Where To Invest

[Topher Bear]

I am about to start my company pension scheme and was looking for advice. Don't worry, my decision will be my own and I won't hold any one to account.

Personally I would rather not do it, but its the only way to remove some tax and get the money doubled by the company. I am a low risk person. I reckon the economy is about to turn a corner and in down a very dark alley. So I consider the stock market a very bad investment right now. Also we all know property is a bad idea, especially commercial stuff, which leaves me with cash, but cash may well suffer from high inflation and low rates. I also don't want to put more money in big london banks. If they had am option for cash in a credit union I might in for it!

What is the hpc advise for best safeguarding pension investments, metals are not included. I do have the option of different countries and stuff.

[LuckyOne]

I am about to start my company pension scheme and was looking for advice. Don't worry, my decision will be my own and I won't hold any one to account.

Personally I would rather not do it, but its the only way to remove some tax and get the money doubled by the company. I am a low risk person. I reckon the economy is about to turn a corner and in down a very dark alley. So I consider the stock market a very bad investment right now. Also we all know property is a bad idea, especially commercial stuff, which leaves me with cash, but cash may well suffer from high inflation and low rates. I also don't want to put more money in big london banks. If they had am option for cash in a credit union I might in for it!

What is the hpc advise for best safeguarding pension investments, metals are not included. I do have the option of different countries and stuff.

A lot of people think that they know what is going to happen next. Nobody actually knows what is going to happen next all the time no matter how strongly they feel about what they think will happen next.

In my opinion, diversification across asset classes, currencies and geographical areas is the approach to take.

Buying some stocks (including some miners), some bonds, some riskier asset classes and some cash spread across the world will probably never make you ecstatic and it will probably never make you despair.

Keep your percentages constant and rebalance back to your original percentages every time you put in more money. The temptation is to invest additional money in areas that have done the best. As markets tend to revert to the mean over time, it is my experience that it is, on average, best to invest additional cash in the under performers although there will be times when that is a bad strategy.

Caveat Emptor and all that .....

[Neverland]

I am about to start my company pension scheme and was looking for advice. Don't worry, my decision will be my own and I won't hold any one to account.

Personally I would rather not do it, but its the only way to remove some tax and get the money doubled by the company. I am a low risk person. I reckon the economy is about to turn a corner and in down a very dark alley. So I consider the stock market a very bad investment right now. Also we all know property is a bad idea, especially commercial stuff, which leaves me with cash, but cash may well suffer from high inflation and low rates. I also don't want to put more money in big london banks. If they had am option for cash in a credit union I might in for it!

What is the hpc advise for best safeguarding pension investments, metals are not included. I do have the option of different countries and stuff.

Take a good look at the charges in your staff pension scheme both from the scheme administrator and the fund managers

If in total they are charging more than 1% of your fund they are ripping you off

Charges on many staff pension schemes can easily take 25% or more off your investment returns over 30 years

If the charges are high, find a low cost SIPP and regularly (every six months/year) transfer your funds into the SIPP

Once you get the leeches off your back it becomes a lot easier to see investment growth

You gonna have to get allocation advice from someone else though

[Lepista]

Can't believe nobody has mentioned the yellow shiney stuff yet.

Just saying.

[VeryMeanReversion]

I reckon the economy is about to turn a corner and in down a very dark alley.

Then put it in cash funds and wait and take the inflation hit. I have done the above after selling my last shares a month ago.

For a top-rate taxpayer in your scheme, the gains can be better than doubling as you get nearer age 55.

1. Contribute £100 (costs you £60 in lost income), company matches and adds £100. Total in fund now £200.

2. Take out £50 tax-free at age 55

So a fund of £150 cost you £10 net (ignoring charging and inflation but you see the point). You can income drawdown the fund, getting the last £10 out in the first year. Pay income tax on this, assume basic rate taxpayer => you get £8

So you fund of £140 costs £2. Now scale this up for bigger contributions and retire to low-tax country

Doing step 1 with salary sacrifice is even more efficient. Free money. The limit will be your company contribution, even without that a salary sacrifice scheme where the company puts in the employer/employee NI contributions helps a lot.

If the particular fund your company has chosen has high charges, negotiate with the pension provider to get the charges down, if you can put away several hundred and month of have £50K in the funds, you can get 0.6%. Even if they still charge 1%, just move the pension to a SIPP when you leave, they may not allow transfers out whilst you are still an employee.

[Lepista]

Then put it in cash funds and wait and take the inflation hit. I have done the above after selling my last shares a month ago.

For a top-rate taxpayer in your scheme, the gains can be better than doubling as you get nearer age 55.

1. Contribute £100 (costs you £60 in lost income), company matches and adds £100. Total in fund now £200.

2. Take out £50 tax-free at age 55

So a fund of £150 cost you £10 net (ignoring charging and inflation but you see the point). You can income drawdown the fund, getting the last £10 out in the first year. Pay income tax on this, assume basic rate taxpayer => you get £8

So you fund of £140 costs £2. Now scale this up for bigger contributions and retire to low-tax country

Doing step 1 with salary sacrifice is even more efficient. Free money. The limit will be your company contribution, even without that a salary sacrifice scheme where the company puts in the employer/employee NI contributions helps a lot.

If the particular fund your company has chosen has high charges, negotiate with the pension provider to get the charges down, if you can put away several hundred and month of have £50K in the funds, you can get 0.6%. Even if they still charge 1%, just move the pension to a SIPP when you leave, they may not allow transfers out whilst you are still an employee.

And that is (one of the many things) that is wrong with our tax / pension rules.

[Neverland]

Then put it in cash funds and wait and take the inflation hit. I have done the above after selling my last shares a month ago.

For a top-rate taxpayer in your scheme, the gains can be better than doubling as you get nearer age 55.

1. Contribute £100 (costs you £60 in lost income), company matches and adds £100. Total in fund now £200.

2. Take out £50 tax-free at age 55

So a fund of £150 cost you £10 net (ignoring charging and inflation but you see the point). You can income drawdown the fund, getting the last £10 out in the first year. Pay income tax on this, assume basic rate taxpayer => you get £8

So you fund of £140 costs £2. Now scale this up for bigger contributions and retire to low-tax country

Doing step 1 with salary sacrifice is even more efficient. Free money. The limit will be your company contribution, even without that a salary sacrifice scheme where the company puts in the employer/employee NI contributions helps a lot.

If the particular fund your company has chosen has high charges, negotiate with the pension provider to get the charges down, if you can put away several hundred and month of have £50K in the funds, you can get 0.6%. Even if they still charge 1%, just move the pension to a SIPP when you leave, they may not allow transfers out whilst you are still an employee.

Interestingly tax relief for higher rate taxpayers costs the country about the same annual bill as public sector pension payments

Luckily both are being cut

[_w_]

I am about to start my company pension scheme and was looking for advice. Don't worry, my decision will be my own and I won't hold any one to account.

Personally I would rather not do it, but its the only way to remove some tax and get the money doubled by the company. I am a low risk person. I reckon the economy is about to turn a corner and in down a very dark alley. So I consider the stock market a very bad investment right now. Also we all know property is a bad idea, especially commercial stuff, which leaves me with cash, but cash may well suffer from high inflation and low rates. I also don't want to put more money in big london banks. If they had am option for cash in a credit union I might in for it!

What is the hpc advise for best safeguarding pension investments, metals are not included. I do have the option of different countries and stuff.

Save for major technological innovations we are moving decidedly to the left long term.

http://macromon.wordpress.com/2011/02/15/the-global-pain-of-rising-food-prices/

[gravity always wins]

Remember if you invest in something that generates a yield you have to make sure that the counterparty can fulfil their obligation in real terms.

Its not the return on your money you need to be worried about but the return of your money.

Got gold?

But don't forgrt you can always eat paper even when it is worthless but I wouldn't advise eating too much gold.

Just thought I would get that argument out of the way!

[SHERWICK]

1. Agriculture (not simply grain commodities, but everything in the supply chain, and water).

2. Emerging markets (not only China).

3. Rare Earth Metals (not simply gold: http://finance.yahoo.com/q?s=REMX).

That should cover everything

[SHERWICK]

1. Agriculture (not simply grain commodities, but everything in the supply chain, and water).

2. Emerging markets (not only China).

3. Rare Earth Metals (not simply gold: http://finance.yahoo.com/q?s=REMX).

That should cover everything

Forgot to add: use ETFs if possible.

[General Congreve]

Can't believe nobody has mentioned the yellow shiney stuff yet.

Just saying.

OK, I will.

You can't have it in a pension as far as I'm aware. There is currently what is being seen as a test case in Holland. A private pension fund there has 13% of the fund that it operates for 1000 pension investors in gold bullion. The Dutch central bank has decreed they must sell most of the gold, only being allowed to keep 2.7% of the fund in gold. The reason? Gold is too volatile an investment.

This is currently in court and if the authorities get there way it is likely such legal action will spread across the western world in an effort to stop private pension funds from off loading dodgy bonds and buying fiat threatening gold instead. Of course, forced gold sales also frees up gold for bullion banks to make urgent deliveries, as the market gets progressively tighter due to higher demand and more customers taking delivery.

This is essentially the thin end of the wedge in gold confiscation.

As regards the OP, you could always sack off what seems like a good deal with employer's contribution and tax exemption and buy gold with what would have been your own pension contribution, but it's a risk like any financial decision.

[gravity always wins]

OK, I will.

You can't have it in a pension as far as I'm aware. There is currently what is being seen as a test case in Holland. A private pension fund there has 13% of the fund that it operates for 1000 pension investors in gold bullion. The Dutch central bank has decreed they must sell most of the gold, only being allowed to keep 2.7% of the fund in gold. The reason? Gold is too volatile an investment.

This is currently in court and if the authorities get there way it is likely such legal action will spread across the western world in an effort to stop private pension funds from off loading dodgy bonds and buying fiat threatening gold instead. Of course, forced gold sales also frees up gold for bullion banks to make urgent deliveries, as the market gets progressively tighter due to higher demand and more customers taking delivery.

This is essentially the thin end of the wedge in gold confiscation.

As regards the OP, you could always sack off what seems like a good deal with employer's contribution and tax exemption and buy gold with what would have been your own pension contribution, but it's a risk like any financial decision.

Disgraceful action by the Dutch central bank and we all know what they hold in their vaults.

[nohpc]

With regards to your pension it doesn't matter if you are invested in equities and the stock Market tanks as you will then benefit hugely from pound cost averaging.

[longtomsilver]

Pensions and houses are a terrible investment in my opinion. The main reason is that they usually end up being your largest most visible asset and you can't exactly hide it under the matress which is why governments prefer this kind of prudence.

I can see gold hitting $2000 an ounce even though it's pretty effing useless.

Shares are a difficult one. There are some on here that say remain clear however others will continue to clean-up with big profits, they are long term investments and so long as you chose your stocks wisely, diversify but not spread too thinly and buy through the peaks and troughs (more so in the dips) you stand to gain.

One of my predictions is that for those of us in their 20s, 30s and early 40s the state pension will be replaced completely by the pension credit. Using todays rate of £97.65 as an example. If you have a private pension paying £57.69 weekly (£3k per annum) they may taper it so you lose £1 for every £2 earned from private income, reducing your credit from £97.65 to £68.81 and so on. In this example you'd now recieve £126.50 and using the top-up scheme (taking with one hand and giving with the other) they would give you an additional credit of £6.10p to get you to the guaranteed minimum pension of £132.60 so like the minimum wage it will mean nearly every pensioner in the land has the same prole wage.

Edited February 16, 2011 by tomposh101

[Realistbear]

A lot of people think that they know what is going to happen next. Nobody actually knows what is going to happen next all the time no matter how strongly they feel about what they think will happen next.

In my opinion, diversification across asset classes, currencies and geographical areas is the approach to take.

Buying some stocks (including some miners), some bonds, some riskier asset classes and some cash spread across the world will probably never make you ecstatic and it will probably never make you despair.

Keep your percentages constant and rebalance back to your original percentages every time you put in more money. The temptation is to invest additional money in areas that have done the best. As markets tend to revert to the mean over time, it is my experience that it is, on average, best to invest additional cash in the under performers although there will be times when that is a bad strategy.

Caveat Emptor and all that .....

Concur with highlighted bit above. In the months ahead it is my opinion, upon which no reliance whatsoever should be made other than at your own peril, is that sterling will tank and the safest bet will be other than European related currencies. Commodities will bust as Warren Buffett warned but not yet--fulcrum point is getting close though. Bonds may yet be a place to be toward the latter part of the year as they are selling off at present.

[Butthead]

I think important questions that need to be asked before providing a helpful answer would be how old are you and how actively do you intend to manage the investment and switch in future?

Few people actively switch their pension investments regularly, even fewer do it successfully, so are you going to be someone who does?

If you are then advice from people here might be useful. Invest as you decide, good luck.

If you aren't though, as most people aren't, then you should pick something that provides suitable exposure to several asset classes in a way that fits your low risk appetite and the term of investment. The provider should be able to help you with that, albeit with varying degrees of sophistication. In this latter situation, opting for "gold", "cash" or indeed any one thing at all is dangerous because even what's right now might be very wrong in the not-too-distant future.

[Kurt Barlow]

I currently don't have a pension scheme but quite a large surplus income. My pension stratgegy is as follows;

Wide diversification in stocks both geographically and by sector. I tend to target stable companies with a good yield and dividend cover.

I am saving cash whilst I can do so at a better rate than the interest I pay on my mortgage (for a house which is rented out). As soon as that changes the mortgage will be paid down

I have also started to engaged in family credit union - lending money to relatives (mainly cousins) at a rate that suits both parties.

[Diver Dan]

Disgraceful action by the Dutch central bank and we all know what they hold in their vaults.

Tulip Bulbs?

[nohpc]

Pensions and houses are a terrible investment in my opinion.

If your company puts a contribution in every time you make a contribution you are basically taking a pay cut if you don't participate.

If it wasn't for employers contribution I wouldn't bother with pensions and stick to the ultra flexible ISA instead and maintain full control of your money with no risk of government interference

[longtomsilver]

If your company puts a contribution in every time you make a contribution you are basically taking a pay cut if you don't participate.

If it wasn't for employers contribution I wouldn't bother with pensions and stick to the ultra flexible ISA instead and maintain full control of your money with no risk of government interference

If it works for you. I can't stand pensions as I had a nasty experience with them... same as you, AVC 8% and company contribution of 6% left the company after 3 years in 1999 with £20k in 2009 it had been whittled down to just under £2k through bad fund management (well known firm), it currently stands a smidgen under £4k. I wish I had spent that taxed 6% on something else instead.

[Butthead]

If it works for you. I can't stand pensions as I had a nasty experience with them... same as you, AVC 8% and company contribution of 6% left the company after 3 years in 1999 with £20k in 2009 it had been whittled down to just under £2k through bad fund management (well known firm), it currently stands a smidgen under £4k. I wish I had spent that taxed 6% on something else instead.

Really the mistake here is to have not reviewed the arrangement after you left. Few people would keep a mortgage for 10 years without reviewing it to see if it was still the best option, why not your pension? Why didn't you notice when it had fallen to £15k? £10k? ..and then do something about it?

[longtomsilver]

Really the mistake here is to have not reviewed the arrangement after you left. Few people would keep a mortgage for 10 years without reviewing it to see if it was still the best option, why not your pension? Why didn't you notice when it had fallen to £15k? £10k? ..and then do something about it?

Most of the money was lost in the year I left so couldn't make the switch at the time. the company switched the scheme to ABN just before I left the firm and at the time it was hardly a sizeable chunk of money so I forgot about it.

[danlee74]

If your company puts a contribution in every time you make a contribution you are basically taking a pay cut if you don't participate.

If it wasn't for employers contribution I wouldn't bother with pensions and stick to the ultra flexible ISA instead and maintain full control of your money with no risk of government interference

Agreed nohpc ... my company will match my contributions up to 3% so I put 3% in, company puts 3% in and I use the salary sacrifice scheme. I am not sure what I chose as my investment divergence but it is tucked away in all my paperwork if I ever need to remind myself ... perhaps I should take a look?!!

I know that if I wasn't making contributions then I would be losing out ... imo, it's a no-brainer to contribute, even if you invest the minimum. I do not miss the contribution from my monthly income but know that it is being doubled (and then some due to salary sacrifice) and I hope my investment choice was good!

[porca misèria]

There's no argument with the tax-efficiency of a pension, nor with the flexibility of a low-cost SIPP.

Between Feb.2008 and Nov.2011 when I was in a high-paid job I put £80k into a pension. It's now worth over £200k.