Savings and Investments thread

redman said:

golfaddick said:

Only reason to go into cash nearing retirement is if you are contemplating buying an annuity. If not then best to stay fully invested. Maybe de-risk a bit if you are looking to take max TFC but if you are going into drawdown then you could be in the market for another 30+ years.

Excellent. Something I 100% agree with but have not actually heard many IFA's actually say. The Lifestyle plans, which were certainly around up until a few years ago transferred all equity to cash over the last 5 years of your working life. I never understood the logic, unless annuity was the likely option.

While talking of annuities, these have been out of fashion, but an IFA interestingly told me he thought these are likely to become more common place again. An example maybe after I have passed, this could be a good option for my wife if she is still in good health. Each year she would then have "excess income" which she could gift and this would be IHT free. 

Annuities are certainly back on the table since Liz Truss's terrible stint at being PM.  Best annuity rates for over 20 years, although be careful because any remaining monies left on a guaranteed policy after death will count towards your Estate like a DC pension pot once the new IHT rules come into force in 2027. 

PragueAddick said:

Diebythesword said:

Us inflation figures came out lower than expected. All but guaranteed rate cuts next week. Markets look like they’re going to open at ATH. 

In the case of the S&P 500 that would hardly be difficult since it closed at pretty much an ATH yesterday.

S&P up 1% and NASDAQ up 1.3%

golfaddick said:

Rob7Lee said:

redman said:

golfaddick said:

Only reason to go into cash nearing retirement is if you are contemplating buying an annuity. If not then best to stay fully invested. Maybe de-risk a bit if you are looking to take max TFC but if you are going into drawdown then you could be in the market for another 30+ years.

Excellent. Something I 100% agree with but have not actually heard many IFA's actually say. The Lifestyle plans, which were certainly around up until a few years ago transferred all equity to cash over the last 5 years of your working life. I never understood the logic, unless annuity was the likely option.

While talking of annuities, these have been out of fashion, but an IFA interestingly told me he thought these are likely to become more common place again. An example maybe after I have passed, this could be a good option for my wife if she is still in good health. Each year she would then have "excess income" which she could gift and this would be IHT free. 

Annuity rates are still quite poor in my view. Under £5,500 for joint life with 3% per £100k. Even without the 3% it's only around £7,500. Of course it's all guess work as to how long we'll all live!

Don't buy a joint life one then, look at a 10 year guarantee instead. And I wouldn't bother indexing it either. As you get older (75+) you don't do as much as you did at 65 and so your yearly expenditure is not so great.

Dont forget your State Pension is indexed so you'll have a proportion of your income already iinflation linked.

And if you have more than adequate savings then one off expenditure like holidays or new cars can come out of that. Keep your pension for day-day living. 

OK, so out of interest I did some quotes, aged myself slightly, so this is based on drawing at 60 now and using £1m from my pot with 50% spouse and guaranteed period of 10 years.

No index linking £68k a year
With RPI £45k a year.

So not as bad as I thought, but still not worthwhile in my view to any large degree, but may be worth considering buying a smaller annuity with a proportion of a fund, maybe my current works pension (which I guess will be around £350k in 4 years time) to take up the 20% band if we remain in the UK. Interestingly removing the guarantee period (10 years) makes very little difference, less than £1500 a year (with no indexing).

With my wife's family all generally living to a ridiculous age (all her grandparents lived to either near 100 or over), it may be worth her considering an annuity from her SIPP at 60, although one of her final salary pensions starts at 60 (the other 67, along with state) so she'll have that constant income (which will be more than she earns now!) especially as she'll in all probability outlive me.

At my place of work redundancies are looming again (somehow getting away with saying they are voluntary when they are anything but, thats another story) and the number of blokes who are 1) pretty chill about the whole thing as they have paid their mortgage off and don't NEED to work so will take the pay off and get what they think will be an easy job (no such thing now, the old boys in B&Q don't look as happy and relaxed as they did a decade ago) or just won't work. Then 2) the ones who have been there for ages and are frankly terrified sometimes because they have paid no attention to finances, some because of the fear of change, which is totally legitimate, some because they have to stay for X amount of months or leave for nothing which makes finding another job a fucking nightmare "yeah I want to work for you but can't start until 18 months time" 

My point was, I've heard a lot made of the number of people working age who just arent working and these guys in their 50s who essentially become unemployed but can afford to live without full-time skilled work must form a fair chunk of it. 

I'm also incredibly envious of them, especially the ones who are thick as shit but bought property at a good time, have not done anything major financially apart from come to work and not spunk all their money. To be fair, even the thick ones have worked for whatever situation they find themselves in now 

Rob7Lee said:

golfaddick said:

Rob7Lee said:

redman said:

golfaddick said:

Only reason to go into cash nearing retirement is if you are contemplating buying an annuity. If not then best to stay fully invested. Maybe de-risk a bit if you are looking to take max TFC but if you are going into drawdown then you could be in the market for another 30+ years.

Excellent. Something I 100% agree with but have not actually heard many IFA's actually say. The Lifestyle plans, which were certainly around up until a few years ago transferred all equity to cash over the last 5 years of your working life. I never understood the logic, unless annuity was the likely option.

While talking of annuities, these have been out of fashion, but an IFA interestingly told me he thought these are likely to become more common place again. An example maybe after I have passed, this could be a good option for my wife if she is still in good health. Each year she would then have "excess income" which she could gift and this would be IHT free. 

Annuity rates are still quite poor in my view. Under £5,500 for joint life with 3% per £100k. Even without the 3% it's only around £7,500. Of course it's all guess work as to how long we'll all live!

Don't buy a joint life one then, look at a 10 year guarantee instead. And I wouldn't bother indexing it either. As you get older (75+) you don't do as much as you did at 65 and so your yearly expenditure is not so great.

Dont forget your State Pension is indexed so you'll have a proportion of your income already iinflation linked.

And if you have more than adequate savings then one off expenditure like holidays or new cars can come out of that. Keep your pension for day-day living. 

OK, so out of interest I did some quotes, aged myself slightly, so this is based on drawing at 60 now and using £1m from my pot with 50% spouse and guaranteed period of 10 years.

No index linking £68k a year
With RPI £45k a year.

So not as bad as I thought, but still not worthwhile in my view to any large degree, but may be worth considering buying a smaller annuity with a proportion of a fund, maybe my current works pension (which I guess will be around £350k in 4 years time) to take up the 20% band if we remain in the UK. Interestingly removing the guarantee period (10 years) makes very little difference, less than £1500 a year (with no indexing).

With my wife's family all generally living to a ridiculous age (all her grandparents lived to either near 100 or over), it may be worth her considering an annuity from her SIPP at 60, although one of her final salary pensions starts at 60 (the other 67, along with state) so she'll have that constant income (which will be more than she earns now!) especially as she'll in all probability outlive me.

how does this annuity at £45k per annum (is that taxable?) compare to mapping out a drawdown of the £1m from age 60 ?

Rob7Lee said:

paulsturgess said:

Rob7Lee said:

golfaddick said:

Rob7Lee said:

redman said:

golfaddick said:

Only reason to go into cash nearing retirement is if you are contemplating buying an annuity. If not then best to stay fully invested. Maybe de-risk a bit if you are looking to take max TFC but if you are going into drawdown then you could be in the market for another 30+ years.

Excellent. Something I 100% agree with but have not actually heard many IFA's actually say. The Lifestyle plans, which were certainly around up until a few years ago transferred all equity to cash over the last 5 years of your working life. I never understood the logic, unless annuity was the likely option.

While talking of annuities, these have been out of fashion, but an IFA interestingly told me he thought these are likely to become more common place again. An example maybe after I have passed, this could be a good option for my wife if she is still in good health. Each year she would then have "excess income" which she could gift and this would be IHT free. 

Annuity rates are still quite poor in my view. Under £5,500 for joint life with 3% per £100k. Even without the 3% it's only around £7,500. Of course it's all guess work as to how long we'll all live!

Don't buy a joint life one then, look at a 10 year guarantee instead. And I wouldn't bother indexing it either. As you get older (75+) you don't do as much as you did at 65 and so your yearly expenditure is not so great.

Dont forget your State Pension is indexed so you'll have a proportion of your income already iinflation linked.

And if you have more than adequate savings then one off expenditure like holidays or new cars can come out of that. Keep your pension for day-day living. 

OK, so out of interest I did some quotes, aged myself slightly, so this is based on drawing at 60 now and using £1m from my pot with 50% spouse and guaranteed period of 10 years.

No index linking £68k a year
With RPI £45k a year.

So not as bad as I thought, but still not worthwhile in my view to any large degree, but may be worth considering buying a smaller annuity with a proportion of a fund, maybe my current works pension (which I guess will be around £350k in 4 years time) to take up the 20% band if we remain in the UK. Interestingly removing the guarantee period (10 years) makes very little difference, less than £1500 a year (with no indexing).

With my wife's family all generally living to a ridiculous age (all her grandparents lived to either near 100 or over), it may be worth her considering an annuity from her SIPP at 60, although one of her final salary pensions starts at 60 (the other 67, along with state) so she'll have that constant income (which will be more than she earns now!) especially as she'll in all probability outlive me.

how does this annuity at £45k per annum (is that taxable?) compare to mapping out a drawdown of the £1m from age 60 ?

the £45k would be income, so yes some tax to pay, or on all once you have state pension.

Difficult one to do as depends when you die and if you die before or after spouse etc.

But compared to drawdown, if you assume that the fund would grow by RPI so the net effect is zero on drawings, then it's about 22 years (£1m / 45k). As always with things like this, it really depends on how long you live!

I want the last cheque I write to bounce ....

Rob7Lee said:

paulsturgess said:

Rob7Lee said:

golfaddick said:

Rob7Lee said:

redman said:

golfaddick said:

Only reason to go into cash nearing retirement is if you are contemplating buying an annuity. If not then best to stay fully invested. Maybe de-risk a bit if you are looking to take max TFC but if you are going into drawdown then you could be in the market for another 30+ years.

Excellent. Something I 100% agree with but have not actually heard many IFA's actually say. The Lifestyle plans, which were certainly around up until a few years ago transferred all equity to cash over the last 5 years of your working life. I never understood the logic, unless annuity was the likely option.

While talking of annuities, these have been out of fashion, but an IFA interestingly told me he thought these are likely to become more common place again. An example maybe after I have passed, this could be a good option for my wife if she is still in good health. Each year she would then have "excess income" which she could gift and this would be IHT free. 

Annuity rates are still quite poor in my view. Under £5,500 for joint life with 3% per £100k. Even without the 3% it's only around £7,500. Of course it's all guess work as to how long we'll all live!

Don't buy a joint life one then, look at a 10 year guarantee instead. And I wouldn't bother indexing it either. As you get older (75+) you don't do as much as you did at 65 and so your yearly expenditure is not so great.

Dont forget your State Pension is indexed so you'll have a proportion of your income already iinflation linked.

And if you have more than adequate savings then one off expenditure like holidays or new cars can come out of that. Keep your pension for day-day living. 

OK, so out of interest I did some quotes, aged myself slightly, so this is based on drawing at 60 now and using £1m from my pot with 50% spouse and guaranteed period of 10 years.

No index linking £68k a year
With RPI £45k a year.

So not as bad as I thought, but still not worthwhile in my view to any large degree, but may be worth considering buying a smaller annuity with a proportion of a fund, maybe my current works pension (which I guess will be around £350k in 4 years time) to take up the 20% band if we remain in the UK. Interestingly removing the guarantee period (10 years) makes very little difference, less than £1500 a year (with no indexing).

With my wife's family all generally living to a ridiculous age (all her grandparents lived to either near 100 or over), it may be worth her considering an annuity from her SIPP at 60, although one of her final salary pensions starts at 60 (the other 67, along with state) so she'll have that constant income (which will be more than she earns now!) especially as she'll in all probability outlive me.

how does this annuity at £45k per annum (is that taxable?) compare to mapping out a drawdown of the £1m from age 60 ?

the £45k would be income, so yes some tax to pay, or on all once you have state pension.

Difficult one to do as depends when you die and if you die before or after spouse etc.

But compared to drawdown, if you assume that the fund would grow by RPI so the net effect is zero on drawings, then it's about 22 years (£1m / 45k). As always with things like this, it really depends on how long you live!

In my experience (over 30 years advising clients) your fund will outlast you, even if you live to 100. At 4.5% your £1m fund will hardly be touched......and will probably increase over the 40 year time span. 

As @Huskaris said, why not do 50/50. Buy an annuity that will pay for your essential monthly expenditure (along with your State Pension) and then use all the rest for social spending. 

paulsturgess said:

golfaddick said:

Rob7Lee said:

paulsturgess said:

Rob7Lee said:

golfaddick said:

Rob7Lee said:

redman said:

golfaddick said:

Only reason to go into cash nearing retirement is if you are contemplating buying an annuity. If not then best to stay fully invested. Maybe de-risk a bit if you are looking to take max TFC but if you are going into drawdown then you could be in the market for another 30+ years.

Excellent. Something I 100% agree with but have not actually heard many IFA's actually say. The Lifestyle plans, which were certainly around up until a few years ago transferred all equity to cash over the last 5 years of your working life. I never understood the logic, unless annuity was the likely option.

While talking of annuities, these have been out of fashion, but an IFA interestingly told me he thought these are likely to become more common place again. An example maybe after I have passed, this could be a good option for my wife if she is still in good health. Each year she would then have "excess income" which she could gift and this would be IHT free. 

Annuity rates are still quite poor in my view. Under £5,500 for joint life with 3% per £100k. Even without the 3% it's only around £7,500. Of course it's all guess work as to how long we'll all live!

Don't buy a joint life one then, look at a 10 year guarantee instead. And I wouldn't bother indexing it either. As you get older (75+) you don't do as much as you did at 65 and so your yearly expenditure is not so great.

Dont forget your State Pension is indexed so you'll have a proportion of your income already iinflation linked.

And if you have more than adequate savings then one off expenditure like holidays or new cars can come out of that. Keep your pension for day-day living. 

OK, so out of interest I did some quotes, aged myself slightly, so this is based on drawing at 60 now and using £1m from my pot with 50% spouse and guaranteed period of 10 years.

No index linking £68k a year
With RPI £45k a year.

So not as bad as I thought, but still not worthwhile in my view to any large degree, but may be worth considering buying a smaller annuity with a proportion of a fund, maybe my current works pension (which I guess will be around £350k in 4 years time) to take up the 20% band if we remain in the UK. Interestingly removing the guarantee period (10 years) makes very little difference, less than £1500 a year (with no indexing).

With my wife's family all generally living to a ridiculous age (all her grandparents lived to either near 100 or over), it may be worth her considering an annuity from her SIPP at 60, although one of her final salary pensions starts at 60 (the other 67, along with state) so she'll have that constant income (which will be more than she earns now!) especially as she'll in all probability outlive me.

how does this annuity at £45k per annum (is that taxable?) compare to mapping out a drawdown of the £1m from age 60 ?

the £45k would be income, so yes some tax to pay, or on all once you have state pension.

Difficult one to do as depends when you die and if you die before or after spouse etc.

But compared to drawdown, if you assume that the fund would grow by RPI so the net effect is zero on drawings, then it's about 22 years (£1m / 45k). As always with things like this, it really depends on how long you live!

In my experience (over 30 years advising clients) your fund will outlast you, even if you live to 100. At 4.5% your £1m fund will hardly be touched......and will probably increase over the 40 year time span. 

As @Huskaris said, why not do 50/50. Buy an annuity that will pay for your essential monthly expenditure (along with your State Pension) and then use all the rest for social spending. 

Why would somebody buy an annuity that pays you £45k for £1m, if you could in all likelihood not touch then £1m and withdraw the same amount annually just off the interest?

The £45k goes up in line with RPI. Was nearly £70k without.
If you’d have bought ten years ago on RPI you’d now be getting £64k. In another 10 years if RPI went up the same you’d be getting near to £100k and so on.

but yes I agree to an extent. If you can make 4.5% per annum you could draw £45k and always still have the £1m. However with the new rules from 2027 you wouldn’t want to be leaving £1m in your pension only for it to be taxed on death (mine would all be taxed).

the bigger issue I have with an annuity is as many point out, you want more at the beginning, so if I were to look at it I’d probably not go for RPI and a small amount probably just for my wife as she’ll in all probability way out live me.

but I’m highly unlikely to take an annuity myself. My wife will have two guaranteed pensions plus we’ll both have the state at 67. 

Rob7Lee said:

bobmunro said:

Rob7Lee said:

paulsturgess said:

Rob7Lee said:

golfaddick said:

Rob7Lee said:

redman said:

golfaddick said:

Only reason to go into cash nearing retirement is if you are contemplating buying an annuity. If not then best to stay fully invested. Maybe de-risk a bit if you are looking to take max TFC but if you are going into drawdown then you could be in the market for another 30+ years.

Excellent. Something I 100% agree with but have not actually heard many IFA's actually say. The Lifestyle plans, which were certainly around up until a few years ago transferred all equity to cash over the last 5 years of your working life. I never understood the logic, unless annuity was the likely option.

While talking of annuities, these have been out of fashion, but an IFA interestingly told me he thought these are likely to become more common place again. An example maybe after I have passed, this could be a good option for my wife if she is still in good health. Each year she would then have "excess income" which she could gift and this would be IHT free. 

Annuity rates are still quite poor in my view. Under £5,500 for joint life with 3% per £100k. Even without the 3% it's only around £7,500. Of course it's all guess work as to how long we'll all live!

Don't buy a joint life one then, look at a 10 year guarantee instead. And I wouldn't bother indexing it either. As you get older (75+) you don't do as much as you did at 65 and so your yearly expenditure is not so great.

Dont forget your State Pension is indexed so you'll have a proportion of your income already iinflation linked.

And if you have more than adequate savings then one off expenditure like holidays or new cars can come out of that. Keep your pension for day-day living. 

OK, so out of interest I did some quotes, aged myself slightly, so this is based on drawing at 60 now and using £1m from my pot with 50% spouse and guaranteed period of 10 years.

No index linking £68k a year
With RPI £45k a year.

So not as bad as I thought, but still not worthwhile in my view to any large degree, but may be worth considering buying a smaller annuity with a proportion of a fund, maybe my current works pension (which I guess will be around £350k in 4 years time) to take up the 20% band if we remain in the UK. Interestingly removing the guarantee period (10 years) makes very little difference, less than £1500 a year (with no indexing).

With my wife's family all generally living to a ridiculous age (all her grandparents lived to either near 100 or over), it may be worth her considering an annuity from her SIPP at 60, although one of her final salary pensions starts at 60 (the other 67, along with state) so she'll have that constant income (which will be more than she earns now!) especially as she'll in all probability outlive me.

how does this annuity at £45k per annum (is that taxable?) compare to mapping out a drawdown of the £1m from age 60 ?

the £45k would be income, so yes some tax to pay, or on all once you have state pension.

Difficult one to do as depends when you die and if you die before or after spouse etc.

But compared to drawdown, if you assume that the fund would grow by RPI so the net effect is zero on drawings, then it's about 22 years (£1m / 45k). As always with things like this, it really depends on how long you live!

Does it really?

My view is a strategy of asking the question "How long do we want to live a very comfortable life, having multiple holidays each year, driving expensive and very fast cars (in my case anyway, Mrs M is an A to B person when it comes to cars), eating good food either at home or in nice restaurants, wearing quality clothes and so on?" The need for most of those things would as good as disappear as you approach 80 or thereabouts. I would rather spend most of the money between now (I'm 68) and if/when we reach 80, and my plans assume that age whereby 90% of what we have now will be gone. Rather that than worry about saving too much for really old age when you can most enjoy it when fit, mobile and relatively sound of mind. 

Income requirements will fall off a cliff at 80 (healthcare apart but we still have the NHS) and if push came to shove we can downsize and bank sizeable equity. I intend to be one of the poorest men in the graveyard!

It was in answer to the question from Redman as to how does mapping out drawdown on £1m compare to the annuity. But otherwise I agree.

Yes, I appreciate that - my comment just focused on your last line and was a general observation about avoiding being too hung up with being worried about what might happen in 30 years or so. I know people who are/were scared to spend any money for 'fear' of living for another 30 years and running out. They wasted their golden years spending very little and many then died in their early/mid seventies with shed loads in the bank.

carly burn said:

Anyone use Moneybox app for investing/ Saving?

I use Moneybox for a cash ISA (4.17%) and also some of my cash savings (3.65% ).  Haven't used it for trading or enything else.  App works well, intuitive and fast.

bobmunro said:

Rob7Lee said:

bobmunro said:

Rob7Lee said:

paulsturgess said:

Rob7Lee said:

golfaddick said:

Rob7Lee said:

redman said:

golfaddick said:

Only reason to go into cash nearing retirement is if you are contemplating buying an annuity. If not then best to stay fully invested. Maybe de-risk a bit if you are looking to take max TFC but if you are going into drawdown then you could be in the market for another 30+ years.

Excellent. Something I 100% agree with but have not actually heard many IFA's actually say. The Lifestyle plans, which were certainly around up until a few years ago transferred all equity to cash over the last 5 years of your working life. I never understood the logic, unless annuity was the likely option.

While talking of annuities, these have been out of fashion, but an IFA interestingly told me he thought these are likely to become more common place again. An example maybe after I have passed, this could be a good option for my wife if she is still in good health. Each year she would then have "excess income" which she could gift and this would be IHT free. 

Annuity rates are still quite poor in my view. Under £5,500 for joint life with 3% per £100k. Even without the 3% it's only around £7,500. Of course it's all guess work as to how long we'll all live!

Don't buy a joint life one then, look at a 10 year guarantee instead. And I wouldn't bother indexing it either. As you get older (75+) you don't do as much as you did at 65 and so your yearly expenditure is not so great.

Dont forget your State Pension is indexed so you'll have a proportion of your income already iinflation linked.

And if you have more than adequate savings then one off expenditure like holidays or new cars can come out of that. Keep your pension for day-day living. 

OK, so out of interest I did some quotes, aged myself slightly, so this is based on drawing at 60 now and using £1m from my pot with 50% spouse and guaranteed period of 10 years.

No index linking £68k a year
With RPI £45k a year.

So not as bad as I thought, but still not worthwhile in my view to any large degree, but may be worth considering buying a smaller annuity with a proportion of a fund, maybe my current works pension (which I guess will be around £350k in 4 years time) to take up the 20% band if we remain in the UK. Interestingly removing the guarantee period (10 years) makes very little difference, less than £1500 a year (with no indexing).

With my wife's family all generally living to a ridiculous age (all her grandparents lived to either near 100 or over), it may be worth her considering an annuity from her SIPP at 60, although one of her final salary pensions starts at 60 (the other 67, along with state) so she'll have that constant income (which will be more than she earns now!) especially as she'll in all probability outlive me.

how does this annuity at £45k per annum (is that taxable?) compare to mapping out a drawdown of the £1m from age 60 ?

the £45k would be income, so yes some tax to pay, or on all once you have state pension.

Difficult one to do as depends when you die and if you die before or after spouse etc.

But compared to drawdown, if you assume that the fund would grow by RPI so the net effect is zero on drawings, then it's about 22 years (£1m / 45k). As always with things like this, it really depends on how long you live!

Does it really?

My view is a strategy of asking the question "How long do we want to live a very comfortable life, having multiple holidays each year, driving expensive and very fast cars (in my case anyway, Mrs M is an A to B person when it comes to cars), eating good food either at home or in nice restaurants, wearing quality clothes and so on?" The need for most of those things would as good as disappear as you approach 80 or thereabouts. I would rather spend most of the money between now (I'm 68) and if/when we reach 80, and my plans assume that age whereby 90% of what we have now will be gone. Rather that than worry about saving too much for really old age when you can most enjoy it when fit, mobile and relatively sound of mind. 

Income requirements will fall off a cliff at 80 (healthcare apart but we still have the NHS) and if push came to shove we can downsize and bank sizeable equity. I intend to be one of the poorest men in the graveyard!

It was in answer to the question from Redman as to how does mapping out drawdown on £1m compare to the annuity. But otherwise I agree.

Yes, I appreciate that - my comment just focused on your last line and was a general observation about avoiding being too hung up with being worried about what might happen in 30 years or so. I know people who are/were scared to spend any money for 'fear' of living for another 30 years and running out. They wasted their golden years spending very little and many then died in their early/mid seventies with shed loads in the bank.

Couldn’t agree more, mine is more around having one eye on the fact my father in laws side of the family, as long as they stay off the booze, tend to live a very healthy/fit old age. My wife’s grandfather was still walking 3.5 miles each way to the pub, every day, right up until 97! Hence why I’ll likely make sure she has a sensible income herself for when she outlives me by 20 years or more!! But otherwise we’ll be spending plenty don’t worry, especially as retirement, or stopping work, we’ll still be in our 50’s.