AVCs...Shariah or Growth best investment in 2021 ?

[Hawkey99]

I understand everyone has different timescales, agendas risk tolerance but wondered which of these people think might do best in 2021.

Shariah Law has smashed it out of the park for last 5 years but is very heavily USA 71%....

Growth is set up to give returns of 3.5% above inflation is only 13% USA.

Will the dollar continue to weaken
Will there be a Biden affect
Will a global recovery post Covid happen.
Will there be a commodity Supercycle happen
Will inflation start to rise.....

Investments banks are saying big rise in USA stocks this year but our FTSE is very cheap at present

I was going to go with Growth but having weighed up everything will have another year in Shariah Law...

Any thoughts ??

[RobertT]

I was going to go with Growth but having weighed up everything will have another year in Shariah Law...
Any thoughts ??

Why not both?
Why not the other options?
Why not spread the risk?

Just my thoughts!

[Hawkey99]

The options are very limited and the most of the others are very low risk except the Ethical one...

A bit of Shariah and Growth....A good thought but think ill stick with the riskier Shariah Law for another 12 months...

[NorthernBoy]

No one on here can tell can tell you the answers to your questions, as even the expects don’t know what’s going to happen next.

Personally, I am sticking with shariah fund as I think long term tech will continue to rise. My view is that as long as the central banks keeping printing then that money has to find a home and the stock market should benefit. I think British bank shares should rise next year as dividends are expected to be reinstated, but predicting anything at the moment is difficult.

It’s all a big Ponzi scheme which I can see continuing as it’s in no governments interest to stop it. Keep printing and then print some more, there is no alternative. In theory all this printing should lead to inflation, but maybe we will get deflation, who knows

Happy new year to you all

[koolishy67]

If market fall you get chance to buy more I am stay with sharia still 18 years to go for me so no problem there buy if you retiring in next 5 years better go with less volitle one ,l ook like S&P 500 trading over valued at the moment

[plymouth3]

Any links to view the shariah price

[Hawkey99]

https://digital.feprecisionplus.com/cor ... ory=2rmp62

[reedy]

Hawkey99 I do 60% Sharia Law and 40% Growth. Like you i will give it another year then i will have 3 years before im 55 and will move it into safer funds. Thats if the avc scheme is still going

[mr hil.]

Surely the AVC funds will remain even if no further payments from pay is enforced on us. If so I hope they open up the scheme for other chances of paying into these funds.

[heapsy]

RobertT is of the opinion that RM will stop future payments into the AVCs, as we will no longer be members of the same scheme. If that is the case, it would probably be wise to look for alternatives. A couple of decent tracker funds. A FTSE250 and a S&P500 tracker? I intend to carry on along those lines.

[RobertT]

Surely the AVC funds will remain even if no further payments from pay is enforced on us. If so I hope they open up the scheme for other chances of paying into these funds.

In my opinion payments into the current AVC's(Flexiplan & Bonusplan) will stop when the new CDC pension starts – I can't see how they'll continue!

But what you've already saved will still be invested with Scottish Widows(with the ability to swap funds) and most people will still use their cash to fund their tax free lump sum, when taking their NRA60 and NRA65 benefits.

There's always the possibility RM could start new AVC's linked to the CDC scheme, enabling us to continue benefiting from PSE aswell as tax relief.
If so, we'll be starting them from scratch and they'll be totally separate from whatever we already have in the existing Flexiplan & Bonusplan.
But only time will tell on that one!

[RobertT]

RobertT is of the opinion that RM will stop future payments into the AVCs, as we will no longer be members of the same scheme. If that is the case, it would probably be wise to look for alternatives. A couple of decent tracker funds. A FTSE250 and a S&P500 tracker? I intend to carry on along those lines.

The wrapper will be important too!

Pensions will get the benefit of tax relief on the way in, and potentially all tax free on the way out too, depending on other income, etc.
ISA's obviously don't get any tax breaks on the way in, but are completely tax free and flexible on the way out.

What's right, as always, will be an individual decision based on circumstances.

[Aquarius]

Surely the AVC funds will remain even if no further payments from pay is enforced on us. If so I hope they open up the scheme for other chances of paying into these funds.

In my opinion payments into the current AVC's(Flexiplan & Bonusplan) will stop when the new CDC pension starts – I can't see how they'll continue!

But what you've already saved will still be invested with Scottish Widows(with the ability to swap funds) and most people will still use their cash to fund their tax free lump sum, when taking their NRA60 and NRA65 benefits.

There's always the possibility RM could start new AVC's linked to the CDC scheme, enabling us to continue benefiting from PSE aswell as tax relief.
If so, we'll be starting them from scratch and they'll be totally separate from whatever we already have in the existing Flexiplan & Bonusplan.
But only time will tell on that one!

I hope you are right - i would be surprised and disappointed if RM don't do this - time will tell i guess

[heapsy]

The advantage an ISA has, is that it isn't limited to only 25% tax free. It's all tax free, therefore unlimited. It is also more flexible. Taking an income tax free until you then choose to cash in, lets say, when you have all your pensions being paid out, and take the whole lot as a lump sum later. For single people they mean you don't have to worry about leaving anything behind when you're gone. You can spend the lot before you are. Let's face it, if you got to about 68 and had around 100k in an ISA, what exactly are you going to do with tens of thousands of pounds tied up when you reach 80? Most of us will be knackered. It will be virtually impossible to take a pension completely tax free, unless you live like a hermit and draw down such a small amount. In which case you will almost certainly be leaving something behind anyway.

[RobertT]

The advantage an ISA has, is that it isn't limited to only 25% tax free. It's all tax free, therefore unlimited. It is also more flexible. Taking an income tax free until you then choose to cash in, lets say, when you have all your pensions being paid out, and take the whole lot as a lump sum later. For single people they mean you don't have to worry about leaving anything behind when you're gone. You can spend the lot before you are. Let's face it, if you got to about 68 and had around 100k in an ISA, what exactly are you going to do with tens of thousands of pounds tied up when you reach 80? Most of us will be knackered.

It will be virtually impossible to take a pension completely tax free, unless you live like a hermit and draw down such a small amount. In which case you will almost certainly be leaving something behind anyway.

It depends when you access it though, and for how long!

Personally I have a fairly substantial sum in my personal pension and plan to draw it down between the ages of 55 and 67. Initially to fund early retirement(55-60) and then to supplement my RM NRA60 and NRA65 pensions(60-67), as that will be below the Personal Tax Allowance.

If I use the 25% tax free as income for 5 years from 55-60 aswell as drawing down an amount equal to the PTA, I won't notice a drastic drop in income compared to my current full time RM wages(I generally don't do OT). And as I won't be paying into the personal pension from 55 onwards, it actually means more in my pocket compared to now.

At 60 and 65 I'll receive payouts from my AVC's to help supplement that basic PTA level income. I also have ISA's on top to provide further income above the PTA.

In practice it's difficult to plan the finances exactly due to the timescales and unknown investment returns, etc. But I only expect to pay a very small amount of tax on my personal pension and am hoping to get away with it altogether.

If you look at a DC pension in the traditional way of providing an income for life, then tax is likely to be more of an issue when factoring income from your NRA60, NRA65, CDC and state pension. Plus any other pensions/income you may have.

Which is where drawdown comes into it's own and enables you to access your pension cash any time after 55(rising to 57 in 2028), making your retirement plans more flexible and potentially making a pension much better than an ISA from a financial point of view aswell.

For me drawing down my personal pension make the finances work perfectly and enables me to take full advantage of the tax breaks and enables me to retire early.
Win, win!

As long as you can plan things to your advantage, a pension will beat ISA'a hands down!