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Around the Internet => Antimustachian Wall of Shame and Comedy => Topic started by: cerat0n1a on April 15, 2016, 02:03:23 AM

Title: UK-centric: 'Earning £56,000 at 35, I've sold my Porsche to target the mortgage.
Post by: cerat0n1a on April 15, 2016, 02:03:23 AM
The person featured in this article actually seems quite sensible, but the replies from the financial advisors are pretty poor; the first one appears to me to be giving incorrect advice and to not understand how tax on dividends works at all.

http://www.telegraph.co.uk/money/special-reports/earning-56000-at-35-ive-sold-my-porsche-to-target-the-mortgage-b/
Title: Re: UK-centric: 'Earning £56,000 at 35, I've sold my Porsche to target the mortgage.
Post by: RobFIRE on May 02, 2016, 04:36:40 AM
Yes, first adviser all over the place on dividends rules. Also the "£48k a year after tax from pension" figure is meaningless as it's not explained whether that allows for inflation, and nowhere in the article do we get information on current expenses, or expected expenses in the future, so £48k may be 2x what's needed or only 1/3 of what's needed. Adviser then goes on to mention some specific funds, probably these all have nice high charges...

Not sure I agree about "quite sensible", unless you mean "quite sensible" with emphasis on first word (for non-Brits: politely saying not very sensible at all actually), as buying a Porsche before you have any pensions savings isn't too clever. At least he's realized now.

Hopefully, the guy featured and readers will at least take away the overall conclusion that putting as much money as possible into a pension is a simple and the most tax efficient option for his retirement objective. He can then easily invest in whatever funds he likes (so property funds if he otherwise wanted a buy to let holding).

If the guy puts as much as he can into a pension then what's left will either be paid as income at 20% tax band or as dividends, so all the fluff about huge tax bills and 40% tax is irrelevant.
Title: Re: UK-centric: 'Earning £56,000 at 35, I've sold my Porsche to target the mortgage.
Post by: cerat0n1a on May 02, 2016, 08:32:55 AM
I was meaning quite sensible in the sense that he's at least now seen the error of his ways; not enough to stop getting him advice from IFAs pushing high fee funds in the Torygraph, but still.
Title: Re: UK-centric: 'Earning £56,000 at 35, I've sold my Porsche to target the mortgage.
Post by: UKMustache on May 08, 2016, 01:54:31 PM
I took a look, the 'managed portfolio' option has a 1.5% annual charge when you add up the various costs.