Credit deflation and the reflation cycle to come (part 2)

[Loki]

1 minute ago, Hardhat said:

Personally I would not be surprised to see silver punch through $30 here, and then FOMO to follow.

Here's hoping you are right - although I am barred from buying any more than 90 more silver CFDs!

(Note that's it's not due to lack of funds - you can just see the 'Add Money' option on 600)

 

[Castlevania]

6 minutes ago, Loki said:

Here's hoping you are right - although I am barred from buying any more than 90 more silver CFDs!

 

Is that equivalent to 90 oz?

[Loki]

7 minutes ago, Castlevania said:

Is that equivalent to 90 oz?

Yes, I'm up to 210 at the moment 

[The_Doc]

7 hours ago, Vendetta said:

 

Currently I am using yearly ISA allowances for myself , wife and 2 kids... £20k + £20k + £9k + £9k a year = £58k per year one can invest without capital gains on selling growth, or tax on any dividend income.

Is there a better ‘tax vehicle’ I should be using? Both my wife and I are higher rate tax payers significantly above threshold and are in (don’t shoot me for this!) : part final salary/average earning ‘inflation linked’ pensions which can be taken at 55 onwards. 

We do not have any Sipps. 

I would be interested to hear how you guys structure your ‘tax affairs’ around your investments? 

If you earn over £100K, then pension contributions are a no brainer as you effectively pay 60% tax on income between 100K and 125K. 

Even if you don't earn over 100K, pensions are more tax efficient than ISAs as you are more likely to be a basic rate tax payer in retirement or if/when you retire early and pensions allow a tax free lump sum (currrently 25%).

ISAs are then next in terms of tax efficiency but have have benefit of accessibility (before 55).

Create SIPPs for the kids, as others have said, to get your free £720 per kid per year (although they can't access it until 55 or later when they get there).

You do need to be aware of Life Time Allowance (value of all pension pots - DBs*20 + DCs + SIPPs). If value is over the limit when you take pension, penal taxes are applied. So if this is possible, some tax planning is seriously needed.

Other tax efficient ideas - use salary sacrifice to increase pension contributions. This additionally saves on NI contributions. If you both make sufficient pension contributions to get your salary below 50K, then you can claim child beniefit.

Plenty of ways to milk the system. All the above however may change when the gov tightens the purse strings. So use it while you can.

[CVG]

^

There are so many ways to validly avoid tax (including second hand purchases to avoid VAT) or earn tax free (such as 7200 rent a room*2), that I have little sympathy for those using the shady schemes to save more.

[TNS]

Got to laugh at analysts (RBC this time), silver to hit $30 by year end. More like next week based on current trajectory... 

[DurhamBorn]

6 minutes ago, TheNickos said:

Got to laugh at analysts (RBC this time), silver to hit $30 by year end. More like next week based on current trajectory... 

They were all saying sell when it was $14 and they were all saying buy the dollar when it was 100.Im surprised anyone actually pays for their research,though when i saw the trustees on one employers pension scheme i could see how they get away with it.I think the problem these days is they are all short term and bonus driven.They couldnt give a toss if a sector is structurally undervalued if it might take a decade to play out.

[DurhamBorn]

11 minutes ago, CVG said:

^

There are so many ways to validly avoid tax (including second hand purchases to avoid VAT) or earn tax free (such as 7200 rent a room*2), that I have little sympathy for those using the shady schemes to save more.

A lot of people forget the VAT one,but its one my family use almost all of the time.We cant avoid if for certain purchased,but we can for lots of things.My daughter has just bought a 2nd hand pram,was £1000 new,got it for £200 on Facebook marketplace,will be able to re-sell for the same price.Everything iv used for grandkids here has been bought the same way and nearly always sold back on for the same price or a tiny amount less.

[Sasquatch]

31 minutes ago, DurhamBorn said:

A lot of people forget the VAT one,but its one my family use almost all of the time.We cant avoid if for certain purchased,but we can for lots of things.My daughter has just bought a 2nd hand pram,was £1000 new,got it for £200 on Facebook marketplace,will be able to re-sell for the same price.Everything iv used for grandkids here has been bought the same way and nearly always sold back on for the same price or a tiny amount less.

Good stuff.

We do it all the time with furniture. We buy nothing new. Generally mid century and with a designer name. As long as you buy cleverly (ebay or auction house), its possible to sell back on again at the same price or even higher.

[Jesus Wept]

1 hour ago, The_Doc said:

If you earn over £100K, then pension contributions are a no brainer as you effectively pay 60% tax on income between 100K and 125K. 

Even if you don't earn over 100K, pensions are more tax efficient than ISAs as you are more likely to be a basic rate tax payer in retirement or if/when you retire early and pensions allow a tax free lump sum (currrently 25%).

ISAs are then next in terms of tax efficiency but have have benefit of accessibility (before 55).

Create SIPPs for the kids, as others have said, to get your free £720 per kid per year (although they can't access it until 55 or later when they get there).

You do need to be aware of Life Time Allowance (value of all pension pots - DBs*20 + DCs + SIPPs). If value is over the limit when you take pension, penal taxes are applied. So if this is possible, some tax planning is seriously needed.

Other tax efficient ideas - use salary sacrifice to increase pension contributions. This additionally saves on NI contributions. If you both make sufficient pension contributions to get your salary below 50K, then you can claim child beniefit.

Plenty of ways to milk the system. All the above however may change when the gov tightens the purse strings. So use it while you can.

Thanks for this @The_Doc
 

That is a good place to start. I have never really thought about my tax situation as I never had much disposable income, no investments in past, am PAYE and we both have inflation linked final salary pensions.

I did not even now what a SIPP was until recently 🙄 - or even knew much about S&S ISA allowances. Never too late to learn.

[Shamone]

4 minutes ago, Vendetta said:

Thanks for this @The_Doc
 

That is a good place to start. I have never really thought about my tax situation as I never had much disposable income, no investments in past, am PAYE and we both have inflation linked final salary pensions.

I did not even now hear a SIPP wa au tip recently or even knew much about S&S ISA allowances.

How? If you don’t mind me asking?

[Jesus Wept]

43 minutes ago, Shamone said:

How? If you don’t mind me asking?

I don’t mind you asking. @Shamone

 “So how come I have not had much disposable income until recently?” 

I bought my final family home 11 years ago after STRing for 2 years at the trough in May 2009 having sold in July 2007. (I had discovered ToS in 2003!). 
 

As a result I had 60% deposit on the purchase and took out a 10 year fixed Mortgage for the remainder of the balance.
 

As DB would say - 1 economic cycle too early. Argh! I should have just got a variable discounted rate. Oh well.

Every penny we earned went into paying it off within 10years. Both of our salaries have gone up a fair bit in last 10 years too. I have also always driven a £3k 1.4litre 2nd hand car for 15 years. Hahaha!

 We are essentially Mortgage free now at 45 years old - so lots more disposable income. 

Also why we haven’t dabbled in shares in near on 20 years - as we have just paid down (mortgage) debt. 

My goal is to retire at 55 and live off pension, share dividend income and beekeeping and the odd bit of private work.

 

 

[MvR]

We just closed out the gold and silver physical ETFs in WvR2s ISA.. 10k worth to 18.5k since may 2019.  She's left with a tasty selection of oilys, potash, telcos, and other reflation stocks, all paid for with the profits from the PMs, with a little cash left over.  Turns out it's easier managing someone else's ISA than my own. She entered all the trade herself, with me viewing a screen share and checking she was buying the right stocks... an approach that minimises tinkering!

So in a little over a year, a 20k ISA turned into 21k cash plus over 7k of "free" stocks.

All credit has to go to @DurhamBorn for the education, timing and targets that made this possible. Thank you!

[leonardratso]

odd bit of private work - hehehe.

sounds a bit shady.

[Loki]

@MvR well done mate

[Jesus Wept]

10 minutes ago, MvR said:

We just closed out the gold and silver physical ETFs in WvR2s ISA.. 10k worth to 18.5k since may 2019.  She's left with a tasty selection of oilys, potash, telcos, and other reflation stocks, all paid for with the profits from the PMs, with a little cash left over.  Turns out it's easier managing someone else's ISA than my own. She entered all the trade herself, with me viewing a screen share and checking she was buying the right stocks... an approach that minimises tinkering!

So in a little over a year, a 20k ISA turned into 21k cash plus over 7k of "free" stocks.

All credit has to go to @DurhamBorn for the education, timing and targets that made this possible. Thank you!

Great job well done! She’s gone to POTS 😉

https://news.bloomberglaw.com/securities-law/robinhood-craze-born-in-america-is-now-moving-stocks-everywhere

The ‘mother of all collapses is coming’ 

However I too and am enjoying the ride.....

 

Silver always likes to put on about a dollar between 4.30pm and the following day....

[Loki]

4 minutes ago, Vendetta said:

 

 

 

 

"trading has become the talk of the town"
Hmmmm when in history have we seen snippets like that

[MvR]

49 minutes ago, Vendetta said:

Great job well done!

https://news.bloomberglaw.com/securities-law/robinhood-craze-born-in-america-is-now-moving-stocks-everywhere

The ‘mother of all collapses is coming’ 

However I too and am enjoying the ride.....

Yup.. Something's coming..  The Robinhood thing is definitely our shoe-shine moment, but we could have a way to go yet.  IIRC Bitcoin tripled between me first being asked by a non trader if they should invest, and it peaking a month or so later.  I don't think all the retail money is in this move yet either.

[Loki]

Just now, MvR said:

Yup.. Something's coming..  The Robinhood thing is definitely our shoe-shine moment, but we could have a way to go yet.  IIRC Bitcoin tripled between me first being asked by a non trader if they should invest, and it peaking a month or so later, and I don't think all the retail money is in this move yet either.

Yes, while we do seem to have the first hints of 'shoeshine boys' I still agree with the excellent work by others, that the end of the year/beginning of next we will see carnage.  

 

[Cosmic]

15 minutes ago, MvR said:

Turns out it's easier managing someone else's ISA than my own. She entered all the trade herself, with me viewing a screen share and checking she was buying the right stocks... an approach that minimises tinkering!

I have a small amount in my mums name that I recon she's forgotten about. I really don't give a damn and don't talk to her, but I still log in and do bits with it. This approach has lead to much better timing and returns than my own accounts.

Though I did check it this week and found 2 SA miners were nearly 45% of the value... Its not actually that small any more!

Just shows over trading/tinkering = bad.

[MvR]

10 minutes ago, Cosmic Apple said:

I have a small amount in my mums name that I recon she's forgotten about. I really don't give a damn and don't talk to her, but I still log in and do bits with it. This approach has lead to much better timing and returns than my own accounts.

Though I did check it this week and found 2 SA miners were nearly 45% of the value... Its not actually that small any more!

Just shows over trading/tinkering = bad.

Yup. it's easy to forget that time is a crucial factor.

It takes time for moves to play out and even the most skilful tinkering can't get around that.

[Shamone]

1 hour ago, Vendetta said:

I don’t mind you asking. @Shamone

 “So how come I have not had much disposable income until recently?” 

I bought my final family home 11 years ago after STRing for 2 years at the trough in May 2009 having sold in July 2007. (I had discovered ToS in 2003!). 
 

As a result I had 60% deposit on the purchase and took out a 10 year fixed Mortgage for the remainder of the balance.
 

As DB would say - 1 economic cycle too early. Argh! I should have just got a variable discounted rate. Oh well.

Every penny we earned went into paying it off within 10years. Both of our salaries have gone up a fair bit in last 10 years too. I have also always driven a £3k 1.4litre 2nd hand car for 15 years. Hahaha!

 We are essentially Mortgage free now at 45 years old - so lots more disposable income. 

Also why we haven’t dabbled in shares in near on 20 years - as we have just paid down (mortgage) debt. 

My goal is to retire at 55 and live off pension, share dividend income and beekeeping and the odd bit of private work.

 

 

Excellent reply, many thanks for that. Don’t be too hard on yourself for the fix. We took a 10 year one in 2013 at 3.99 with a 60 deposit, first time buyers. Threw everything at it and paid it off 2017. Wife and I crap pensions but we can now both work part time, hopefully til the world ends. If it doesn’t, I hope to have a choice at 60. My wife younger so she will get to do that younger, I hope. Thanks.

[DurhamBorn]

1 hour ago, MvR said:

We just closed out the gold and silver physical ETFs in WvR2s ISA.. 10k worth to 18.5k since may 2019.  She's left with a tasty selection of oilys, potash, telcos, and other reflation stocks, all paid for with the profits from the PMs, with a little cash left over.  Turns out it's easier managing someone else's ISA than my own. She entered all the trade herself, with me viewing a screen share and checking she was buying the right stocks... an approach that minimises tinkering!

So in a little over a year, a 20k ISA turned into 21k cash plus over 7k of "free" stocks.

All credit has to go to @DurhamBorn for the education, timing and targets that made this possible. Thank you!

Its always nice to build up a portfolio of big companies on the profits from smaller ones.Iv been really pleased to be able to buy so much in the telecom sector for instance simply from silver miner profits.I should of kept my gold miners longer rather than sell 2/3s,but no complaints at all,very happy with how we have done,and of course mistakes are important too so we can keep learning.

[Talking Monkey]

1 hour ago, Loki said:

Yes, while we do seem to have the first hints of 'shoeshine boys' I still agree with the excellent work by others, that the end of the year/beginning of next we will see carnage.  

 

I get the same vibe on end of this year early next for some serious carnage. 

[Alifelessbinary]

11 hours ago, Vendetta said:

Picked up some more SDF (K&S AG pot ash) and also some BP (oil) after the initial 3% drop this morning. 

They are both still relatively near their 5 year lows so even though I think if/when the NASDAQ market collapses - they will definitely take a hit but wont fall too much and may be much higher than where they are now if this ‘crack/melt up continues’.
 

Plus BP not ex dividend until 13th Aug.
 

Also I am trying to get my head around and reconcile buying with my ISA allowances. On one hand I would like to use up ISA allowance by April 2021 but on the other hand I would like to build cash and wait for (the inevitable??) big fall....

Currently I am using yearly ISA allowances for myself , wife and 2 kids... £20k + £20k + £9k + £9k a year = £58k per year one can invest without capital gains on selling growth, or tax on any dividend income.

Is there a better ‘tax vehicle’ I should be using? Both my wife and I are higher rate tax payers significantly above threshold and are in (don’t shoot me for this!) : part final salary/average earning ‘inflation linked’ pensions which can be taken at 55 onwards. 

We do not have any Sipps. 

I would be interested to hear how you guys structure your ‘tax affairs’ around your investments? 
 

PS: I wouldn’t be surprised if TPTB ‘rip the arse’ out of the government backed inflation linked pensions within next 15 years. They already started back in 2007 changing the finish date and changing  the final salary link to average earnings.

Hence why I am am taking out an insurance with these investments.

 

 

 

I’ve got a similar setup up but also use Junior Sipps, as I like the fact that you can set your kids up for retirement. I won’t be telling them until until they are in their 30’s to ensure they learn the value of money. 

One area you Could look at is Venture Capital Trusts(VCTs) for the tax benefits. They are more sophisticated than ISAs and illiquid so you tend to need to lock your money up for 10 years. 

The fees are high at circa 2-3% per annum and there’s been an over subscription the last few years, but generally mine have performed as expected and the tax free dividends are nice to receive. 

DYOR and google the benefits.