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  • In the Spotlight

    BoE Chief Economist says property > pensions

    pipllman



    Andy Haldane, Chief Economist at the BoE says property is better than pensions (reluctantly).

    http://www.thetimes.co.uk/article/proper...-lfgqx9rwc

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    If you look at BTL with a Mortgage Property may win

    Because you have the full asset value which may rise

    If you look at pensions your asset is only the cash you put in

    But today with Taxation its a close run game

    Any cash I am saving at present is not going into property its going into Pension and ISA ivestments

    The Taxation of BTL has and will change for the worsed I think we can be certin that ISA and Pensions will not change a lot in regards to Tax

    As a Side point for Landlords who are investing in property via a Company The Directors Pension is a gift

    So you can have both and hopefully make money on both

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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.

    I would put a defined benefit pension (if secure) ahead of property with a defined contribution pension well behind.

    I have only 5.5 years worth of a defined benefit pension. It should provide as much income as one unmortgaged properties with less hassle.

    I also have a defined contribution pension with an underpin that will almost certainly apply. It should bring in about the same income, though I could afford to buy two such properties if I could take the money out without tax or penalties.

    Property will continue to provide me with an income well past retirement, and then I can probably get my money back.

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    I don't think many here would disagree as it's probably the primary reason many got in to property. I also think the headline is a bit misleading as it's not what he really was saying.

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    I agree property beats a pension.
    Just one shrewd purchase is all it takes to maybe match like for like
    Buy 5 and you are the runaway winner
    Buy 10 and you are home and dry and can give up work early
    Property - Take £250 per month out in profit to spend/invest further
    Pension - Pay £250 per month of your wages in and you are stagnant for years and years
    Maths experts come forth please and prove it for me
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    Jonathan Clarke. http://www.buytoletmk.com

    I would say that it depends on the pension; it depends on the property and it depends on the individual.

    Property has the benefit of being easily leveraged and, for almost a generation now, prices have only ever really gone up, often quicker than wage inflation and cost of living inflation.

    Pensions are still very tax efficient, especially for higher and top rate tax payers.  The limit on pension pot size is starting to become a big issue for quite moderate earners now.

    Defined benefit schemes as part of employment packages, under which the money contributed to the pension couldn't be taken in any other way than a contribution to the DB scheme stand separately imo

    Excluding pensions -  by default - from your own financial planning would be daft.  But throwing all your money into some defined contribution scheme and expecting to buy an annuity on your 65th birthday that you will live on for the rest of your days would be equally daft too.

    A pension wrapper is, in many cases, the ideal one to use to hold investments.  Used sensibly and properly, I think it would probably be a benefit to use the tax efficiency of a pension for almost everyone that pays tax.

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    You are spot on

    I am Lucky I have  Final Salary Pension from Local Govt

    I took my Pension when I was 40 after an accident at work Its will be paid for the rest of my life and even I die my wife will have a pension for the rest of her life

    Pensions should not be over looked They have Huge Tax advantages over BTL

    The problem with BTL income is its not counted as Nett Relivant Earnings so I you are only a Landlord you can only put in £3600 pa

    So its restrictive

    But If you are a Company Director its a Golden Oppertunity to make money  from Pensions and its a great sheild for IHT

    Tax Free Growth

    Tax Relife Going In

    Tax Free Lump Sum

    and the New Drawdown rules

    It has to be looked at especialy if you are a Higher Rate Tax Payer

    I was never keen on Pensions in the old way but since Pension Freedom its a Gift

    So have Both a BTL and Pension

    Also A point worth mention We all get old and when you want to pass on assets Haveing another income stream allows you to hand over the BTL Bussiness to the next Genartaion

    JUst as a side Point One Pension Fund I use is Aberdeen emerging Markets its growth rate this year has been 33% and there track reccord over 10 years 207%

    I wont be investing in BTL Futher but I know where my spare cash is going Penisons and ISA

    No one knows what this Govt will do next to BTL so I am spreading my risk


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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.

    Taxation on BTL has a huge effect on returns Jonathan No one ever dreamed of S24

    I just dont trust our Govts to be honest and there could be more changes on the way

    I dont see BTL getting better But I can see it getting worse

    So any Investor should spread there risk long term

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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.

    High leverage always carries a risk.  

    High leverage BTL carries a risk.  Particularly where the leverage is stacked on deal after deal via equity release.  S24, for instance, is most painful for the most leveraged.  Remortgaging in the light of the PRA and Basel III developments, will be most painful for the most leveraged.

    I have known some people to assess their BTL portfolio and explore what %age house price fall would wipe out their equity totally, or breach the LTV value of their mortgages - potentially leading to repayment demands, the result sometimes shocks them.

    Similarly, if forced sale scenarios are looked into and the CGT liability crystallised (and how it would be paid), that can be a sobering moment too.

    Not for everyone, but for some.

    Of course, such scenarios may never actually happen.  But it does no harm to be aware that they could and, if they do, what that means.

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    Yes naturally I am well aware of that. My tax bill will go up 5 fold but I will still make a cash flow profit

    My capital values will rise over time .

    So before S24 etc the returns were absolutely  stunning in BTL

    The government saw this and said wind your neck in a bit people and  they taxed us more.

    Now the returns if done correctly are just very good . I can live with that

    Even if they kick us about a bit more it would still make maybe average returns

    I would like to see a typical comparison for someone deciding now whether to go down the pension or BTL route

    Appreciate everyones circumstances are individual to them but you could have a handful of common examples which then you can  adapt to your own position

    In the Budget they always manage to do this and come up with typical families and show how the Budget affects them

    Maybe someone can do likewise  for like for the property v pensions debate as a template which we can then pull apart constructively

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    Jonathan Clarke. http://www.buytoletmk.com