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arrgee1991

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Everything posted by arrgee1991

  1. When I looked at getting a private pension about 20 years ago, I was surprised that after putting all the money in and getting the growth that I could only take 25% of it and the rest had to buy an annuity. However the advisor said where else would you get 15% on your money. My reservation was that 15% is all well and good only if I live a very long time! I didn't get one, but down the years have got a pension pot (albeit small!) thanks to generous employers putting in up to 20% of my salary. http://www.rightannuity.co.uk/news/just-how-far-have-pension-annuity-rates-fallen/ "pension annuity rates have fallen from around 9% of your retirement fund per year down to just 6% in the past ten years. That’s a pretty bad combination with an average 10 years of no real capital gains in the stock market. And there’s more. At the beginning of the 1990′s pension annuity rates were 15%. Anyone retiring now, counting on getting an annuity to pay their bills, etc., may be rather distressed by the deterioration they’ve seen in these annuity rates over the years." The change from 15% to 6% means my pot would have to be 2.5 times bigger to get the income projected in 1991. Given I have another 20 years before I reach retirement age, there is every chance rates could be as low as 3% with little change to the size of my fund. I would need a fund of £1m to get £30K/annum. I'm glad I got ISA/PEPs. At least I can just drawdown on them until I'm broke. I could take £30K for 33 years with £1m, with zero growth. Of course, my ISAs aren't worth a million, but neither would my pension be if I had put in 20% of my salary for the last 20 years.
  2. If that place was worth £500K, then the world has truly gone mad!
  3. I have always felt superior to others and if anyone tried to drill it out of me, I'd tell them where to stick it. And I was brought up in a council estate in Hackney. At independent schools, children are actively encouraged to be involved in charities and to help those less fortunate than themselves. I don't believe those who attend independent schools do necessarily think themselves superior. Most of them are simply getting on with life, making friends, studying hard, trying to do their homework and so on. Working hard and achieving their potential should be what they try to do.
  4. I'm not sure British society rejected it, it is politicians. We initailly sent our son to a tutorial group in order to improve him. It started small but grew enormously in about a couple of months. Parents were preparing their children for the 11+ and prepared for their children to travel over 30 miles to attend them. We withdrew our son as the initial effect wore off when all the children were doing were being drilled in verbal and non verbal reasoning (neither of which he would be tested on). The one grammar school in our area is heavily over subscribed with about 1000 applicants for the 120 places on offer. Assuming that people only apply if they believe their children have a reasonable chance of passing there is a high demand for grammar schools. If there were more grammar schools, then I suspect the demand for independent schools would fall dramatically.
  5. But what happens to the brightest and the best? They go to schools where they end up being dragged down to the lowest common denominator. Schools do not help the brightest and the best. At our primary school, those with special needs and low achievement get the attention. the brighter, enthusiatic kids are left to their own devices. I had a wake up call about a year ago when my son who is in the top sets in English & Mathematics at his primary was only able to get 5% (Five per cent) on a entrance examination that was not particularly demanding. We had noticed he had lots of unfinished work when we met teachers, yet none ever looked at why nor how to improve things. They were happy with his level. Since then, I have spent evenings and weekends to get him up to the standard that most 11 year olds should be at. Now he is at the point where he would score around 80-90%. He is one of the brightest and the best but was going nowhere. And I don't believe that educating people to do well financially is part of the problem in the UK. The true problem is that the education system is not doing enough of this. That's why where I work they recruit from the rest of Europe. It's not that they are cheaper (they aren't), they are simply superior. Many people are sending their children to independent schools just so they have a chance of competing for jobs in the future, not to rule.
  6. I don't believe people send their children to independent school just to view themselves as superior. More often it is done to maximise the academic achievement. Nepotism is everywhere, and who you know will always have some influence in your life. I got by without job interviews for much of my life, as I used my contacts to get work. However if I wasn't able to do the job I would not obtain work. I think the idea that all independent schools do is create a ruling elite is misguided. Maybe places like Eton may think like that (I doubt it), but if you look at the alumni of most independent schools they are in many areas of society and at many levels.
  7. +1 What is worth remembering is that not all independent schools are Eton, and don't breed toffs. On the whole they are full of children from affluent middle class backgrounds, most likely living in nice suburban areas. There are also a few children who come from less privileged backgrounds with the aid of scholarships and bursaries. I have found most, if not all, of the children I have met who attend independent schools to be socially adept and engaging.
  8. http://www.telegraph.co.uk/sport/othersports/olympics/news/7132024/Third-of-British-2012-Olympic-athletes-privately-educated.html A third of the medal winners in the last British Olympic team went to independent schools, including Chris Hoy. I suspect that if you add on those who went to University it would be around 50%. I believe that those who attend state schools are often just as talented and able, but without the necessary encouragement and development, end up achieving less. I also suspect that most of the highest achievers in lucrative/pestigious areas of life went to independent school, except footballers. There will always be exceptions who buck this, but overall I would say that it is not necessarily the most talented that wins. It is often the best developed.
  9. Yes there are. No it isn't. The only thing is no one can predict what they will be nor when they will occur. The best you can do is limit your own exposure to crisis. Personally I'd buy wine ahead of gold because even if it crashes it value I can still enjoy it! (frivolous point)
  10. Interest rates will stay low unless there is a budget crisis that would force the UK to borrow money at high rates. With Ireland, Portugal and Spain all taking out large loans off the UK and the austerity measures announced in the UK, the UK is a bit down the pecking order right now. Banks debts (like house prices) are notional. If the bank values all property assets at an average of say £200K they have no debt, should they value the same assets at £100K they are bust. Whether the value is realistic is not the point. My house may be valued at £500K , but I may not sell it for that. It doesn't matter to the bank as long as they are believe the value of their mortgage portfolio. Of course, they believed in the value of their credit portfolios until they saw they become worthless. Savers on the whole are lazy (self included). Many stick with the same bank and have accounts paying less than 0.1% in interest. People with spare cash are paying down mortgages as they earn nothing elsewhere.
  11. The banks are playing nice at the moment, and I don't see that they will do this soon. They would have to write off loans and repossess, and hence set off another credit crisis. The banks know the property they have mortgages on may not wholly meet the criteria, but they would be foolish to enforce it in the current environment. The drop will be sudden and steep, but needs something to make it happen. Unemployment and rising interest rates would be my prime suspects, but neither is a problem at present. I am still amazed that the events of September 2008 didn't lead to a crash. All it led to was the BoE sending interest rates down to near zero to the benefit of everyone not on a fixed rate deal. The BoE will not raise interest rates even though the current levels of inflation suggests they should. And as you say it will be worse than the last 20% drop. Back then rates went from 10% to 15% in a couple of years, a 50% change on smaller loans. Changing rates from 0.5% to 3% on large loans would have more impact.
  12. What then needs to happen is no one buys. Then people who really need to sell puit their places up at 5% less and then the flooding starts. I have bought myself a little time in that I don't have to move for another three years, so I'm really hoping for lots of property on the market by then. Of course, everyone in my street will be selling up as well!
  13. It will take interest rate rises and unemployment to push people over. And as you suspect it could be many people. Should that happen things will crash and property will flood onto the market in the aftermath. Just not this spring.
  14. When I bought in 1992, I was initially paying 10% interest, and for 6-7 years the value went nowhere. I wasn't too concerned as it a place to live and I would have paid something similar in rent. The rise in value was not a major concern to me. The point I am trying to make is that while people see a profit (even if virtual as it would be eroded by inflation), they will not be selling. Also most sellers are buyers so rises and falls aren't as important as the difference. Only those who are buying a condsiderably large house or downsizing will be impacted by falls of around 10-15%. The flood of properties is unlikely as things stand as people won't sell simply because prices start to fall. People have been misreading the market for the last ten years, I know someone who sold in 2002 as they couldn't see property rising, and bought back in in 2007 (oops!). I think the most likely reaction is to do nothing. People who need to sell may be wise to sell now at whatever they can get as they won't get it in a year's time, but for those who aren't selling because they can't afford to buy they will stay put. And the latter outnumber the former.
  15. No - 2% per annum - and higher rate tax payers, which you probably need to be to afford houses will get less net. Even if not for next 10 years, the general trend on interest rates over the last 15 years has been downward. I don't see a return to double digit interest rates. At best, 4-5% may be achievable. I agree real prices will never be as high in the next 10 years, and it is likely that other investments will outperform.
  16. Wanstead/Woodford/Buckhurst Hill/Loughton Not much new 4 bed + for sale in those areas. And what there is, is not great.
  17. Big hikes in interest rates and job losses will force sales. Price fluctuation won't. It is probably fair to say that less than 5% of the population live in a property worth less than they have spent initially buying them (ignoring interest) I bought in 1992 for £80K, then 9 years later sold for £170K to buy at £250K . My total outlay is £160K and my place is worth around £500K. I am still in profit with a 50% drop. The flood and bubble burst won't happen until people are being dragged out of their homes. In 1992 I was driven around by EAs looking at repossession after repossession. That was due to job losses and redundancies. And that's what brought prices crashing down. This market is not there (yet).
  18. The scenario you paint is only valid if you only see the house as an investment. I need somewhere to live with my wife and kids. If I could sell the house and pay rent with the interest I would earn then fine. But with the likelihood of getting less than 2% on my money, it's not an attractive prospect. I'd rather have the house.
  19. Most people who have £500K house have a mortgage and possibly are not in credit to £20K. They may have savings but they are often dwarfed by the size of mortgage. I would like to see a significant fall myself, but it is not happening where I live (east London/essex) for the type of property I want to buy. No one is selling larger properties because of the cost of purchase. Given the choice between a £30K loft extenstion and £30K fees to move (not to mention the difference in prices) , most opt for the former. We have had about 10 extensions done in our row of 50 houses last year and at least another couple (including mine) starting soon. The original question is will pent-up supply flood the market this spring? From what I see it won't. Volumes will remain low even if prices crash. I suspect they will crash in some areas, but not all. And falling prices won't make people sell. Only when they bottom out as they did around 1993, do properties start to flood markets. The bubble hasn't burst, it is slowly deflating.
  20. It all depends on the schools you can send your children to. If your LEA decides your child is going to your local underperforming comprehensive whether you like it or not then you might consider that you have little choice but to pay. In an ideal world I would send my son to a really good state school, but my LEA pretty much decides where he goes thanks to catchment areas. Notionally I have six choices on the form but in reality of the four schools we selected two were pipedreams as we are on the fringes of the catchment areas. I also think the money I would spend could be spent wisely on tutors and so on, but the reality is that unless I have to pay it I won't. Going back to the question of affordability, I guess it's just a matter of priorities. My in-laws have very nice cars/houses and probably spend £15K/annum on them. I drive a T-reg car, that I will soon be dumping and not replacing as I don't want to pay tax, insurance and maintenance on it. It's a lot, but fortunately I have a bit of cash squirrelled away and should be able to afford 5-7 years of fees without too much hardship.
  21. 3-4% is on the sum of your purchase and it is the purchase price that matters not the sale price. And most people buy when they sell, normally buying for more. 4% of 700,000 isn't much different from 4% of 693,000 The market is frozen because if you have a £600K house to move to an identical house will end up costing over £25K. Most people upgrade when they sell and buy. So even if prices fall they still have high costs. The market is frozen because fewer buyers/sellers that can afford the costs of moving. At the sub £250K level it makes little odds, but at over £500K it does, and most chains have at least one of those towards the top of the chain. Things are probably very different outside the South East, but I don't expect a flood of properties this spring. If anything, I expect less availability as house owners dig in.
  22. All depends on when you bought and your equity. If you bought 10 years ago and have seen your property double in price and have paid off most of your mortgage, your house "falling" by £1K a month won't bother you. I quote "falling" as no one has any idea what their house is truly worth until someone actually pays for it. If you bought 3 years ago you will be bothered, but probably can't afford to sell. Never see a house as an investment, just a money pit. If you are lucky it will appreciate. I bought my first in 1992 and it took about 7-8 years to rise in value.
  23. (2) People have their properties for longer mainly because of the cost involved in moving. It was easy to buy my current house @ 1% stamp duty, but buying the next @ 4% is going to hurt. Many people are in this situation. Only ONE out of about 50 houses sold in my street in 2009 and it looks to be the same for 2010. 7 were sold in 2001 and 2003 with most other years to 2007 having a similar story. I really don't care about the price, it makes little odds to me. I was selling a 3 bed to move to a 4 bed, so I pay the difference which is about £200K (current house virtually paid for). A 50% drop in prices would be nice, and would leave me finding just £100K, but it is less than a third of the price. Given I paid about 50% of the current price for my place I wouldn't lose in that scenario, bar the interest paid. Most people sell to buy unless they have to (death, divorce, work). Only at the top of the property chain are there outright sellers (normally due to death). And with people living longer.... My problem is nothing to buy as most people with the type of house I want won't sell until they have to.
  24. This will be very dependent on location and type of property. I spent the last year looking for a family home in a particular area and there were only a couple that came up that I offered on, both of which sold within a week of going on the market. I had one offer accepted but the purchase fell through due to my buyer withdrawing and someone else offering before I could find another buyer. I can't see a flood of the type of property I want coming up for sale (4 bed semi in suburban london/essex). The people that own them bought long ago and won't need to sell. The only thing that I can see that would open the floodgates would be a lot of unemployment and sharp rises in interest rates as was the case in the early 1990s, neither of which appear to be forthcoming where I am looking. Another factor inhibiting sales is the cost of buying. £20K+ in stamp duty, not to mention other fees, to buy a 3 bed semi in our area means that buyer have to add that to their budget. There is a pent-up supply, my own house included, but without anything to purchase it will remain pent-up. I suspect the housing market will continue with low volumes for the foreseeable future.
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