Clean It Up
UK Floor Cleaning Forum => Carpet Cleaning Forum => Topic started by: Doug Holloway on May 19, 2013, 10:24:22 am
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Hi Guys
It has come up another thread that one of our successful fellow contributors has made no pension provision and intends working part time for a longer period.
While this is an option provided ones fitness allows, both mentally and physically it is surely better to make provisions.
I have paid into a personal pension for over 20 years although the amount I would currently get wouldn't' pay my bar bill.
Over the past 30 months I have invested in an ISA and with a fair wind am showing a 30% profit. I also have a small SIPP.
My plan is to max my ISA each year, reinvesting dividends and anymore I can add to my SIPP, hopefully allowing me to sell the business in ten years time(65) and retire without having to talk about CC .
Cheers
Doug
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I have various provisions the taxman is going to have a birthday with me when I retire but one fly in the ointment is that I have 2 properties that ill end up giving to the kids as they'll never be able to get onto the property ladder otherwise which takes away a decent part of my pension I do intend to go part time just to keep the grey matter working and keep myself fit.
Shaun
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Shaun.... Rent the properties to the kids...... then if they have had enough of the houses and move out, you can then rent them to other people... all the time enjoying the income..
If the kids like the houses, leave them to them in your will, and let them worry about the tax that may bring... You will be out of it and therefore not have to pay it..
;D ;D
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One thing to bare in mind. Forget about this utopia of retirement. If you are lucky you may have a long and healthy retirement. However old age and I don't mean old but even late 50s on can bring all kinds of health issues especially if you've had a hard working life. In view of this I would recommend work hard now and use the proceeds to do things, travel, hobbies etc while you are young enough to enjoy them.
http://www.forbes.com/sites/carolynmcclanahan/2012/12/05/the-fallacy-of-saving-for-traditional-retirement/
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We are not able to see the future so the only indication we have of how we will survive old age is to look at our parents, if your dad & granddad died from prostrate cancer or had a heart attack at 50 then be worried.
My dad is 83 and could still work if he wanted, my grandad died at 89 after tripping over a curb, he was walking the 5 miles into town every day before that.
I think The best investment you can make is in your self and your company, you can put £40 a week into a pension or spend the same money on learning to restore stone & marble.... I believe the best investment is the training course. The problem is people don't see knowledge as an investment.
Last year I found out I need both my hip joints replaced and was due to have them done in December but there was complication so now have decided to live with the pain until the pain medication stops working. At that piont I took a big look at what I needed to do,
I see my son as my main investment over the coming years he will do the courses , he now can do the work. as I go into retirement I will take a back seat and let him reap the rewards of what I have created, but I will still take in income from the company that will be my pension, I have worked out that at this time I could take a £300 a week income from the company and my son will still have the lions share, this is better than any pension I would get if I had been paying for years.
But.... In the end we play the cards we have, no piont thinking about pensions if you're 50. my plan is based on maximising my own circumstances if I was 25 years younger my plan would be different
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..........and what if your Son decides after a few years he would like to do something else, or meets a girl who lives abroad and he moves etc etc etc etc .
I have a son who is returning home this summer after finishing uni , there is no way on this earth I would be planning my retirement plans based around him , it would just not be fair on him.
I want him to ( and he does as well ) make his own mark on this world.
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I have 5 houses i rent out..Hopefully that will sort me. Or the Government decides otherwise.
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Paul I get run over by a bus next week, yes things could change,
my son could want to take a different route and if that happens I will alter my plans but I can't predict the future and can only make my plans on what I know now. And at the moment my son wants to continue the business if he changes his mind then so be it, i will change my plans
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Hi Guys
At 50 you could put160K plus based on todays figures into an ISA over 15 years, double it which should be easily achievable with reinvesting dividends and you have a tax free pot of 320K to help your retirement.
Cheers
Doug
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Alternatively you could put it in a SIPP, the government will add almost 40K, although you will be restricted on how you spend the money with currently 75% having to be used as a pension, if you die before you buy an annuity it will go into your estates so wife and kids benefit.
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I'm always interested in this subject, I get quite pent up on my retirement provisions. Currently I have a rental property and i'm looking to get another, I pay into a private pension monthly and also into an ISA, I will also be looking at a SIPP this year.
At the the end of the day no one knows if they are right or wrong, pensions could pay pittance, property prices could stagnate, businesses could fail, etc etc. If there was one sure fire way to achieve a liveable pension then every single person on here would do it.
Just out of interest what are people saving every month? Or what % of turnover are they saving? How long have you been and will save this much for? Just to compare.
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Just to add, my dad retired at 55 last September from the fire service, he also served in the army. If I told you his pension and lump sum, your eyes would water. He now spends April-Septemeber doing part time gardening as work which he loves. I would be extremely happy with his lifestyle.
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Hi Guys
At 50 you could put160K plus based on todays figures into an ISA over 15 years, double it which should be easily achievable with reinvesting dividends and you have a tax free pot of 320K to help your retirement.
Cheers
Doug
Doug just break that down for me where does the £160k come from? And how does it double in 15 yrs
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I bet if there was a poll on here about who had a half decent pension it will only be 15-20%. Nowadays you are looking at a pot of £250k plus.
Also I bet there are some on here who are thinking who needs a pension when my business is worth way more than that.
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Wynne most people don't even technically own a business because they don't keep records and customer details, all they have is simply a collection of cleaning equipment and chemicals. The amount of times i've seen an advertisement on ebay listed as a 'business' when all you simply get is a van and equipment, maybe a website, flyers and phone thrown in.
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It’s a bit ironic nether of us planed for it but fortunately both wife and I worked for companies with a none contributory pension system with the option of lump sum to minimise tax liability very happy day till the tax man get to the rest what we need is more tax loopholes as a business ;)
Doug
30 months and showing a 30% profit on ISA can you give me the sums ???
Neil
What’s the betting your dad said something to you years ago? ;D ;)
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You can put 11K plus into an ISA, so 15 x 11, is roughly 160.
If you invest in FTSE 350 probably going to get dividends of 3.5%. say you achieve a 6.5% capital growth that's 10% per annum which will give you much more than double.
It also allows you to invest in the big companies like banks, so when they rip people off you benefit, it's what the wealthy do!
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Len
There are a lot of shares like the banks which are seeing big gains, Lloyds is up 125% in a year.
Obviously no one is going to back all winners but it's a good time to invest because the Economy will be much brighter in 5 years.
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Wynne most people don't even technically own a business because they don't keep records and customer details, all they have is simply a collection of cleaning equipment and chemicals. The amount of times i've seen an advertisement on ebay listed as a 'business' when all you simply get is a van and equipment, maybe a website, flyers and phone thrown in.
You are spot on there Neil. Some on here though will have contracts, customers on pre pay, business owned premises, employees and some sort of system that someone could look at on paper and think its a turnkey business. And then of course there are Franchisers and Retailers.
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You can put 11K plus into an ISA, so 15 x 11, is roughly 160.
Thats what you do with it..... not like I asked "where does it come from?" I'm guessing this £210 a week ( every single week for the 15yrs) come directly out of the wages you pay yourself.
A great idea if you have a spare £210 a week to invest
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Flog your house a year before you retire then private rent spend your money in the bookies ;D and then let the state keep you simples
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Don't worry the EU are going to screw our pensions up now.
http://news.sky.com/story/1093003/euro-tax-to-decimate-pensions-report-says
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Doug
Noted but emerging markets is my thing
Mike
Most cc claim are on £100 + an hr so £250 per week is pittance for there future don’t forget it tax deductible/advantages until you have to pay the ferryman
Dennis
Think the so called powers to be have lost the plot god help us if they introduce a county a tax (like they have in the states), WAIT FOR IT its bound to come,
??? ;)
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The stats are that pensions take out most from the pot from national insurance and tax from the economy, people on benefits and other mis spending is a pittance in comparison a suggestion would be for mass murder for any 75 and above then we'd have a chance of spending any inheritance they may have got left after the nurses fees ;D
Shaun
Ps no offence frans
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As far as pensions go my plans were wrecked by helping two members of my wife's family One to the tune of £60k, the other to the much bigger sum of around £500 k.
I thought I would still cope but my body let me down with a whole raft of problems forcing me to partly retire about 8 years ago and fully retire ( in theory ) just over a year ago. I still do small jobs just to make me feel better but my wife who is a lot younger than me is the main earner.
Warning to anyone facing operations.........I had my second hip done last December and it's fine, but, I was NOT warned about the possibility of my bladder reacting to the anaesthetic and leaving me catheterised. This can happen in people a lot younger than me so be warned.
No one in my family had cancer but it didn't stop me getting prostate cancer and that can be pretty shattering.
I'm working at ways of raising enough to leave my wife debt free and mortgage free which I believe I can do via the Internet.
It would have been a lot easier to look after the money when it was there and not be so generous to the wrong people.
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Hi Mike
When we are younger with Mortgages, children etc it is difficult to save for later but if when the kids have become adults and our business's are going reasonably well then 800 a month is hardly a fortune to secure a decent retirement.
Even if it's only 200 a month but for 30 years the pot will be very useful.
What I am saying is planning for the future is all part of juggling life's finances and to make no provision could leave you one vulnerable.
Cheers
Doug
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1200 invested at 100 a month in a SIPP with just 7% interest would be just over 60,000 over 20 years
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Right from the start of my business I put more money away for tax than was needed-the main reason being that if in the following year my turnover was down I would find it even harder to save for the tax bill. I managed to get to the stage where i was over 12 months in advance of saving for my corporation tax bill.
As turnover increases it becomes progressivly easier to save as the covering of the survival/basic income required to live becomes a smaller proportion of turnover. As such each year I would inctrease the standing orders and direct debits to various savings plans (ISAs, pensions, unit trusts, cash etc) but I would also make lump sum investments to reflect any large jobs I got as well.
My long term plan had always been to find a buyer for my business once I reached 50. I was lucky in that I sold for the full asking price 2 weeks after my 50th birthday. Even better the new owner employees me as his "number 2" working (approx) 9-5, five days a week and often on a Saturday. I also have to fully run the business for him when he is on holiday. And yes I did sell it as an on-going profitable business-not a pile of equipment and a list of jobs completed.
Give it another 5 years maximum and my body will be more than ready to ease itself into something less physical like voluntary work, golf, holidays and reading/studying.
With annunities rates as they are I am planning on going for income draw-down rather than buying an annunity. If I did go for an annunity I should also be elegible for an enhanced pension to reflect my poor health. (My dad got an enhanced pension as he really didin't look as if he'd live very long. He's in poor health but just turned 90! Mind you he got an annunity rate of just under 18% with a guaranteed rise in his pension of 5% pa. Lucky man!)
Rog
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I would not put any money into a pension "plan"
All you are doings funding the yacht. I know I clean for someone.
I sold a business 15 years ago and bought 4 flats. These give me a nice income with my state pension. The only reason I am still working at 70 is to pay for 2 months in the states. Then I will probably finish.
If I were younger I would save to get a deposit on a flat. Then buy to let mortgage. Then another and so on.
These will, when they have been paid for and you retired will give you a nice income.
And you will beagle to leave them to your children. The costs per month are similar to a pension, but that dies with you and that is that.
My son has a flatland a house already and he is 42.
IMO the financial services sector is a ripoff.
This chap I know has a yacht in the Caribbean with 2 permanent crew. You don't do that on tuppence..
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Do you buy these on interest only or repayment. I`ve got a couple of flats and was thinking about adding to them. The yield isnt so good these days around Chichester so would probably go a little further afield.
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Hi Guys
As Roger has said pensions are much more flexible these days, so you can take an income without converting it into an annuity.
ISA are much more flexible, the main difference being you pay tax on the money before you put it in, whereas with a pension there is no tax liability on deposits but income is subject to tax but you can take a25% as a lump sum tax free.
Houses/flats are another way of building a retirement income, the main thing is to do something.
If you worked for a large company pension contributions would be compulsory.
All in all good reasons to charge proper prices!!!
Cheers
Doug
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All in all good reasons to charge proper prices!!!
Cheers
Doug
Very well said.
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I been running an ISA for years, good idea.
The interest is crap these days but still worth doing.
Doug, 11k per year? the limit is around £3.500 per year. unless you mean saving into other pots.
I have been reliably informed 'unit trusts' are the best investments today.
IMO if you are not saving you are getting no where, just treading water.
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Oh I have shares too, they are worth half what I paid a few years ago, lol, they are on the way back up though.
Someone said recently, was it a politician? "investing in shares is really gambling" I tend to agree. Don't bother.
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Investing in shares is a gamble - except that with gambling any profits are tax-free!
I'm just in the middle of getting my first buy-to-let. I'll put 25% down, interest only mortgage the rest - keep them for 15-20 years and sell to pay off the balance as well as a 200% return (in theory...)
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I bought mine out of the proceeds of selling a very large property and associated business.
I would have them on a repayment mortgage if I were younger- the idea is the have them paid for when the time comes to pack it in.
The income from them is inflation proofed unlike most annuities ( which I think are a ripoff) as prices go up the rent follows.
I clear around 8% on the value, you won't get that rate anywhere else legally.
I does me around £1000 per month before tax.
Pays for the ale.
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Craig
The ISA allowance for shares is £11520.
You can invest in blue chip which if you keep them for any length of time, with dividends reinvested will far outstrip bank interest.
Cheers
Doug
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I am currently training to be a financial adviser, learning all about the systems available is a real eye opener.
My mentor has taken me to some of his clients meetings , what is clear is that high street products are expensive and unsuitable for most people .
Isas show very poor returns , whilst they give a headline of being tax free , the rates barely beat inflation.
I was with a client last week who has 230k invested in a proper structured portfolio , he is returning 8% after tax , which is not uncommon.
It is very important to seek advice and have a holistic approach , this means balancing protection , retirement planning and investment.
Commission is no longer paid to financial advisers , along with very tight regulation and the high barriers to entering the market mean that the advice given is far more meaningful and professional than ever before
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@ Jason , serious question , how do you or freelance FA make money if you don't earn commission, somebody pays you at some point , and the person paying must be the person investing ?
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All charging for IFA business is now fee based , for investments generally 1% IS CHARGED ON A SLIDING SCALE DOWN TO .5% if the sum invested is over a million.
For advice on pensions and protection(insurance) , where commissions are now outlawed, a flat fee is charged for time spent fact finding, research and providing a suitability report for various products. Clients are VERY happy with this new scenario, banks have generally pulled out of the financial advice market because commissions have evaporated, leaving lots of "orphan " clients for the independent adviser to pick up.
The fees can be added monthly to premiums so the adviser is paid monthly. It is much fairer to the client ,as the adviser has to have a clear paper trail showing that the fees being charged are enhancing the clients wealth to a greater extent than if no advice had been given.
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Hi Guys
ISA's will give a marginally higher rate than a normal account but if you cut out all the middlemen and just invest yourself you will do well over the medium/long term and quite possibly over the short.
Remember every 1% which an advisor who probably knows about as much you takes, is 1% less of your money, not much if you have 1000 but quite a lot if you have 100000.
The keys to successful investing seem to be, reinvest dividends, don't pay commission and invest for the longer term.
Of course if you happened to be good at investing you could do a whole lot better but it's riskier.
Just bear in mind with Dividends that Vodafone will pay almost 5%, BT 3.5%, Barclays 3%, HSBC 4.5%, no high street Isa is going to give you that, apart from introductory offers which soon drop well below.
You will soon become confident and ultimately much wealthier.
Cheers
Doug
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I noticed rich people like buying property and businesses on the cheap from the desperate. It's a great strategy if you have the stomach for it.
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Hi Guys
ISA's will give a marginally higher rate than a normal account but if you cut out all the middlemen and just invest yourself you will do well over the medium/long term and quite possibly over the short.
Remember every 1% which an advisor who probably knows about as much you takes, is 1% less of your money, not much if you have 1000 but quite a lot if you have 100000.
The keys to successful investing seem to be, reinvest dividends, don't pay commission and invest for the longer term.
Of course if you happened to be good at investing you could do a whole lot better but it's riskier.
Just bear in mind with Dividends that Vodafone will pay almost 5%, BT 3.5%, Barclays 3%, HSBC 4.5%, no high street Isa is going to give you that, apart from introductory offers which soon drop well below.
You will soon become confident and ultimately much wealthier.
Cheers
Doug
Doug , why not see an advisor ? you will be amazed , one client I saw happily pays .5% of £3 million plus to have his money managed , these advisers have access to funds that blow ISAs well out of the water, ISAs are a retail product , very much like buying vanish to clean carpets , customers think they do a good job , they are most popular , but in the majority of cases totally unsuitable and ineffective.
Also tax , especially inheritance tax , is very avoidable , but this is a specialist area that the amateur investor just cannot possibly get right.
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Thanks for your answer Jason.
Another quick one , so the client is paying 0.5% of £3 million to have his money managed, what happens if that money shrinks and becomes £2 million is the "adviser" responsible ? will he guarantee that he will make up any short falls if the investment shrinks due to his advice ?
I know the answer is going to be no , and this is what would make it very difficult for me to hand over my money to an adviser, I would rather manage my own capital, have very low returns, and keep it very very safe, even if the investment is going "backwards" due to inflation, I would still have my capital.
Very interesting subject, and a very complex one,
Cheers
Paul
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Paul and Doug.........
Do you advocate that your customers clean their own carpets??
Or do you, being the professional know more about carpets, stains and the pitfalls of carpet cleaning than your customer? Who after all can look up on the interweb how to clean carpets......
If you don't (which I suspect is the case, or you would be out of work) why are you taking such a cavalier and if I may say so hypocritical attitude to financial advisors??
Just askin like ;D ;D
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Hector, I give a guarantee if the customer is , in the end, not happy with my service, I give a full refund, how many IFA will do that !
And like many households and business owners, I am a realist, I will do some things my self, for example, I cut my own lawn, not very well and its got weeds in it, I could use a specialist, but I don't, the same goes for the general public and carpet cleaning if they want to clean their own they will do.
The list goes on , I cook , but I don't bring in a chef every evening, I drink beer but I don,t brew my own
I wash my own van and don't use the professionals,
I don't like heights so we use a window cleaning professional
I can paint so I don't use a professional decorator...............
I look after my own money, ( and have done quite well ) and don't use an IFA
and the list goes on etc etc :)
but each to their own !
cheers
Paul.
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Thanks for your answer Jason.
Another quick one , so the client is paying 0.5% of £3 million to have his money managed, what happens if that money shrinks and becomes £2 million is the "adviser" responsible ? will he guarantee that he will make up any short falls if the investment shrinks due to his advice ?
I know the answer is going to be no , and this is what would make it very difficult for me to hand over my money to an adviser, I would rather manage my own capital, have very low returns, and keep it very very safe, even if the investment is going "backwards" due to inflation, I would still have my capital.
Very interesting subject, and a very complex one,
Cheers
Paul
The question you are asking is about risk , a large part of the training is about how to manage risk , and measure a clients attitude to risk.
Returns of 15-20% are available in high risk investments , but safe ones often manage 8% , in fact ,investing in an ISA means the bank will hand your money to a fund manager who will indeed get 8% return , taking a fat fee sharing it with the bank.
If the IFA fails to follow protocol , and an investment loses money , then there is a very robust complaints procedure available .
Most IFAs will not look at an investor with under 100k to invest, maybe they will take on a young client if they show potential to be profitable later in life.
You can have a low risk investment with an IFA , and invariably it will still beat self investing.
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Hector, I give a guarantee if the customer is , in the end, not happy with my service, I give a full refund, how many IFA will do that !
In that case he would assume you are risk averse and put your money where it makes jack poo. Most people are happy to take a higher risk with some of their money that at least has a chance of giving a high return.
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Hi Guys
I am not adverse to IFA's just that an awful lot are not very good and the ones that are probably wouldn't be interested in my' pile'.
I am not risk adverse in fact I have taken quite a few gambles but I can research a company and make my own decision. I am thinking of CFD's and have opened an account but have not yet been bold enough to take the plunge.
My original point was that you, the small man, can invest in shares and own a small part of the big companies and this will give you a greater return than the 2% currently on offer.
Cheers
Doug
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I an earlier post I mentioned having a holistic approach to financial planning, this is where an IFA really comes in useful.
For example Shaun saying he wants to give 2 houses to his kids , that screams big tax liability on his death , so proper planning means getting the right combination of insurance against inheritance tax, putting assets into trust out of HMRC reach and timing of transfers. These kinds of transactions are nearly impossible to get right for the amateur investor, a few grand to an IFA for setting it all up properly saves tens of thousands in many cases .
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I take your point Doug that many IFAs are not very good , are you aware that 20% have deregistered this year as they cant/wont take the degree level exams that are now necessary in order to practice. The study required takes 2 years and is very in depth , I am a third of the way though my qualifications, and it is tough.
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Doug, CFD's are great tools. Chuck a few hundred quid in - find a company after doing some research, make your your stop losses are in place, and have some fun. It's quite exciting stuff - but you've got to be prepared to lose what you put in.
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Doug, CFD's are great tools. Chuck a few hundred quid in - find a company after doing some research, make your your stop losses are in place, and have some fun. It's quite exciting stuff - but you've got to be prepared to lose what you put in.
Certainly agree with that!
Rog