Pension or buy-to-let?

[contractor79]

Pension or buy-to-let, what would you do? Say you decided to put £1k/month away for your retirement. Would you:-

(i) put 1k into a defined contribution pension scheme?
(ii) put £500 into pension scheme, £500 into buy-to-let?
(iii) put it all into buy-to-let?

It seems to me that we need to put a ridiculous amount of money into a pension pot to make it worthwhile. And then we could be hammered near retirement with poor annuity rates or market crashes.

Buy-to-let, well I know property is expensive and it would be a hassle to get people in and that we get taxed on the income in the meantime etc. but at least by retirement the rents would be higher and the house would be paid off...

[eliquant]

Don't put any into a pension scheme they are dangerous traps where people play with your money like a game of Monopoly which you have no control over and if the scheme collapses or you need that pension money now the answer is usually "tough luck buddy".

[Fred Bloggs]

I agree it's a tough choice with downsides either way. I put £1k monthly into a SIPP with Hargreaves Lansdown and choose my own unit trusts within the SIPP wrapper. I don't intend to buy an annuity. I intend to put the fund into "drawdown" when I retire (and at 75 into an asp). I'm steadily moving my funds towards income producing investments so that by the time I retire I will be drawing down off dividends. The trusts I invested into in the recent few months pay anything upto 9 to 13% pa dividends and providing the divdends aren't cut, will keep doing that forever, I hope.

[ace00]

I agree it's a tough choice with downsides either way. I put £1k monthly into a SIPP with Hargreaves Lansdown and choose my own unit trusts within the SIPP wrapper. I don't intend to buy an annuity. I intend to put the fund into "drawdown" when I retire (and at 75 into an asp). I'm steadily moving my funds towards income producing investments so that by the time I retire I will be drawing down off dividends. The trusts I invested into in the recent few months pay anything upto 9 to 13% pa dividends and providing the divdends aren't cut, will keep doing that forever, I hope.

WHS

[GreenerGrass]

I would go for a mixture of both but not commit to £500 of your own money per month for the BTL mortgage - ideally you want it to be self-funding, covering at least the interest.
If you're out of work a BTL mortgage that isn't fully covered by rent would just be an added burden, whereas you can stop paying into a pension at any time.
To find out when to buy post up a poll or something with a list of years from 2010 to 2020 and we can choose for you. For now you could put the 500 per month towards building deposits.

A SIPP gives you a fair amount of control, you need to stuff away a lot though, this is quite depressing.
http://www.h-l.co.uk/pensions/pension-calculator
I also think it is unrealistic to assume you will be able to put away £1000 per month into a pension when you are over 50 and as contracts/jobs get harder to find due to ageism/offshoring/etc
Whereas with BTL someone else is paying the mortgage for you, once you have done the hard part of stumping up the deposits.

P.S. Don't watch Pacific Heights

[expat]

Pension or buy-to-let, what would you do? Say you decided to put £1k/month away for your retirement. Would you:-

(i) put 1k into a defined contribution pension scheme?
(ii) put £500 into pension scheme, £500 into buy-to-let?
(iii) put it all into buy-to-let?

I would put it into a pension, but I wouldn't put it into a pension scheme.

[DimPrawn]

I wouldn't put it into either until:

1/ You've paid off your debts.

2/ You've used up your annual ISA allowance

3/ You've built up a good sized war chest

4/ You've had a ******* good time travelling, nice cars, nice women, etc


Lets face it, when you're old (if you live that long) the best bit is moaning about the £25 the bus fare costs getting to the jumble sale.

[BlasterBates]

Don't fart around with all that low income cr*p get in the stock market.

The stock market is good fun, I regularly lose or gain 10's of thousands of pounds.

Yesterday I lost about 20 grand but today is a new day

[expat]

I wouldn't put it into either until:

1/ You've paid off your debts.

2/ You've used up your annual ISA allowance

3/ You've built up a good sized war chest

4/ You've had a ******* good time travelling, nice cars, nice women, etc


Lets face it, when you're old (if you live that long) the best bit is moaning about the £25 the bus fare costs getting to the jumble sale.

I dissent from no. 2, it ain't necessarily so. IMHO the balance between ISA and SIPP depends on your age. If you're young, use an ISA amd let the interest/divis build up tax-free and always available to you; if you're as old as I am, the length of time between now and when I stop working (assuming that hasn't already happened ) is not enough to build up much interest, so having it tax-free is no big deal, but having my contributions tax-free (SIPP) is good.

[DaveB]

Son is , hopefully, off to University next year and we are thinking of buying a btl to give him somewhere to live and rent out space to other students. Otherwise I am making the mst of the permie pension atm and chucking cash into an offeset mortgage account to get it paid off. Much better effective guarenteed return if you still have a mortgage than ISA's atm. And effectively tax free as well.