How to Start a Pension in the Face of Economic Armaggedon - The Bear and Badger

mk64

i would assume most people studied economics but you can teach yourself most of what is being spoken about here

drumbeg

I use a LifeStraqtegy 100% Equity Accu fund. I'm 42. Will look to reduce to 80% equity in a few years.

Good question. Thinking back, I think I just picked up bits and bobs from newspapers and friends. I think the best thing in your position is to get a financial advisor to set you something up and then explain all the terms.

RamSteelwood

SG done a post, seemed convincing, so I clicked some random links, put some money in a random fund. hopefully in several years time i'll be able to get more money back than i put in

If not I'll be hunting down SG...

Diluted Dante

I doubt many if any were taught it in school.

I've only learned any of this since the start of the thread. It's a dense and impenetrable subject, but the good news is that you don't need to learn too much to benefit.

Although with you living in Germany, I don't know how much you can take advantage. You won't be able to put into an ISA (Individual Savings Account, anything in it is not taxed), but there might be German/EU equivalents.

voices

Annual allowance of 40k, plus you can carry forward unused allowance from the previous 3 years. It's not that big a deal for most people in most years (or at least, those of us plebs without old school defined benefit pensions), but in the final few years before retirement it can be something to think about.

For example, if you've a large amount of savings sitting outside of pensions (from a second house sale or something), then put it in your pension pot just before you retire - you would get tax relief on the whole amount up to your annual allowance limit (sort of - this isn't the only tax consideration). Then 25% of the amount you draw from your pension is tax free.

Defined contribution stuff is a bit outside of my wheelhouse, but that's my understanding.

n0face

I don't know anything about it. Got the "start acting like a grown up" bug at the mo so thought i'd give it a go, trying not to piss all my money up the wall.

MattyJ

Didn’t learn anything about it in school. I’m sure my dad would tell me all he knows if I asked him, but wasn’t actively thought it.

Pretty much just realised I need to be a bit smarter about some of my money, saw the pandemic as an opportunity to get some good investment in and then basically listened to SG. Plus a bit of Googling to make sure he wasn’t completely off his rocker about it

Funkstain

When I started my business I had to learn about this stuff. It's like everything else - it has its own syntax and vocabulary, but with practice comes familiarity, and it's not particularly complicated compared to many of the things you already know and understand. The main problem is it's less interesting than many things, and part of a global finance system which is at best distrusted and at worst actively despised.

The realisation I came to was that the state cannot be counted on to look after me and mine when I retire, and that the more reliant on the state I would be, the longer I would have to work full time in jobs which mean little to me.

I put aside catastrophism - it's not like I don't believe it could happen (a collapse of capitalism leading to worthless shares), but it's a bit like the old "why shouldn't I smoke, I could get run over by a bus tomorrow". In the end I like to play the odds and it's more likely I'll die of cancer / heart disease than a bus-based mishap.

So I looked into it and there are plenty of resources online like "pensions for beginners" and the like, much like SG's OP here on investments contained in ISAs.

Again the most important takeaway is: if you want to save for a retirement without relying on the state, put something away - anything, however small - regularly into a pension, and invest it in a fund which doesn't cost you much (investment funds are run by large banks and fund houses, and they need to make their money). It doesn't matter if you're 20, 30 or 40; obviously being younger helps, but anything is better than nothing.

In this country, your contributions immediately attract tax relief, which as I've said mean for every 80p you put in, the government will top up 20p, an immediate uplift of 25%. Any money / profits made by your pension's investments are also tax free, and many companies will also top up your pension as part of your overall package (but only if you actively contribute yourself) - and as Drum says up there, at 55 you can take out up to 25% of the total sum tax free, to (say) pay off a mortgage if you've saved enough.

hylian_elf

Stuff like this isn't taught in school, but there is a charity that is trying to change this a bit.

https://redstarteducate.org/

hylian_elf

Lack of knowledge and exposure on matters of saving and pensions and retirement etc is a big issue, even among adults. Probably getting better. Government just not doing enough about it. It should have modules in national curriculum.

Dark Soldier

Noxy just put it all in shiba coin dude easy

drumbeg

My financial advisor said the average private pension pot in the UK was 20k. Pretty bad!

The_Emperor_of_Sand

Invest in sand tokens.

SpaceGazelle

https://coinmarketcap.com/currencies/sand-coin/

tigersgogrrr

Fuck off you slimy, 2 faced, double crossing wanker.

g.man

*chortle*

lastant

We started reading/listening into more of the FIRE (Financially Independent, Retire Early) movement blogs and podcasts a while ago and whilst I'm not convinced some of the early adopters' paths will ever be easily replicated these days the basics around it are well worth getting up to speed with - we're not planning on retiring super early, but it has got us into good habits and will hopefully mean we can both finish work at 60 at the latest.

The Monevator website is well worth a browse and this book is a reasonable summary of everything in hard copy and is UK based. Audio and video wise, ChooseFI are probably the most established podcast people, but I also enjoyed the Mad Fientist's material too. There's also a film (Playing With Fire) that you'll watch and come away thinking more about what you can change in regards to the future.

GooberTheHat

S&P 500 experiencing it's worst first half of a year since the 1970s. Probably a good time to chuck some money in as it will almost inevitably return to the status quo in another 6 to 12 months.

Dark Soldier

I'd expect 2024 before a proper back to the norm but aye its a good investment now. Prob go down more from here tbh

RamSteelwood

That makes me feel a bit better knowing my work pension is bigger than that...even if it still makes me a bit sad when i get annual summary and see the paltry amount it would work out to as a yearly pension!

drumbeg

Word. But, just think of it in terms of topping up your state pension and it won't seem so bad.

Currently state pension is £9620 per year. Your private income will be on top of whatever this figure is in the future. The caveat being you can't claim state until your are 68.

If I imagine myself right now living off £1500 p/m as a pensioner, then in my mind, that ain't bad at all (am assuming 0 rent/mortgage).

LivDiv

Been looking at my SIPP recently, same thing as this stuff really just locked into a pension rather than an ISA. Juggled some funds. Im not that well clued up really I just looked at some recommendations from trusted places like Forbes then checked how they were tracking. I use Hargreaves Lansdown for everything so just checked fund performance on their site.

In terms of learning I picked up what I do know from my dad. He learnt after his company pissed the pension pot up the wall when he was in his early 50s. Not enough time to accumulate a decent pension using the current workplace pension schemes which tend to be built for long term safety, he had to play the market a bit.

He got some advice from a company director then self learnt the rest. He couched a lot of his workmates through it as well who had ended up in the same boat seeing 25 years of pension contributions burned.

Funkstain

Woah. Hey. Was just thinking about you. Hope all good mate

LivDiv

You were always on my miiiiind.

Yeah all good cheers mate.

Dominar_Fybogel_XVI

Top tip - invest in Medigel Inc. I've made an absolute killing on that stock the last few cycles.

Dominar_Fybogel_XVI

Oops, wrong thread

drumbeg

So, with interest rates shifting as well as the general economic picture, I'm wondering whether to put money into a cash ISA to benefit from improved rates.

Should I wait and see what happens with rates later in the year? Would variable be better than fixed?

LivDiv

I know general advice is "leave, dont touch, everything will even out" but it might be worth looking at what funds people have right now and where they are centred.
A couple of previously healthy global funds I had just dropped. I ditched both and put the big one in America and the other into Asia.

If you have British funds you could wait for a potential BoE rate rise but personally I would move them on.

b0r1s

Got US funds so figure should be ok.

SpaceGazelle

Hopefully it's all American in here, or at least it should be.

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