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Member You - Pension or ISA: Which Investment Route Should You Take?
Branding is very important to a business, whether it is an online or offline business. Your brand will be the first impression the public has of your business and could very well be the most important one. The goal in business branding is to give consumers a visual image of your company. Business branding is very important to a business because it allows the public to identify your company name on sight.There are several elements of business brand
Taking an average exam
Less than one generation ago, if you needed a box of full color business cards you would have contacted your local graphic arts printing company, paid for expensive design and set up costs, and received your ordered cards one or two weeks later. If you wanted your order completed quicker, you paid extra for that service too. Thanks to the internet, ordering business cards has gotten a lot easier…a lot cheaper too! You can save money on your next order of bu
James was confident that he could invest this money until his retirement at age 60, in 15 years time. He has a mixture of PEPs and ISAs, with an NHS Pension and a buy to let property.
Looking at this as one investment against another, we need to look at a like on like projection. So we will use a growth figure of 6% net of charges for both investments.
Because of the tax relief available for James at his highest rate (40%), the amount he can invest into a pension fund is ?835 pm compared to the ?500 pm to an ISA. Using projections of the future fund values over 15 years we get figures of:
Pension - ?238,810
ISA - ?143,000
It appears there is no contest, however, let’s look at the figures a little closer.
The ISA fund is all available as tax free cash, whereas the Pension fund rules say a maximum of 25% of the fund can be taken as tax free cash which is ?59,702.
So if we calculate ?143,000 minus ?59,702 = ?83,297, this is the amount of tax free cash we have over and above the Pension route. The remaining ?179,107 in the Pension fund has to be used to buy a pension called an annuity. So the question now is what pension amounts could be available for James?
Taking an average exam
Marketing, marketing, marketing, it's like a never ending cycle and it must end! Even though I do talks and give tons of information on infrastructure, systems, processes, target market, and all those other things that are critical in business - it always ends at "well...can you help me with marketing?"I know I know, it's the marketing that drives revenue the revenue in your business but it can also be the camel that breaks your business's back. In
Looking at this as one investment against another, we need to look at a like on like projection. So we will use a growth figure of 6% net of charges for both investments.
Because of the tax relief available for James at his highest rate (40%), the amount he can invest into a pension fund is ?835 pm compared to the ?500 pm to an ISA. Using projections of the future fund values over 15 years we get figures of:
Pension - ?238,810
ISA - ?143,000
It appears there is no contest, however, let’s look at the figures a little closer.
The ISA fund is all available as tax free cash, whereas the Pension fund rules say a maximum of 25% of the fund can be taken as tax free cash which is ?59,702.
So if we calculate ?143,000 minus ?59,702 = ?83,297, this is the amount of tax free cash we have over and above the Pension route. The remaining ?179,107 in the Pension fund has to be used to buy a pension called an annuity. So the question now is what pension amounts could be available for James?
Taking an average exam
Unwanted email is no joke.At the very least, unsolicited email wastes everyone's time. Much worse however, are the online dangers that this unwanted email (also known as unsolicited email or spam) brings.I'm talking about the problems of spyware and adware; of computer viruses; and of so-called phishing attacks that enable identity theft and threaten your financial security.There's no doubt that reducing unwanted email helps just about
Pension - ?238,810
ISA - ?143,000
It appears there is no contest, however, let’s look at the figures a little closer.
The ISA fund is all available as tax free cash, whereas the Pension fund rules say a maximum of 25% of the fund can be taken as tax free cash which is ?59,702.
So if we calculate ?143,000 minus ?59,702 = ?83,297, this is the amount of tax free cash we have over and above the Pension route. The remaining ?179,107 in the Pension fund has to be used to buy a pension called an annuity. So the question now is what pension amounts could be available for James?
Taking an average exam
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The ISA fund is all available as tax free cash, whereas the Pension fund rules say a maximum of 25% of the fund can be taken as tax free cash which is ?59,702.
So if we calculate ?143,000 minus ?59,702 = ?83,297, this is the amount of tax free cash we have over and above the Pension route. The remaining ?179,107 in the Pension fund has to be used to buy a pension called an annuity. So the question now is what pension amounts could be available for James?
Taking an average exam
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Taking an average example and using today’s rates, a level pension of ?9,117 per annum would be achievable. However, will James be a higher or lower rate tax payer in retirement? This changes the picture somewhat, as the following after tax pensions would be applicable:
Higher rate tax payer - ?5,470 per annum
Lower rate tax payer - ?7,111 per annum
So to compare this to the ISA, we need to see how many years the pension needs to pay out to reach the ?83,297 value of the ISA fund, allowing for growth on the ISA fund at the same 6%, net of charges.
The answer is 17 years for the basic rate payer and 30 years for the higher rate payer! Not only is this is a massive difference between the two, but it also helps towards the decision whether to invest into a pension tax wrapper or an ISA.
Other considerations
-We have ignored any “pension drawdown” option
-The amounts you can contribute to pensions is currently far more generous than that available to ISAs
-Annuity rates on pensions may improve or reduce in the future
-The government may change the rul
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