House deposits?

[crewy]

If i was you SF (thank god i'm not ) I would put all my efforts and opinions into saving up money for a deposit, rather then to justify some thing that is a bit of a con and insulting people that are giving you good and honest advice!!!

[redken1]

I agree with a lot that has been said with regard to renting. I still blame Thatcher for stopping the building of council houses – no surprise there then. In the long-term LA’s always recoup the initial outlay. I was talking to a German chap some time ago and he was comparing the UK’s house purchasing habits to that of his motherland. In the UK many of us tend to buy a house/flat foremost as an investment. In contrast, according to this chap, Germans tend to buy a home and stay there for most of their lives. Perhaps Lisa can confirm as to whether or not this is indeed the case.

[Toph]

whats a mortgage????......... ;-) is that one of those things that other people have... :-)

Jaydee, a mortgage is something that I will have paid off in 15 months time!!

[Ducatista]

Buying a house is a good idea long term.
Currently all indicators are downwards for prices, so you need to consider your timing. Public sector job losses have yet to kick in fully.

Overpayment is a great idea. The nitty gritty of doing it monthly is a different matter.

If you ever pay higher rate tax or your employer offers to match your contributions to a pension then not paying into a pension would be a bad thing to do, but I realise that might not be your circumstances.

I don't personally think you would unlock "lots" of capital if you are going from a 3 bed semi.
My in-laws downsized 8 years ago, they sold their 3 bed semi for £135K and bought a flat for £100K.
I know prices have gone up in the last 8 years, but the point is that the capital released is the wrong ball park to significantly supplement a pension and flats are not a great deal cheaper than your average family home.

I don't think you should count on an inheritance in your financial planning.
Apart from the fact that it could go to the toy boy/cats home, more realistically it could be spent on long term care or you could find you are retired well before you get it with people living longer.

[redken1]

SF, Pensions? I wouldn't trust the City gamblers with my hard earned.
Downloaded the following. Safer sticking it under the bed.

Economic uncertainty around the globe, prompted by a number of key factors emanating from the US, the Euro zone and the Middle East, has panicked investors somewhat, causing them to ditch shares in riskier asset classes in favour of what are historically viewed as safer investments, namely bonds, gilts, gold, commodities and property. This rush to sell has sent the price of shares into a tailspin, with all key global exchanges enduring something of a rollercoaster ride.
The impact of this turmoil has been bad for all but those that have the reassurance of guaranteed final salary pension schemes. In the last month alone, £120 billion was wiped off the value of UK pension savings and, according to research undertaken by the firm Towers Watson, the pensions deficit of firms listed on the FTSE 350 has widened by a daily average of £2 billion, increasing from £52 billion at the end of June to £73 billion as of the 10th August. Worse news for holders of pensions reliant on equity growth was the assertion made by Price Waterhouse Coopers that members of pension schemes would have been financially better off had they kept their money under a mattress rather than investing it!

[Ducatista]

I wouldn't trust the City gamblers with my hard earned.

You don't have to.
A pension is merely a wrapper (like a ISA).
What you invest in is up to you.
For example if you like property then you could invest in a property fund. You could also invest in bonds/gilts/cash.
A pension doesn't mean you just have to invest in stocks and shares it's just a wrapper that's all.
The underlying invstments (which can include cash) are up to you.

I get a 5% contribution from my employer plus 40% income tax relief which means I only have to put in 3% of my salary to get a 10% contribution (HMRC pays 2% in tax relief, employer pays 5%).
Frankly you'd be nuts to turn this kind of deal down especially if it's on some false assumption that pensions equals stocks and shares - that's simply false, you can pick whatever investments you want including cash.

Economic uncertainty around the globe

This is complete knee-jerk reaction stuff.
Stocks and shares are LONG term investments and can go up and down.
I'm not worried about what happened between June & August because I have 25 years til retirement.
If you are retiring soon then you should be moving your investments into safer types with less volatility.

To say you shouldn't invest in pensions because of short term volatility is rubbish.
Firstly you can invest in anything (cash, gilts, bonds, share, with profits etc.) and secondly equities are for the LONG term. If you invest in equities and don't undertstand they can do down as well as up then frankly you shouldnt' be investing in them, but you can still take advantage of the tax relief offered by pensions even if you want to leave it in cash.
Putting it under the mattress is risky because - there is guaranteed to be no return, no tax relief, it will go down in real terms and it could get stolen/soiled etc. (and yes I know you didn't mean it literally but the inflation and shortfall risks are still there).

Property or cash can be an alternative to more traditional investments but generally it's best not to have all your eggs in one basket and you need to consider the tax implications. The government offer tax incentives for pensions because they want to encourage people to save for their old age.

[redken1]

I am certainly no expert on pensions but, I remain sceptical. Back in the 80’s, I took out a 25 year endowment mortgage policy. Prior to signing the application forms, the advisor of a reputable financial institution advised me that in all probability, when the policy matured I could expect to receive a significant amount of cash after paying-off my mortgage. I lost £1000’s – where did all my money go?
Back to pensions, Royal Mail has a £10bn black hole in its retirement postbag – the biggest pension deficit in UK corporate history.
The size of the bill for payments to former mail staff will easily overtake the pension’s deficits hanging over other British companies, such as the £9bn revealed by telecoms group BT, or the near £3bn liability at airline BA.
The aforementioned are just a few of the high profile cases relating to the pension’s fiasco. There are hundreds of horror stories of pension scandals on the internet. I was reading one of many- a company went bust and the pension scheme was wound up leaving the contributors, the redundant workers with sweet FA. Nothing is certain and no one can predict what will happen when we reach retirement age. The government could be on to something – if they keep raising the retirement age there will be no need for a state pension.
>

[Ducatista]

when the policy matured I could expect to receive a significant amount of cash after paying-off my mortgage

We had a similar experience.
Did you make a mis-selling claim?
We did and got the £1500 back that we had lost.

I lost £1000’s – where did all my money go?

Bad investments. But that does not mean that you should never invest again.
An analogy is getting food poisioning and deciding never to eat again !!
I'm sure you would agree that would be a bad decision.

Nothing is certain and no one can predict what will happen when we reach retirement age.

True there are risks.
But you need to understand there are risks with doing nothing (having a very poor retirement) and risks with putting it under the mattress (not even keeping up with inflation).

The government could be on to something – if they keep raising the retirement age there will be no need for a state pension.

We are all living longer and therefore pensions are getting more expensive.
Yes, the government will have to default in some ways because it's a cast iron certainty that they cannot afford their liabilities.
I don't expect to get a state pension and I'm planning for it.

I would say two things.
Don't have knee-jerk reactions about things you read in ther paper, do some proper reasearch. A pension is merely a tax free wrapper that's all. It's the underlying investments that count and we all know that the meeja just want to sell papers etc. and are all morally corrupt anyway e.g. phone hacking scandal.
Secondly if you do decide you don't like pensions or investments then that doesn't mean it's ok to do NOTHING. That way you'll have a really miserable last few decades. Regardless of how you do it, you still need to plan your retirement, so it's not going to help just to throw the towel in.

[redken1]

Ducatista, thanks very much for your advice, I have taken on board what you have said. I like your analogy – a bout of food poisoning won’t stop you from ever eating again but, it certainly makes you more careful about what you consume in the future.


“Don't have knee-jerk reactions about things you read in the paper.”
I never do – I have been dealing with the media/press for over 25 years as a press officer and in a personal capacity.

Perhaps you could offer me some further advice on how you quote sections of a post and repost it, I keep making a hash of it. Thanks
:-[

[Toph]

When I took out my endowment mortgage policy in 1987, I was informed by the salesman(who worked for a market leading company) that when it matured it would pay the mortgage and the extra would buy me a holiday, or a new car, etc etc..
About 10 years ago , I received a letter informing me of a shortfall, a £12,000 shortfall, we made a mis-selling claim and their only offer was £3500, take it or leave it, leaving the final repayment £8,500 short.
I have since started an ISA that matures when the mortgage does, to cover the shortfall.
In my opinion, endowment policies were sold, as a product, for the intention of paying off a mortgage, the fact hat they do not
makes them not fit for purpose , the financial institutions should have been obliged to at least cover the mortgages of their customers, there's always plenty of money for their bloody bonuses. >