Retirement.....

Re:Retirement..... (Varg)

Mon, 23 Nov 2009 21:47:59 GMT

Sorry, misleading smiley maybe?

Your explanation was very clear - I do understand now!

Re:Retirement..... (Rosc0PColtrane)

Mon, 23 Nov 2009 21:39:43 GMT

What are you not sure on?

Re:Retirement..... (Varg)

Mon, 23 Nov 2009 21:32:21 GMT

Cheers for that, I think I understand

Re:Retirement..... (Rosc0PColtrane)

Mon, 23 Nov 2009 20:05:57 GMT

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.

Re:Retirement..... (Varg)

Mon, 23 Nov 2009 14:54:31 GMT

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?

Re:Retirement..... (Frost)

Mon, 23 Nov 2009 14:47:42 GMT

cheers thanks :)

Re:Retirement..... (Rosc0PColtrane)

Sun, 22 Nov 2009 19:39:17 GMT

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.

Re:Retirement..... (Frost)

Sun, 22 Nov 2009 16:02:48 GMT

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

Re:Retirement..... (Blue_Lagoon3000)

Sun, 22 Nov 2009 15:57:58 GMT

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.

Re:Retirement..... (Blue_Lagoon3000)

Sun, 22 Nov 2009 15:45:14 GMT

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.

Re:Retirement..... (Rosc0PColtrane)

Sun, 22 Nov 2009 13:39:56 GMT

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.

Re:Retirement..... (Wheels)

Sun, 22 Nov 2009 12:58:54 GMT

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.

Re:Retirement..... (peagreen)

Sun, 22 Nov 2009 12:44:19 GMT

It is sometimes better to take a slight loss on a tenant and have a reliable one, than to have unreliable or worse empty properties. As an investment topping up by a fifth is now respectable, I was told that the days are gone that you make a profit on an investment property!! Of course it is quite easy to build a portfolio once you have one buy to let because you seem to be able to get mortgages a lot easier but then if it does go wrong it can be a long way to fall!!

Re:Retirement..... (Blue_Lagoon3000)

Sun, 22 Nov 2009 12:41:58 GMT

Wheels

Blue_Lagoon3000

Yes recessions can lower rental but not by much though £100 tops, and there may be borrowing involved for the mortgage but whats so risky about that when all you have to do is keep tennants in?

lol. Your yeild can drop to 0%, no tenant = no money to pay mortgage etc. Gaps in tenants is what kills real estate investors who buy and hold. Getting and holding good tenants in a flooded market is hard, relying on a property manager to do it is just plain bonkers. Your going to pay them, what, 10-15% as well? That will put your investment into a loss vs inflation.

The reality is it's much harder than it looks and there are very few people who manage it successfully over the long term. There are much better ways to make money in real estate.

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.

Re:Retirement..... (Wheels)

Sun, 22 Nov 2009 12:30:31 GMT

Blue_Lagoon3000

Yes recessions can lower rental but not by much though £100 tops, and there may be borrowing involved for the mortgage but whats so risky about that when all you have to do is keep tennants in?

lol. Your yeild can drop to 0%, no tenant = no money to pay mortgage etc. Gaps in tenants is what kills real estate investors who buy and hold. Getting and holding good tenants in a flooded market is hard, relying on a property manager to do it is just plain bonkers. Your going to pay them, what, 10-15% as well? That will put your investment into a loss vs inflation.

The reality is it's much harder than it looks and there are very few people who manage it successfully over the long term. There are much better ways to make money in real estate.

Re:Retirement..... (Blue_Lagoon3000)

Sun, 22 Nov 2009 12:16:34 GMT

Wheels

Blue_Lagoon3000

Bricks and mortar do not dissapear, sure recessions can effect sale values but i am 100% correct in saying that investing in to property is better than investing in a risky pension plan.

Recessions can and do kill rental yields as well. The only way for you to buy a property porffoilo is through borrowing, that increases the risk dramatically, much higher than a pension.

Your judgement of risk in this case is wrong, as is you idea property is a better investment. Over the long term, the return on property is only a fraction of shares and not much better than gilts with a much higher risk.

Yes recessions can lower rental but not by much though £100 tops, and there may be borrowing involved for the mortgage but whats so risky about that when all you have to do is keep tennants in?

Re:Retirement..... (Blue_Lagoon3000)

Sun, 22 Nov 2009 12:12:00 GMT

peagreen

Blue_Lagoon3000

Yeah and to be truthful i don't even have 1 of my own yet so im no tycoon by any means, but i do know a lot about the property market as i was working for a property investment firm at a young age.. I plan to buy and start investing next year. And yes keeping tennants in is not easy but for that you can use management companies who spend all day every day looking for tennants, if stuck you can buy tennants or just give them a % of the rent.

Aren't you still only just out of nappies anyway Blue?

Yep im just out of nappies but knowing what i know already at 23 is giving me a good start in to this messed up yet beautiful world.

Re:Retirement..... (peagreen)

Sun, 22 Nov 2009 11:28:39 GMT

Blue_Lagoon3000

Yeah and to be truthful i don't even have 1 of my own yet so im no tycoon by any means, but i do know a lot about the property market as i was working for a property investment firm at a young age.. I plan to buy and start investing next year. And yes keeping tennants in is not easy but for that you can use management companies who spend all day every day looking for tennants, if stuck you can buy tennants or just give them a % of the rent.

Aren't you still only just out of nappies anyway Blue?

Re:Retirement..... (Blue_Lagoon3000)

Sun, 22 Nov 2009 10:34:11 GMT

Varg

Blue, that would be my preffered retirement plan as well but it's getting one extra property never mind 10 that is the difficult part.

Not to mention that this isn't a solution for everyone because you will always need tenants, who will not presumably have their own property empire.

Yeah and to be truthful i don't even have 1 of my own yet so im no tycoon by any means, but i do know a lot about the property market as i was working for a property investment firm at a young age.. I plan to buy and start investing next year. And yes keeping tennants in is not easy but for that you can use management companies who spend all day every day looking for tennants, if stuck you can buy tennants or just give them a % of the rent.

Re:Retirement..... (Wheels)

Sun, 22 Nov 2009 10:32:25 GMT

Blue_Lagoon3000

Bricks and mortar do not dissapear, sure recessions can effect sale values but i am 100% correct in saying that investing in to property is better than investing in a risky pension plan.

Recessions can and do kill rental yields as well. The only way for you to buy a property porffoilo is through borrowing, that increases the risk dramatically, much higher than a pension.

Your judgement of risk in this case is wrong, as is you idea property is a better investment. Over the long term, the return on property is only a fraction of shares and not much better than gilts with a much higher risk.