|
Investing For Retirement -
There are many ways of saving for retirement. However, the best ways of investing for retirement in the UK are as follows: 1) Employers Pension Schemes There are two types of employer pension scheme. The Defined Benefit (DB) Scheme is a more generous one as the pension you get is based on the length of service and your final or average salary. These can pay up to two-thirds of your final/average salary. You also eliminate the risk of investing in the stock market. Most companies have now closed their DB schemes because they are very expensive for companies to maintain. The other type of pension scheme is the Defined Contribution (DC) Scheme. You contribute a percentage of your salary into a pension fund which invests your money in the stock market, bond market, etc. Most companies will match your contributions up to 5-7% of your gross salary. There is an element of risk with the DC scheme as the size of your pension pot, and eventually the annuity you will get, depends on the performance of the investments in your pension fund and the annuity rate when you retire. No matter which pension scheme you are in, you get tax relief on your pension contributions at the basic rate or higher rate depending on the tax bracket you are in. 2) Personal Pension - Additonal Voluntary Contributions (AVCs). The contributions to your AVC will build up a separate pension pot which you will use to buy an annuity when you reach retirement age. This will give you a third source of retirement income, assuming you will receive an occupational pension and a state pension. You also get tax relief on your contributions at your personal income tax rate. This form of saving for retirement is also flexible as you may be able to take up to 25% of the pension pot as tax free lump sum. However, many people are now privately investing for retirement in alternative investment vehicles because they are increasingly disillusioned with pensions.Figures released by the Association of British Insurers (ABI) confirm that personal pension contributions have been falling since 2007. This is not exactly surprising when you consider that over the years successive governments have meddled with pension legislation, making it increasingly complex. In addition, there is a legacy of industry high charges and poor performance and, to cap it all, the prospect of all time low annuity rates when using their pension pot to buy an annuity. People are losing confidence in the traditional methods of saving for retirement and are looking for alternative ways of investing for retirement.
3) Individual Savings Account (ISA) ISA investments are a tax efficient way of investing for retirement. The incomes you receive from your ISA investments are exempt from income tax and any capital appreciation are not subject to capital gains tax. You can invest in blue chip stocks that pay regular dividends, even when business is not faring as well as usual. There are two types of ISA investments - Cash ISAs and Stock and Shares ISAs. For the tax year 2012/13, the maximum you are allowed to invest in a Cash ISA is £5,640 and the limit for a Stocks and Shares ISA is £11,280. The overall combined allowance for your ISA investments is £11,280. Figures recently released by the Office for National Statistic (ONS) show that people in the UK have put more money into stocks and shares ISAs than personal pensions. In 2010/11 around £15.84 billion were placed into investment ISAs, while pension contributions amounted to around £14.28 billion. This is the first time pension contributions have lagged behind since 2001. In 2010/11 about £38 billion was placed into cash ISAs. The above figures suggest that people are increasingly losing faith in pension schemes, and are turning to products such as ISAs, that are viewed as being much simpler and less open to political interference, hidden raids and vested interests. 4) Invest in real estate - Buy to Let. Investing for retirement can also take the form of investment in property and collecting rental income from your tenants. A buy to let mortgage may required you to have a reasonably substantial deposit for the property you are buying and the balance of the purchase price will be financed by your bank or building society. However, the rental income is liable to UK Income Tax and any capital appreciation is subject to Capital Gains Tax. "Buy to let", as retirement investing, is gradually becoming popular again especially in a time of low interest rates and stock market volatility. Rising rents, low property prices and great mortgage deals are making "buy to let" an attractive retirement investing vehicle. However, a word of caution: At the moment, interest rates are at its lowest level and is not likely to stay at the current level for very much longer.
Investing For Retirement - Real Estate Investment Opportunities This Unique E-book Is Virtual Encyclopaedia Of Real Estate Investment Opportunities And Real Estate Service Businesses
It is important that you have a diversified and balanced portfolio of investments. When investing for retirement, you will have to consider your own circumstances and the level of risks you are prepared to take. "Time" is a vital ingredient when investing for retirement. Start saving for retirement early to maximize your pension fund. Your retirement savings will ensure that you have a comfortable lifestyle when you retire. Retirement Investing Products (UK)
Retirement planning helps you get more out of life in retirement |
