could take out £50,000 to live on,  pay zero tax on it, and the £500,000 stays there, never reducing because of the compound interest.

Why on earth is basic finance not taught at schools??? Instead we get to learn x over y in algebra or what the capital of Thailand is. 

To be fair though, finances can all disappear in the blink of an eye anyway, and health is wealth, but it is an interesting subject.

Without being controversial how do you come up with those figures How do you get 20% growth the interest rate on an isa is no ware near that , the interest rate on £0-1,00000 is 0:02 % interest not 20%  according to most banks .

Stocks and Shares ISA and cash ISA’s are very different from one another. 

https://www.wealthify.com/blog/cash-isa-and-stocks-shares-isa-what-s-the-difference

[Jonny 87]

Finance talk is interesting. I’m not big on it, but I think it’s wise to have savings.

So for those who think it’s pointless…….Stocks and shares ISA.

This is something I’ve only just started understanding, and is very good for savings as long as you know what your doing, and it’s also tax free!

I’ve never been big on pension schemes, the fact that they could collapse, or the fact that actually a company is just taking your money and using it to make money and then give you a fraction of that back. Plus you get taxed when you pay into the pension, then taxed again on the way out.

I’ve currently gained 20% over the last year, which I know will not continue, but based on historic average It should yield about 10% growth. Even through economic crashes the stock market has bounced back, and it’s how all the pension schemes make their billions anyway.

Here’s an example of “compound interest” for an average working man based on the figures of 10%.

Start at age 20 putting away £250 a month each and every month, a very affordable amount.

By age 50 you would have contributed £90,000 total into the tax free ISA account, the total value of the account? ……. Over £500,000.

That would mean each year at 50 year old you could take out £50,000 to live on,  pay zero tax on it, and the £500,000 stays there, never reducing because of the compound interest.

Why on earth is basic finance not taught at schools??? Instead we get to learn x over y in algebra or what the capital of Thailand is. 

To be fair though, finances can all disappear in the blink of an eye anyway, and health is wealth, but it is an interesting subject.

Without being controversial how do you come up with those figures How do you get 20% growth the interest rate on an isa is no ware near that , the interest rate on £0-1,00000 is 0:02 % interest not 20%  according to most banks .

As the link that Deeege put, It’s investing in the stock market, which always sounded off limits to me, until you realise that it is much safer than you’d at first think.

You get ISA accounts, which have tiny Interest rates, then you have stocks and shares isa which allow you to invest in the stock market but in a tax free isa “wrapper”. You can “only” deposit £20k a year, but any growth from the stocks themselves is tax free and doesn’t effect the 20k limit.

[NWH]

You are gambling with stocks and shares RBS shares went from 24-25£ a share to literally pennies 70-80k worth of shares all of a sudden become worth about £450,yeah they seem a good bet.
You need loads of money to play with to make serious money I was discussing this with a customer that’s in that business,the only reason the first example made 20 odd a share was because it was invested over 30 years and the lot was lost.
Stocks and shares are a gamble and if you want to make money quickly it takes a lot of investment and it’s a gamble.

[Jonny 87]

You are gambling with stocks and shares RBS shares went from 24-25£ a share to literally pennies 70-80k worth of shares all of a sudden become worth about £450,yeah they seem a good bet.
You need loads of money to play with to make serious money I was discussing this with a customer that’s in that business,the only reason the first example made 20 odd a share was because it was invested over 30 years and the lot was lost.
Stocks and shares are a gamble and if you want to make money quickly it takes a lot of investment and it’s a gamble.

Sorry but that’s not true NWH.

If you put all your eggs in one basket then yes, it has risk,  but that’s why you have to do your research.  If people go into it with the “get rich quick idea” then that is risky, and that’s what I would describe as gambling, or “day trading” is another term.

In reality they’re are funds available through companies like vanguard who offer things called “index” funds which track the stock market as a whole, which for example the S&P 500 has consistently yielded 10% yearly growth even factoring in stock market crashes.

The idea is, view it as any other ISA, set it up correctly, then leave it in there, making regular contributions just like any other savings. It’s exactly what many of these big pension funds do with money they are given. They just take most of the profit, and give back what they have committed to give back for the pension.

If you put all your life’s saving into RBS then a stocks and shares ISA definitely isnt for you.   

[NWH]

No I didn’t do that.

[Smudger]

Same ole Nigel -  I saw, I heard, I was chatting to the worlds expert.....  yawn....


Personally I found bit coin quite a good investment - the wife brought £300 just over a year ago - now at £3k ( it does go up/down - but mostly up )

Darran

[Jonny 87]

Same ole Nigel -  I saw, I heard, I was chatting to the worlds expert.....  yawn....


Personally I found bit coin quite a good investment - the wife brought £300 just over a year ago - now at £3k ( it does go up/down - but mostly up )

Darran

Did you hear the story of the guy who had a few pounds worth bitcoin on a hard drive years and years ago and it got binned and put in a landfill.

It’s now worth over £200,000,000 or Mayb more, and he’s desperately trying to get help recovering it. 😱

Hang onto that £3,000s worth. You just never know.

[KS Cleaning]

High risk = high returns …….. if nothing goes wrong. 

You two sound just like my pension and mortgage advisors did forty years ago. Unfortunately both twats got it wrong.
My endowment policy was going to make me rich and my company pension was going to be incredible.
Endowments turned out to be useless and my company pension got put into a pension protection fund as it failed when the company went bust.
Property however has steadily increased in value.

The advice you were given was when interest rates were high, mortgage interest rates went as high as 14% in the early nineties. This was when an interest only mortgage was the way to go, you would only pay the interest part of the mortgage, you would then take out an endowment policy to run alongside your mortgage. These policies were sold with the promise that when the endowment matured it would accumulate enough money to pay off the mortgage and give you a nice lump sum on top of it. The slump in interest rates put an end to all that.

[Smudger]

I did 

its the wife's, I have NO CHANCE of getting my mitts on it 

Darran

[Jonny 87]

I did 

its the wife's, I have NO CHANCE of getting my mitts on it 

Darran

 

Hopefully she will let you live in the garage of your 10 bedroom mansion in a few years. 

[Splash & dash]

Same ole Nigel -  I saw, I heard, I was chatting to the worlds expert.....  yawn....


Personally I found bit coin quite a good investment - the wife brought £300 just over a year ago - now at £3k ( it does go up/down - but mostly up )

Darran

Lol if it’s worth that I would sell it quick 😂😂😂😂😂

[DJW]

I may have missed it but what are your pension plans NWH?

[dd]

Is your pension pot guaranteed?

You could be paying into a pot like those employees of BHS did. I'm sure there are numerous other Philip Greens about.

In addition to an ISA I pay into a personal pension, which I converted into a SIPP 6 years ago where I control what it is invested in. You cannot compare it to a company pension scheme. The only person able to put money in or take it out is me.

[deeege]

I may have missed it but what are your pension plans NWH?

Rich wife blah blah was chatting to a customer blah blah blah pensions are a rip off blah blah blah stocks and share gamble blah blah…….

[dd]

For those who take the DIY investment route, I personally find it better to invest in Investemnt Trusts and ETFs as opposed to OEICs (unit trusts). The charges tend to be lower and returns higher.

This probably does not mean much to most people.