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99% of me thinks your right
but I have learned Govts can do some very silly things indeed
but I think Company formation is the only way now for BTL
Learn Change and Adapt ?????
d_l, using your cavalier approach to financial assumptions it would be a cinch to justify pretty much anything.
You have heroically assumed 8% pa pension fund growth, which as has already been pointed out is wildly optimistic unless you are prepared to invest in high risk funds. I know you can list lots of funds which have achieved great returns but you might be falling into the trap of cherry picking with the benefit of hindsight. You also do sometimes seem to quote relatively short term growth figures when it suits.
You then assume zero capital growth in property when making your comparison!
Its perhaps unsurprising that in your calculation pensions appear to be the better bet.
Hi John Thanks for the input
I can see where you are comeing from but I have been running a selection of funds and I think 8% pension growth is not bold
Just over 18 months ago I picked a selection of Pension funds as listed below this is from my platform today not assumptions bud t real figs
I put in £9730 and today the value is £12062 that's an approx. growth rate of 24% on a wide spread of funds
I used a couple of property funds to have balance and they have not done as well
But 24% over 18 months is a higher rate then an average of 8% which I am using as an assumption
My Isa funds have done even better
I am running my spread sheet to compare and up till now its quite rewarding and all tax free
If you look at Funds Such as Jupiter European the figs are even better
and if you look at the Historic performance of M&G Recovery since 1969 its quite remarkable
I do take your point of capital growth and there is good reason for me not using a growth fig and its because I believe we are entering a stagnation on property capitals
I don't see any good reason to us a growth fig at present even over 10 years
Historically prices have risen but with tighter lending and tighter wage growth I don't think we will see great rises
and Even if we did The HMRC will remove a lot of the gain via CGT which is higher on property than any other sector of investment and don't forget the repair costs which mount as property ages
So I still think its a very close call today to if I should invest in a pension or a BTL property
And Taxation alone on taking an income from a Ltd Co is so much higher than the tax I would pay on pension income
Taking the over view a landlord has to put in a great deal more effort to gain a similar return
where a pension is a true armchair investment where I set back and put the money in and forget it if I want too
Pension funds can not be touched by creditors another good reason to invest in pensions
It seems pension income can be taken by creditors.
It is unclear whether drawdown is income either.
It seems the OR could in some circumstances take pension cash drawdowns and monthly pension payments.
So clear as mud!!
if you have not taken any income from a pension creditors can not touch it
I remember an old IFA saying to me when you try to explained a pension don't use the word pension ???
He said think about it as a separate company from the business your operating at present and offshore
and he was right ??
Its totally Tax Free in fact the Govt give you free money
it grows tax free
and its away from creditors
and you can even have all the money you have put into back Tax free
and even if you die your wife and children can have the fund to use as they wish
Today with S24 I can what he means and his words have come back a lot over the past months
Its the word pension that puts folk off it makes folk think of old age and restrictions
when the alternative is true now
Pension Freedom has changed it a lot
and its my chosen route for a lot of spare cash