Investment

[motorbiking]

Yup. Open your isa account. Add your funds. Choose buy or put a limit order to try to catch the bounces. Accept you will be down a percentage or two in the first weeks. Then it should gradually rise.

It is tech and US heavy. That is the nature of the world trackers. Something like 80% of the biggest companies in the world are US.

You have to remember with pensions, you get stung at the other end, when you draw it down but you are investing tax free.

 

[Justin Passing]

Think I may get into that next April when I access an existing pension, take out 25% and give to the kids and then do something with the rest, not quite sure what or what all the ins and outs are of trying to reinvest the remainder elsewhere, perhaps I need to speak to a financial advisor

As far as I know it would be taxed, unless you move it to an annuity payer
If you still have headroom in a tax band at any point you can tinker with the amount to "just" use it up.

It's done particularly well since 2024, longer term it has been satisfactory, but not so exceptional.

I recently sold some because I was not comfortable with its five biggest holdings.

Opinions naturally differ.

I agree, That's why I'm using a Smart GARP - Growth At A Reasonable Price. It doesn't hold these either:

As often happens in extreme market conditions, most of the biggest negatives for relative returns were companies that the fund does not hold, such as Micron, SK Hynix, AMD and Intel.

It appears that in order to do stock markets, you really need to know your stuff and take action at the appropriate tmes, to me this is too much info required and seems very risky. I prefer to have less of a return in order to guarantee not to lose any money. My savings account pays me a % that makes money rather than losing it. It is easy for those who understand the stock market to trade but for me it would be disastrous. I will be looking at ISA's and Premium bonds though.

You could try a little bit - 100, 200 ?

I think that is me. chasing a quick buck would result in me being pennyless.

SO irrational!

Isn't this why most folk have a stockbroker?

Complete with bowler hat and stripy trousers? You can ask AI just about anything.

Every £250 you put into your pension turns into £312.50, just by the tax rebate. Nothing else does that.

DId you say they might match your payment as well?

If you hold it outside an ISA you have to track your holdings for ERI tax. If that is the case VWRL might be easier as you will have clear dividend payments. Again. Multiple streams of income can reduce your tax burden.

 

[JohnD]

Depending on your tax band, there are two other advantages to investing in a pension

1) you can take out 25% of the value tax free (up to a generous limit) even though the money you paid in was untaxed

2) if, as is very common, your income is lower after retirement than when you were working, you may be in a lower tax band. So you might have got a 40% rebate when you put it in, and pay only 20% tax on what you take out. This is a particular benefit to the higher-paid.

The overgenerous tax handouts to the rich have been, and continue to be, whittled down.

 

[JohnD]

DId you say they might match your payment as well?

HMRC doesn't

Some employers may, but there may be a limit

If you own the company, you can be very generous to yourself

 

[JohnD]

As far as I know it would be taxed, unless you move it to an annuity payer

I don't usually favour annuities.

If you have a drawdown pension, you can adjust your total taxable income to be, say, £12,569, or £50,269, if you are lucky enough to have a large enough pension, while the rest of your plan continues to grow tax-free.

You are not obliged to take an income when you take the tax free amount, nor to take it all at one time. So you might, for example, choose to take £20,000 a year tax free from the earliest possible date.

The wheeze of using a pension scheme to avoid inheritance tax has now been quashed. Quite right. The reason for the tax benefits on pension is to encourage people to save for their old age. It is no longer advantageous to die with a large pension plan.

 

[Dec27]

If you own the company, you can be very generous to yourself

Could you elaborate a little on the above please

 

[JohnD]

Employers are permitted to make payments to the pension schemes of their employees and directors.

Such payments are not subject to tax or NI.

 

[Dec27]

Employers are permitted to make payments to the pension schemes of their employees and directors.

Such payments are not subject to tax or NI.

How would I be generous to myself from my Ltd ? I’m a bit green with Ltd at the moment

 

[JohnD]

I no longer follow this topic, so may be out if date.

Occupational pension schemes often have (had?) different conditions for the common workers and for the higher management.

These are (were?) known in the trade as "top hat pensions."

Unsurprisingly, the people running the show are (were?) more generous to themselves with the company's money.

Schemes commonly allow the Pension Scheme Trustees to make ex-gratia payments, or increases, or early pensions at full rate, should they consider it appropriate.

Can you guess who are, or who appoints, the Trustees?

 

[JohnD]

How would I be generous to myself from my Ltd ? I’m a bit green with Ltd at the moment

You had better ask your accountant. It would be very unwise to do an amateur job, and be heavily penalised.

But, plucking figures out of the air, suppose you made an exceptional £10,000 profit one week.

You might pay it to yourself as wages, paying income tax, employee's NI and employer's NI, and what was left would end up in your pocket. Or the directors of the company might decide to make a one-off contribution of £10,000 into the pension scheme of each employee.

More commonly, they might make a pension contribution of £x per month, or x% of gross wages.

 

[motorbiking]

How would I be generous to myself from my Ltd ? I’m a bit green with Ltd at the moment

Any of the AIs will explain it.
Pay yourself your tax free allowance, the rest is dividends and corporation tax. On a £50k “salary” you’ll save about 4-5k in tax.

You’ve also got the ability to sell yourself used assets at reasonable prices. E.g. second hand company cars.

 

[motorbiking]

Even if your employer doesn’t offer a great pension, you have the option of a SIPP where HMRC automatically top you up the 20% and if you are a 40% tax payer you can claim the extra yourself.

 

[Dec27]

I appreciate the advice chaps.

The Ltd is new and the money can all be reinvested for my late 50’s/early 60’s

One question, if I pay myself 10k for my pension, that’s off the bottom line and I save on corporation tax ?

@motorbiking I took your advise with a Sipp. Wish I’d have known sooner. I know how to make money, I’ve just been lazy with it.

 

[Justin Passing]

Rather than just taking what the market gives you, if and when any of y'all see the light about the SM, consider what's called "dollar cost averaging".
You can d a search on it. Investopedia is great on all things investing, their effort on it is here: (click the box)

[[Nb it talks about ETFs (Exchange Traded funds which are just collections of shares,). Forget that if you're only going to use one "instrument" like VWRL, which is like the ultimate ETF - it's all of them]]

As MBK said, it's wise to leave an order, called a Limit Order, whenever you buy anything, to attempt to BUY THE DIPS.
If you buy at the top of a spike it might take a month to rise clear of it.

THIS is an UPTREND, okay. Like the whole SM, it goes up over time.
If you buy anywhere, you get filthy rich eventually.
I know because I put the maths in to make the wiggly line.
Whether I'm rich as well as filthy - it's all relative.
If you look only at recent prices, you can see small dips, and then bigger ones, as you buy at Red, Green, Blue. But you can be going downhill in the short run.
Keep the faith.
Eventually you might have a little prayer and say soddit and buy at black and walk away and come back in 10 screens time and you're well up.
From the other side of the room in hindsight, that's obvious. But when you're just looking at today's price, you can't tell.
TRY to work it out by looking backwards, maybe over a month or a year.
With a bit of luck you'll see a bit of a LEVEL it comes up from, or something of a CHANNEL it's moving in. That's why traders draw lines all over their charts. You draw between the highest highs, then the lowest lows, to see that channel.


It can be frustrating as hell.
Dollar cost Averaging says to buy once a week/month or whatever. But you will do a bit better if you wait for a "local" dip, bottom of the channel, etc.

It's worth SOME patience.

Is that clear??

 

[Justin Passing]

if I pay myself 10k for my pension, that’s off the bottom line and I save on corporation tax ?

Yes. Allowable business expense.

Wanting Profit??? How strange!