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About sunshine11

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  1. Another scary thing is salaries - average wage being circa £23,500 (I know that's very different from the median wage), but it does once again underline the total disconnect between property prices and incomes, which was only compensated for by loose lending on silly income multiples
  2. The cost of living is massively subjective, but yes this is an expensive country and it is true that fixed costs such as tax, housing and essential bills are a huge chunk of any sub-rich person's income. It's a shame that the public sector will be cut later in the year in that we won't see tax bills etc go down, because the savings will all go towards starting to pay down the deficit. In the meantime some services will get worse. I'm buggered, personally. Earning more than twice national average but getting divorced and wife has the house. 1 kid, who I have 3 nights a week, so I have no choice but to rent a 2-bed, and NW London is so expensive that it's £1100 minimum for an ok 2 bed suitable for a small child (have to stay in area as childminder is nearby), and that's with him having a wee single room and no outside space at all. Then add maintenance, half the childcare bill, council tax, phone, food, insurance, heating and car bills and it's a nightmare. I can't afford Sky, eating out, holidays or clothes beyond essentials for him and the odd pair of Primark jeans for me and I'm still having to use a few quid from savings each month to get through. Not a whole lot of fun right now.
  3. We're in the eye of the storm and there's an atmosphere of eerie calm. ]There are three options: 1. Subject the population to 15 years of fiscal austerity and sub-trend growth 2. Unleash inflation 3. Default on the national debt Ireland has been forced into option 1 due to lack of control of its own currency/interest rates. Result = house price crash, huge cuts in government spending and unemployment through the roof, but they are at least taking the medicine required under the circs. In the UK we've deferred and deferred the real pain by socialising debt, fiscal stimulation and maintenance of public sector expenditure. QE has helped this deferral process by inflating/re-inflating asset prices, generating inflation of sorts but not in what we'd call the "real" economy. One issue is what the hell happens when the government has to sell gilts to a real market (i.e. not one where the banks are either forced buyers of gilts to rebuild their tier 1 capital or where large investors buy gilts to then sell to Bank of England under a QE repo a few hours later). It is likely that the government's cost of capital will rise when forced to sell to "real" buyers unless QE is further extended. By how much, who knows, but we should find out over the next 6 weeks, though the international bond markets and rating agencies will give us some grace and leeway until we have a new government. So there will be a significant but not catastrophic rise in the government's borrowing costs over the next few months. Post-election is when it'll get really interesting. Without sensible and rapid plans to reduce the deficit we will be downgraded by the ratings agencies, thus dramatically increasing interest costs on raising further sovereign debt. This must be avoided so there is a delicate balance between cost-cutting at a level that satisfies the agencies while maintaining sufficient spending so as not to trigger a second dip into recession that would come if the government makes hundreds of thousands of public sector workers redundant in a short space of time, which would depress consumer spending, increase mortgage defaults and send unemployment through the roof. Default is not a realistic option due to the catastrophic increase in cost of funding and long-term damage to a country's reputation. I think the gold, gunz and Heinz brigade are over the top with their predictions of societal collapse, but there is a huge problem facing us as a nation because we have not even started deleveraging as a country; the debt has just been either moved up to the nation-state level or had its impact reduced by near-zero interest rates. Overall I think the next government will try both austerity and inflation at different times to deal with this, and it will play out not just over the lifetime of the next parliament but the one after too. We will get austerity post-election for a while, but as it gets too hard to face the full horror of the debt (or a massive vote-loser) the pressure will build quite quickly to again erode the debt by any means, which means inflation in one form or another. I think we'll see "new" policy tools for inducing "controlled" inflation developed in coming years, but what those will be I don't know. What does all this mean for house prices? Utter stagnation for a looooong time. Most of the nations' household wealth is tied up in their homes. Activity levels are low and debt is cheap, which is supporting prices at present. But all it would take would be either an increase in supply or a relatively small rise in the cost of debt and all the wheels will come off again. The macro picture is too gloomy to envisage meaningful HPI except possibly in banker territory, unless the government does lose control of the money supply by going crazy at the printing presses. But for it to feed into house prices there needs to be a mechanism to transmit this funny money to the general population, either via "free money" (i.e. cheque in the post), paying companies to raise wages (impractical) or, more realistically, debt forgiveness on mortgages. The US is looking at principal forgiveness at present for mortgages that are a long way underwater, and it may be something that gets discussed here at some point if people are "trapped" in their properties for a long time, unable to sell for what they need to repay debts. How to pay for these arrangements I don't know. But it really does depend on how things play out at the policy level later this year. Such forgiveness arrangements are also a confirmation that house prices were too high, so it could be expected that they would lead to lower prices, but it is unlikely anyone buying a property would ever know if the owner had their mortgage reduced, so available data on house prices would stay the same.
  4. I'm just adjusting to renting again after a relationship breakdown after many years on property easy street so to speak with a decent house and tiny mortgage thanks to family (not mine, unfortunately) money, so it's quite interesting moving from one side of the fence to the other (gutting obviously, but such is life). After giving the soon to be ex-wife the house, renting is the only option as I need a 2 bed place as have my son with me 3 nights a week. In zone 3 in North London I'd need to spend circa £250k for the property I am in now and probably over £300k for the place I'm moving to shortly. Place I'm moving to is a nice 2 bed Victorian house, fully furnished with outside space front and rear. Rent comes to £14k a year. To buy it I would need a £40k deposit at least to get a decent mortgage and would pay circa £12k a year in interest alone for the first few years on a £260k mortgage at, say, 4.5%. If repaying I'd be looking at almost twice that per annum. It's irrelevant as I have neither the deposit nor, when childcare and maintenance payments are taken into account, the income to secure or service such a mortgage on a repayment basis. It does appear that from a more or less standing start it would be impossible for me to buy a suitable property unless my income more than doubles in the next five years, yet I can rent somewhere I could not buy. In fact I can't see myself being in a situation where I am likely to be a homeowner again in the next 10 years, if ever, but I do plan to be a long term tenant to provide stability to my son. I need to and can (fortunately) rent somewhere I could not afford to own, ergo, for me, renting is cheaper. Oddly, this loss of homeowner status is not concerning me anywhere as much as I thought it would. If I was single and/or younger then I'm sure I'd be desperate to have my own place, but given that the circumstances are such that a 1 bed or whatever is not practical, and the suitable properties are well beyond my reach despite earning a lot more than the national average, I'm pretty philosophical about it. It's nice to not obsess about buying furniture and for it to be someone else's problem when the dishwasher breaks down. It's also nice to have flexibility to move quite easily and for a huge chunk of life's stresses re maintenance, worrying/banging on about house prices etc to be taken out of the equation. We're a bit odd in the division of owners v renters. It really does depend on circumstances. And in the same way that none of us will be on our deathbeds wishing we'd spent more time in the office, it would be rather sad to expire in 30 years or whatever, thinking "if ONLY I'd bought that 2-bed flat in Balham in 2003!". Anyway, onwards and upwards. Wonder if I'll feel the same in 3 years.
  5. 15% this year plus extra 7.5% bonus. Professional services. Got 11% the year before.
  6. Jeez you're dumb for a guru. There is no return without risk. That's why you get a crappy below inflation savings rate with National Savings most of the time (cept when govt needs the money, like now). Of course you can't protect your pension or any other aspect of your life from all external factors - you want to live in a hermetically sealed cell? I care about other people not being bothered with pensions because the givernment will be taking money from me to bail them out. Also, funded pensions are not a pyramid scheme, unfunded ones are. All private sector ones are funded (though some have deficits). Please try and get your head round this. It isn't complex. A third of your income on pensions? I pay 5% of salary and employer pays 7%. It isn't enough to make for a single source of income in retirement but that's why I won't rely on it alone. Relying on a pension alone is stupid but not as thick as not having one at all. Sorry.
  7. I think the point was that you get no return from precious metals unless they go up in value. Shares and bonds at least provide a return on investment through dividends in the case of shares and coupon for bonds. Precious metals as a store of value are ok at the level you recommend but I'd recommend investing through an ETF or somesuch rather than taking physical delivery although perhaps you're happy installing a big safe. ps times are always uncertain. I would also be interested to hear the numbers in terms of cost of energy self sufficiency as the price points for solar, wind etc are still too steep in terms of buying/installing/maintaining the equipment for the outgoings to be low. I suspect you've spent quite a few thousand pounds on this and are still on grid for what, 30% of your electricity? I guess in 10 years or so it might start paying for itself. Happy to be proved wrong on this.
  8. To bring us back to topic: failing to make provision for your future finances is stupid, and saying pensions are too risky is terrible, terrible financial advice. The result of too few people paying into pensions will be that those who do make a sensible provision for later life get penalised come retirement. If I get a even half decent income from pensions and other savings you can bet I'll get absolutely zero from the state as any state pension will have to be ferociously means-tested as there'll be so many muppets who blew all their cash living hand to mouth and now need money for food, heating, medical care, etc. They'll probably whack up the tax paid on my pension as well to help pay for all the knobbas. I may have to move to Switzerland as I approach retirement age...
  9. Stakeholder is basically a personal pension. You were incorrectly advised. Government rules say this as one of the principles of a stakeholder pension: "Unlike many personal pensions, there can be no penalties on stopping contributions to an individual's fund or on transferring the benefits to another scheme " For more info: http://www.pensionsadvisoryservice.org.uk/...older_pensions/
  10. What kind of pension was it? Final salary ones can be tricky to move but money purchase ones are mobile - they have to be.
  11. I transferred mine 2 years ago. A bit of a pain in the **** but just a bunch of forms.
  12. Already dealt with the "if the company goes bust" question above - read up on money purchase schemes and find out for yourself. As previously said, "Magic pot" applies to unfunded public sector pensions, not money purchase private sector pensions. I am most definitley a housing bear and think we have unfortunately de facto replaced the gold standard with the property standard as people saw it as the only reliable store of value in a world awash with fiat currency. We're now dealing with the consequences of having a monetary system backed by such a lumpy, illiquid "currency" as houses.
  13. 1. If the firm goes bust (unlikely for a range of reasons) then my pension will be worth precisely what it was before because it is a money-purchase scheme (obviously the company would stop paying into it if they went bust though). The firm pays contributions to the pension fund manager and once it leaves the company's account it is no longer anything to do with the company. Unlike future final salary obligations, money-purchase schemes cannot be touched by creditors in the event of a company going bust. That's one of the reasons they exist. Not sure what private sector company pensions have got to do with the public sector gravey train. I think you're rather confused. 2. Contributions come out of pre tax income so there is tax relief at source. 3. The smart 20 and 30 somethings will have to. If they don't it is guaranteed they will be unable to retire!
  14. I get £7k of employer contributions per year going into my pension. I wouldn't get that if I didn't have a pension. Factor in that my contribs come out of pre tax income, plus compound interest and re-invested dividends and there is a huge cushion before I would get out less than I personally paid in. Relatively low risk. And that magic pot nonsense someone posted actually applies to unfunded state pension liabilities rather than private sector pensions based on cash investments where the money is used to buy collateral (shares, bonds etc). The value of these investments goes up and down but they are worth something. Unfunded civil service pension liabilities and shortfalls in provisioning for the state pension are the problem.
  15. Exactly. Via the tax relief and employer contributions you get money for nothing for having a company pension. Why would you say no to money for nothing? It's just extra savings. The problem is actually that some of these posters still think in terms of your pension being the sole source of income for when you retire (maybe there's a generational thing going on here). The 20 and 30-somethings of today need a portfolio approach to investment for retirement. A combination of pension, ISAs and other savings - maybe even commerical or residential property as part of the portfolio (obv not bought at the top of the market and based on using excess yield to pay down the debt). The contribution-based pensions prob won't perform as well as expected and people who think they will be anything like final salary schemes will be in for a shock, but unless you are making proper provisions elsewhere (and I don't think you can get anything like the tax relief etc on other investments), you'd be very dumb not to say yes to the company pension. Also, equities tend to be a reasonable hedge against inflation and the figures annouced today take the scenario of every company that participates in the scheme going bust simultaneously, so let's not all stock up on baked beans etc just yet...
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