Investment

[JohnD]

Bit of cheek having a cap isn't it? Not that I'll have that much.

Being able to take money out tax free, when it was untaxed going in, is a generous concession.

For most people, the cap is more than enough.

 

[motorbiking]

Calling it a generous concession, falls into political opinion. Others would argue, it encourages people to save for their future and be less of a burden on the next generation.

 

[Highway Man]

Being able to take money out tax free, when it was untaxed going in, is a generous concession.

For most people, the cap is more than enough.

Ahh I get it now.

 

[Highway Man]

Are you just in 40% tax band? I think from memory you are just in to this bracket. If you were on about £50k, and had say £25k saved in banks, the above scenario would benefit you.

	Before	After
Savings allowance	£500	£1,000
Tax on interest	£180	£0
Total income tax	£7,666	£7,486
Tax saved	–	£180
Pension gets	–	£1,000 gross
net cost	–	£620 (£800 paid minus £180 recovered)

here is the same scenario for someone earning about £50k

Yes just in the 40% tax bracket. I have a sideline that I do from my workshop and mainly charge cash for jobs as I didnt want it to get too complicated with tax,

 

[JohnD]

Yes just in the 40% tax bracket.

It's a wise move to put enough into your pension to move down a tax band, if it's close enough to be achievable.

 

[Justin Passing]

Looks like the hindsight supervinvestor should have left his money in those accounts that were giving him 40% growth p.a. That or waited to see which investments performed best and claimed them after the event.

To be fair, any active-ish investor is going to get a 40%pa return in at least some of their funds, sometime.
I've got some amounts which have doubled in a year, and more. Not enough, unfortunately.

The point about all these Bond discussions is about the core of your money, especially when you retire and are living off it, you need stability - a couple of percent above inflation, very secure, is ideal.

I had the cash in October, and bought the gilts in October.

A bit more thought would have made you hesitate....

I have a policy of not holding cash.

... to buy things predictably losing value. Holding cash doesn't mean doing nothing with it, sometimes fixed interest is best.

No cherry picking involved.

Pity.

I used to make regular monthly payments,

Yes, that's "dollar/Pound cost averaging" - which you said you didn't do

The regular payments had more time to grow, and reduced the risk of investing during a price spike.

If you're just going to invest blindfolded, then ok.
If you looked around to see , say which if the large sectors was in a dip, you would do better.

Things go up and down like water at the beach, you don't need to be psychic to predict the next wave.
This is one at random - Healthcare, a major sector

Are you going to invest the same every month, or more near one line than the other?
There's nearly 10% between them.
The clue is in the colour.
If your cash arrival, or your monthly payment, had occurred when the wiggle was above the red line, it would have been unwise to invest.
Obviously the lines would have been drawn at the time, so curved around a bit.

I see no virtue in the piety implied in the grand posturing.
It's not the 80's any more, these things are easy to see and manoeuvre around.

A little while ago I mentioned European Gas - $EGAS. It's up 28% this month, oil is only up 12%.
I don't have crystal balls, no need, it was a big wave. With stops under it!

 

[motorbiking]

Yes just in the 40% tax bracket. I have a sideline that I do from my workshop and mainly charge cash for jobs as I didnt want it to get too complicated with tax,

There are potentially two benefits. The first is lowering your income tax, the second is increasing your tax free savings allowance.

You need to spank that pension with every penny you have/can spare to keep yourself out of 40% tax.

 

[Justin Passing]

If I up my payments into my company pension which I am trying to do, when I finally retire can I take a lump sum or do I have to pay tax on it if I take it out?

Ask AI to "explain" and keep digging. GPT or Claude are pretty good. Check the meaning of "in drawdown".

When my wife retired she got a 6 figure "redundancy" payment
Choices were
1) pay a load of tax on it
2) put it in a pension, where it would get boosted, and grow free of tax.
Obviously we went for the latter. Its now some multiple of what the other option would have given, even if you take the tax off.
I haven't drawn it yet. It was supposed to pay a chunk out if she needed a care home....

 

[Odds]

I'm sure pete is following all this with rapt attention.

 

[Justin Passing]

I'm sure pete is following all this with rapt attention.

The details don't matter anywhere near as much as the basics. Too many people never read anything. It should be taught at school.

 

[SPLINE]

Serious question for the investment gurus: When you make a profit, where does that profit money come from?

I.e. when Justin, for instance, makes a casual £1,000 in between making a brew and haaving a sh*t, where has that £1,000 come from? Whose was it the day before?

 

[Highway Man]

Serious question for the investment gurus: When you make a profit, where does that profit money come from?

I.e. when Justin, for instance, makes a casual £1,000 in between making a brew and haaving a sh*t, where has that £1,000 come from? Whose was it the day before?

I wanted to ask this but dare not.

 

[Mottie]

Serious question for the investment gurus: When you make a profit, where does that profit money come from?

I.e. when Justin, for instance, makes a casual £1,000 in between making a brew and haaving a sh*t, where has that £1,000 come from? Whose was it the day before?

I wanted to ask this but dare not.

Someone’s gain is someone else’s loss. You just have to hope that you’re not providing the gain.

 

[Highway Man]

Someone’s gain is someone else’s loss.

That's what I was thinking.. I could be sat celebrating from my neighbours going bust.

 

[Mottie]

That's what I was thinking.. I could be sat celebrating from my neighbours going bust.

Every. Single. Investment. Opportunity. I’ve. Looked. At. Says the same type of thing.

"Profit is not guaranteed. You may get back less than you put in".

Why do you think they say that?

When I got my first mortgage in 1984, low-cost endowment mortgages were the thing. You paid in for 25 years and hopefully, at the end your endowment would pay off your mortgage with a chunk left over. All my mates had one. Every single one of them. Endowment mortgages were heavily pushed. When I asked if it was guaranteed, I was told no. When I asked if it could be guaranteed, I was told yes, but it would cost more than double. I took a repayment mortgage. Within 5 years, all my mates had swapped to repayment mortgages too. Do they still do endowment mortgages?