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Everything posted by VeryMeanReversion

  1. I very rarely swear at the radio but this morning, I made an exception when I heard that. Telling that person to fekkoff is my lifestyle choice. The good side to the story is that they will be building lots of houses to rent. This could put downward pressure on house prices. However, another 330 thousand people arriving will make it all pointless. Oh well, back to dumping everything I can into pension and spending as little as possible so I can stop paying for this stupid system.
  2. I think the process is that they are supposed to bump up the council tax band when the house is next sold. I bought a dump on a big plot (rated Band E) and improved it so it would probably be Band G now. I still only pay band E, saving me around £500 per year or £20K assuming I stay there for my final 40 years and they don't change the rules.
  3. My view is that each £/$ is just a promise. Those promises can no longer be met in any reasonable way. Promises being broken means inflation and/or write-offs. For the first 7 years I was on this website, I expected the powers that be to act responsibly. Then I gave up. In the last 6 years, I've swapped my £'s for real stuff (capital, not used for consumption). Any cash I have is only kept until a decent capital buying opportunity comes up.
  4. I was living in the Bay Area in the 90's and people were doing this then. I paid around £300/month for a flat-share at the time which I didn't find too bad.
  5. I'm always impressed by your posts DB, keep it up. I'm one of those people you mention that have woken up.
  6. Very boring here but I'm doing nothing other than collecting divis as time rolls by. Picking up ~£1k/month off £250K of equities so 4.8% yield. I'm not tempted to buy/sell anything. Investments now 75% equities, 25% cash, sold out of bonds ~2 years ago. (I also picked up British Land in the Brexit drop). Total investment running costs are 0.1%. Summary for 2016 - House equity up £40K, SIPP gains £50K, SIPP new contributions £27K. Expectations for 2017 - Housing equity down £20K, SIPP +/-£50K, new contributions £27K. I'm also trying to shift income from salary/bonus to EMI share schemes to reduce effective tax rate from ~65% to ~5%.
  7. See if they will increase their offer before you accept. Even then, this could be the best time in history to transfer a DB to DC. Have a think about the lifetime limit (if that is something you were planning). The DB rules are a lot friendlier for those with big pensions.
  8. Basically yes. It's all to do with low interest rates on gilts. The wonders of QE and low gilt rates means it costs a fortune to provide a guaranteed income for life. This is the reason for those £Billion pension deficits you hear about. Its not just inadequate contributions from the companies involved, its the rules they have to play by to guarantee that pension. If you think gilt rates will stay rock bottom (i.e. annuities will stay expensive), keep the DB. If you think gilt rates are going up, now may be a good time to move. On the principle of "always decline the first offer", you could always see if they will improve it. PPF only appears to cover your back 90%. Read the rules carefully as it is not the guarantee it initially appears to be. I believe you lose the index-linking and other benefits of a DB. Best to check this yourself. Last time I looked, I figured the protection was only worth around 50% of the promises if you were 20+ years from retiring. My inlaws were offered a similar deal, several thousands now (taxable) to give up some income (tax-free under personal allowance). I showed them that the offer wouldn't even buy half their income they were already getting. They would only "win" if they both dropped dead within a couple of years. Being in good health, I suggested they keep the income. Given all the info in your post, I would be more than tempted to collecting your winnings now and get it all under your control.
  9. I was an accidental landlord as executor of an estate that included 2 BTL properties. The beneficiaries didn't want to deal with them so I sold them and converted the estate into cash for distribution. One tenant did a runner whilst in arrears, the other left when the beneficiaries stopped paying the mortgage (which they had taken responsibility for) and the mortgage company threatened reposession.
  10. I'm a fan of the iplayer world service programmes. e.g. "Business Daily", "World Business Report", "Tech Tent" For some reason, the BBC tv-based news and current affairs programmes are awful (left-biased and dumbed down) but the radio ones are much better. ShareRadio is also worth a listen but their app is not as nice to use as Iplayer.
  11. NPV = Net Present Value (basically work out what an asset is worth if you had it today) EMI = Enterprise Management Incentive (HMRC approved employee share scheme) When you have a stock option, it tends to have a vesting period i.e. You get an option on 1000 shares, vested over 10 years. So in this case, you can exercise up to 100 per year. If the original price is at £1 but the shares are now at £2, you make £100 profit. Under EMI, you get entrepeneurs relief so only capital gains tax of 10% is payable (above your annual allowance). If the shares go below £1, don't exercise the option and make nothing. If you exercise the option and then gradually sell the shares, you can keep under your CGT allowance every year, double if married. So overall tax paid = 0%, Donald Trump would be proud. Even the subsequent divis under £5K per person are tax-free. All but one of my employers over the last 22 years had share-save or options schemes. The EMI is only suitable for small employers. Working when I get to keep 35% has no motivational value. It forces me to put more into SIPPs and retire even earlier, no good for my employer. My top designer announced his early (age<55) retirement last month which has kicked all this off. With EMI, they can lock me in for 10 years. I spend less than Frugal Git on stuff for myself so can wait for a (potential) bigger £ later on which I can give to the kids.
  12. Pay rise of £10K p.a. => I get to see £3500 of that. (effectively after income tax, NI, loss of employer NI contributions to pension and child benefit) Instead, go for options vesting at £20K p.a. with say a 50% chance of doubling over the vesting period => NPV of £10K. (so same as above). However, EMI rules mean no Income tax or NI, CGT at 10% but I can use my CGT allowance and spouse to effectively reduce further => NPV of ~£9500. => Riskier than cash but much higher net present value. Needs a suitable employer.
  13. My previous actions were : 1. Buy property from desperate seller in the 2010 dip with large garden for outbuildings and growing food 2. Equities in the 2016 dips. Mostly those with non-£ earnings in boring markets. 3. Maximise use of low-charge SIPP to defer taxes, reducing my marginal rate from 65%+ to 15% Next actions are: 1. Decline pay rises and make use of EMI option schemes to reduce marginal rates income from 65+% to ~5%. 2. Keep some cash in SIPP for occasional opportunities, e.g. P2P lending when the platform supports it 3. Some platinum when it gets cheap enough. I generally hate non-yielding investments but at least it's nice and shiny. 4. Develop outbuilding(s) for kids or tax-free rental income and generally spend as little as possible on consumption....
  14. I know a couple of BTL'rs and they just told me their accountant deals with all this stuff. They simply don't understand how any of this works.
  15. I think you have missed the point. It makes his life sustainable, not yours.
  16. Good luck getting an electrician. My usual guys were £150/day in 2010 when I was building extensions/outbuildings. Now its £400/day and no shortage of work. (Area = South Cambs)
  17. My top designer has just announced his early retirement (under 55). He has enough investments to provide an income at the tax-free threshold, mortgage-free and no dependants so doesn't need to earn any more. My manager did the same thing earlier in the year (age 57). Him and his spouse both get the tax-free threshold, no point working for any more. I'm maxing out SIPPs to do the same at 55. Avoid 40% income tax and 14% NI on the way in, keep the child benefit (paid net), withdraw 25% of SIPP tax-free, the rest at 20% tax and NI-free. Work a couple of days a week as a top-up if I feel like it. The key seems to be keeping your costs down so you simply don't need the highly taxed marginal income. The next generation with massive mortgage and student debt will be stuffed. I met up with a well-off Aunt last weekend. It turns out her side of the family are all part-time or non-workers now. They play the system to maximise credits/benefits. They were all the posh-side and we were the rough lot.
  18. One of my neighbours has a seriously disabled son that needs 24/7 care. (think adult nappies and mind of an <18 month old) The mother told me that when her time was up, she would kill the son first. I believe her.
  19. Yes, that's the one. He stopped his bond trading job in September to concentrate on this full time. Interesting history in F1 as well.
  20. A friend of mine is starting his own airline (UK<->India operating out of Stansted). He has a lot of wealthy backers but I hate to think how much of his own money is getting tied up in it.
  21. I think you meant "Great Rotation". This has been expected for quite a few years but doesn't seem to happen. The "It's different this time" is that the price of property and bonds has reached extreme highs whereas equities are just doing their usual volatility mood swings but the yields are not actually that bad, even as the market reach previous highs. Maybe earnings will collapse killing off the yield, maybe they won't. Now for my personal views.... 1. Bonds/property have been seen as safe. They won't be for long 2. Equities have been seen as risky (they are). The desperate search for yield will overcome this as they are now the least bad option. 3. Pension rules have changed dramatically. The tax advantages blow away the tax/leverage advantages that BTL provided. e.g. I can turn every £10 net into £60 net with ~no investment risk. (based on 65% EMTR, 25% tax-free withdrawal). Critically, you can get the money out from age 55 without the need for an annuity. If I want investment risk, the returns can go up at a long term average of 3-5% (but at a cost of principal risk/volatility). 4. BTL is under attack from HMRC. Pensions wrapper cannot contain BTL but do allow just about anything else. 5. The size of the bond market greatly exceeds the stock market. Even a "small rotation" would cause a massive boom. So based on that I've moved £250K into equities. If it halves, I can cope with it. If it doubles, I retire early, if it produces 3-5% for the next 10 years, I retire early. If I would have leveraged into BTL now, I would expect to lose the lot and be a forced seller of my main residence as well to cover the future losses.
  22. I came to a very similar view last year but waited until the Feb'16 and Brexit dips to pile in. Went mostly for FTSE100 with foreign earnings. BTL and Bonds money rotating into equities could produce a ridiculously large boom.
  23. I prefer to think of the glass as full. Half water, half air. Those fluids get everywhere.
  24. Worth a listen, I've now been through a few podcasts and the live shows. Ads aren't too intrusive, guests seem pretty knowledgeable (more than me anyway). I used to like the soundcloud podcasts with the moneyweek crew but that seems to have stopped. I also tried the bloomberg radio app but that was awful. Shareradio can be downloaded as an app (Android for me). Its not as slick as the bbc radio iplayer but good enough. I know many of you are BBC haters but the world service Business Daily and World Business Report are good.
  25. Yield on FTSE ~3%. QE-induced yield on everything else = 0%.
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