Retirement.....

Wheels has hit the nail on the head. Property is a good feather in your cap, but not exclusively a better one. There is no one right answer, hence any sort of diversification is a good thing. Many pension portfolios invest in commerial property too, so if that floats your boat, you'd have a small holding.

Bricks and mortar also require repair and maintenance. One crap tennant can lead to thousands of pounds in damage. Then there's environmental factors. Look at recent news in cumbria. Average damage is £40k. Ok insurance covers it, but you're looking at maybe 6 months without a tennant.

You're reliant on the area the property is in to remain prosperous too. If the major industry declines, you're f**ked. Look at any mining town around the country.

So what is buying at the right place and the right time? There's a lot of variables and a huge gamble in your own interpretation.

I really cannot add amy more to what Wheels has offered. The fact that we've had differing point of views on investing, but are on the same wavelength here, speaks volumes.

What's easier to start? A pension from £20 a month, or buying a house, requiring 20% deposit, probably more like 25% on buy to lets at the moment. With reasonable properties over £100k, that's a lot of money to be risking.

There's no reason why you couldn't aim for both either, a pension and a property portfolio. At 23, what is the likelihood of you raising up to £25k in the next couple years? Then keeping money aside to maintain the property? Will a mortgage provider even lend to you? Is your credit history strong enough?

Then there's disposal of the asset. Rent will be subject to income tax. Property other than your main residence, the gain is subject to capital gains tax.  Again extrapolate that across a whole portfolio, you'll get bum raped by Mr Brown.

Commerical property could form part of a pension, but the risks with tennants are greater. Walk down your high street, wonder around trading estates, there's a lot of empty premesis.

Wheels

Blue_Lagoon3000

I never said it was easy its all about buying at the right place at the right time, it can be a pain with a large portfolio i have a contact who bought a load in a sh!tty area and he's constantly getting phone calls saying your tennant has left the house trashed and took all the appliances/furniture etc

But about yeild it can't really drop to 0% unless you have no tennant, and if your not in a saturated area you'll find tennants if you put the legwork/marketing in.

Having no tennant is common, your going to have a property vancant on average 10% of the year.  You sugest relying on a property manager to get new tenant, how motivated do you think they are?  Do you think they are putting that legwork and marketing in when you have a vacancy?  The agent in the last place I rented didn't start marketing until the day I moved out!  That means a gap of at least a month even if a tenant shows up within a week.  Extrapolate that across a property portfolio and the return will be devistated.

You also have no control over weather or not your area is saturated.  It might not be when you buy, but this can change dramaticaly in only a year or two.  When your planning to hold for long term, this is a serious risk.

Yes there can be times with no tennant but if you were clever about it you can get new tennants ready asap for the move, regardless of that most investors will understand that they may have vacant properties on occasion but most will have a contingency budget for these types of scenarios.

Rosc0PColtrane



There's no reason why you couldn't aim for both either, a pension and a property portfolio. At 23, what is the likelihood of you raising up to £25k in the next couple years? Then keeping money aside to maintain the property? Will a mortgage provider even lend to you? Is your credit history strong enough?

My credit rating isnt perfect right now as i have had a few debts in the past even a few defaults earlier this year when i set up a business but its getting better all the time, I doubt they would even give me a Mortgage right now but the banks have said that another 6 months on this income and it will be looking good for pretty much anything mortgage/finance wise.
 
Personally i still think investing in property but thats only what people 'on the ladder' have told me, i was with a guy this morning whos 54 he's got 23 properties and he could retire today if he wanted to and just manage the properties. Sounds sweet and much better than getting a pension.

whats the best bit of advice you could give to someone who is looking for a pension Rosc0pColtrane ? in brief

Frost


whats the best bit of advice you could give to someone who is looking for a pension Rosc0pColtrane ? in brief

Have a look online at providers. It's difficult to get to grips with comparisons really. The returns they suggest are based on projections, so not an indication of how it will do. More "If it averages 5%, you get x from investing y, if it averages 7%...9%...."

I'm a commercial F.A. I'm tied to one product provider. Scottish Widows. As such, I cannot really comment on other providers. Though Scottish Widows has won awards 7 years running for it's pension products.

As I work directly through a bank, I don't charge customers for time. I'm salaried. An independent FA should be able to offer more ranges of products, form the whole range on the market place, but could charge for their time and as they're dependent on what they sell for income. There's always a chance their decisions could be swayed by commission payments too.

The best bit of advice is to plan for retirement now, not later. Potentially pick a strong brand that has plenty of experience and track record in the industry (ie. Scottish Widows ).

If I can answer any questions, or provide any info around products and process, please feel free to ask.

cheers thanks :)

Do independant FAs usually have our best interests?

Someone I know is convinced that because they get a fee, they don't necessarily favour the best plan.

I have used an independant FA to arrange my pension, although he was chosen by my company.

Also, I have used a mortgage adviser who works for an estate agent when arranging my mortgage.
He said that he gets paid a salary no matter what so can give unbiased advice to the best mortgage.
When I bought the house it was through his estate agency.
Yet three years later when I remortgaged I went back to him.
I didn't have to pay a fee, so what does his employer (the estate agency) get out of it?

Varg


Do independant FAs usually have our best interests?

Someone I know is convinced that because they get a fee, they don't necessarily favour the best plan.

I have used an independant FA to arrange my pension, although he was chosen by my company.

Also, I have used a mortgage adviser who works for an estate agent when arranging my mortgage.
He said that he gets paid a salary no matter what so can give unbiased advice to the best mortgage.
When I bought the house it was through his estate agency.
Yet three years later when I remortgaged I went back to him.
I didn't have to pay a fee, so what does his employer (the estate agency) get out of it?

It's a little luck of the draw, it depends on the person you see and their moral compass. Though that is true of all advisors.

Independents do earn a fee, but no one goes to work for the hell of it. Advisors employed by banks don't, but could potentially earn a performance related bonus. The limitation is that they can only talk about the product provider(s) the bank are tied too. Independents should talk about the whole market place.

The way the process is set up, it's all transparent and the advisors should tell you what commission they earn.

The estate agents would get a commission payment from the mortgage provider. That would be used to pay the advisors salary as well as count toward their gp. Your mortgage advisor will probably earn a performance related bonus if he sells enough mortgages.

Cheers for that, I think I understand

What are you not sure on?

Sorry, misleading smiley maybe?

Your explanation was very clear - I do understand now!