The best ways to put aside £20k per year for a long term investment – instead of having a pension! Self employed NHS contractor. Buying land vs BTL houses, vs S+S ISA
NHS pension: its good if you are employed. BUT For me as a self employed locum, I would have to pay both the employer and employee contributions 12.5% + 14.5% This would mean paying £25K per year into it! a huge dent in my earnings of 100K per year (I currently pay £35k of this as tax and the rest on bills, mortgage, and then hobbies and holidays) The NHS pension would then get me £45k per year as a pension if I pay £25k into it every year for the next 27 years (until age 67 retirement age)
Not loving the idea of paying £25k per year for the rest of my life so that I get a pension (It works well for most NHS workers as the employee pays most of it, but I am self employed!)
It’s a lot of work and paperwork and stress for life to pay into the pension as the organisation that deals with NHS pensions (PCSE) is famously, criminally incompetent. This also means they could easily lose all my money.
So I started thinking about investing instead. If I am going to lose £25k per year, I would be much more excited to invest that in something each year! I like the idea that I could put away money not planning on using it until retirement, but I could potentially take it out earlier if I really want it
Things I have thought about:
Investing in property Pros: Get a BTL mortgage, rent out the house, and the investment is the fact that the mortgage is being paid off So with a deposit for a house like 100k, I could get a bigger asset like a 400k house in the end… this may be better compared to just buying 100K asses? Cons: the person renting the house will probably refuse to pay and squat there for a decade while I pay the mortgage and struggle!
Investing in land: Pros: Safer as a tenant cant really ruin land I like land, I am a country girl I could buy little bits of agricultural land for as little as £20k Cons: Might lose money in real terms as value of land may not go up as much as inflation I hear?
Investing in stocks: pros: ?? makes good interest? Cons: I know nothing about this! I’m not a gambler and work so hard for my money that just gambling it on a stock isnt in my comfort zone My comfort zone is more in something tangible like property but that shows my age!
Investing in stocks and shares ISA: Pros: No tax on profits from the interest (capital growth) they accrue Likely secure as they are a government thing Cons: Stock market is volatile How do I choose which one??
Note: I would prefer to understand this stuff myself than get a financial advisor to sort it all for me… I would be very happy to diversify and do different things each year Or spend 4 years saving for example 100k to put a deposit on a house
Whether this is sensible or not (I know it’s not) - I don’t want a pension! If I’m going to take a financial hit every year putting money aside, I’d rather it be something I’m slightly excited about / interested in 😊 I won’t starve when I retire as I have little bits of pension from previous jobs, my husband has a pension, we get the state pension, and my parents might leave me something (not a huge amount, they are middle class and have other children). I have no children so I don’t need to be responsible for anyone else’s financial future. My only priority is having a bit of money to make myself happy!
Advice I would like: I would love some real life examples of what people are doing?? Specific advice about which S+S ISA to invest in with the percentage capital gains it usually makes Do you think its still worth investing in property or with the new rental rules would that just be super naïve – like I’m buying a home for someone else to live in for free if they don’t feel like paying rent! Any way to guard against this in the kind of property I may buy?? In short – the best ways to put aside £20k per year for a long term investment
Notes: I’m age 40 I don’t have children I have a house with my husband with a mortgage I have little bits of pensions here and there from previous jobs before I went self employed I plan to stay self employed forever as it really suits me I am fairly comfortable for money but like holidays and having fun and don’t want to be frugal in my lifestyle forever for the sake of the investments