Pension vs ISA - So many people get this WRONG!

The problem I see with your calculations is that you are not considering the fees that are present with the pension providers. for example one of the cheapest is vanguard sipp with 375 a year.

Talking about 25-year-olds 65 sorry what about 85 and 65-year-old? What’s got an eye and a pension? We’re going to get clobbered are they taking it out your pension or you’re not explaining to people what you’re talking about? Really we want to know are they gonna take the money off in Tax? We save it all our livesand Tax is taking it offered pensioners ages. I’ve just mentioned can you tell us if they’re gonna take the tax or your pension or your pension?

When you pensioner can you save all this money? You’re talking about? Not not live that long to save anything and can you save anything? If if if the tax is been taken off you off your eyes so all you all your pensions which is it and how much will be taken okay? Depends what pension you get, can’t get your pension out cause you’re ill. You’re talking about people at 65. You’re not talking about our ages not me savings got savings. You can do this and invest it and invest in my better savings I’ve got which isn’t a lot.

I just sold a property in Portland and I'm thinking to put the cash in stocks, I know everyone is saying its ripe enough, but Is this a good time to buy stocks? How long until a full recovery? How are other people in the same market raking in over $450k gains with months, I'm really just confused at this point.

If you want to retire early, you have to max out isa first, otherwise you will have to wait till 57/58 to access your pension.

Too many bot comments 😊

Very good. Clear and concise. Like your final comments. It’s good to have multiple options. Thanks

The thing is, it depends what the pension is invested in.

Company pensions by default are usually invested in some ridiculously low return mix of bonds and bad equity funds... usually to try and reduce volatility in the short term (pointless).

Whereas if you just simply buy the S&P 500 index fund from blackrock or Vanguard the trailing 10 year average return is 14% (as of 2024).

My solution has always been to change my pension immediately in any company i work for to "Freestyle" or "Custom" and basically invested it in a fashion to mirror what i do in my ISA.

I even bought Nvidia in 2007 in my BA pension where i had complete control 😂.

what might be really helpful is a excel spreadsheet for some of these amazing videos. that way we could put our basic details in and see how that pans out. I know there is the voyant go stuff and I will get to that but a basic excel spreadsheet here or there might help us get to the academy stuff a bit quicker? Just a thought Pete but all in all I love the videos you produce. Might be in the market for a new financial planner later this year as the fees on the current one are likely to bite off quite a chunk of what I'm putting into my pension.

£1.5k per month? What's that going to pay for? Bills only, if you're lucky. There needs to be an option 3: £3k net per month.

How about investing in physical gold bullion which is exempt from capital gains tax, British sovereigns let's say with an average return of 10-13%

Who is modelling the value of the pension pot or ISA at age 100?

But I thought if the isa had been invested for 7 years there was no IHT? So any money put in more than 7 years ago would be IHT free wouldn’t it?

Thanks for this informative video! I have a question: If you die, does your family inherit your pension? I thought this is not the case?

What if you’re a higher rate tax payer whilst you’re putting money into your pension?

I'm going to live to 100?
Stop saying CRITICAL MASS, unless you are a physicist. I doubt it.

Too much waffle. Should have started with answer then moved back. And why use Millions as the examples. I’m bailing

I've kept much of my savings in cash for safety, but I'm unsure if it's right for retirement. Contemplating investing $400K in stocks, as I've heard investors can profit in tough times. Unsure about my next move.

Why do you worry about the inheritance tax on the ISA? Inst the whole point to retire early and draw the pot before dying?

move to Dubai

Am I missing something here, in the initial draw down calculations you say the person wants £750pm after tax. Are you assuming they have other income and as such will pay 20% on the pension income? If not they will not pay any tax on the pension income as they will not exceed the £12570 tax free allowance and will therefore only need to take out the same amount as from the ISA.

Great point. I pay into my pension as i am a higher rate tax payer. I also do iSA funds because i like the flexibility.

I have two pensions. I would much rather have had a Roth 401k throughout my working lifetime. $500/month invested from 25 - 65 at 9% is $2.3mil. I have $100k that i like to invest in a non-retirement account, Where would you invest this as of now?

Can you not just have a work pension and an isa

Totally agree with this video 👍 and I continue to suggest to youngsters to get saving into both pots... Annual return on my pension this year is 27.2%. The ISA is 28.7% .... BLOODY BRILLIANT !!! I'm seeing around 20% year on year, but this year has got my thumbs up 👍👍👍Retired a couple of years back at 56.

Could you do an update on this now that pensions are under the IHT, please

For me the big problem is: a lot of things could change long term including the tax rules for both, if that happens with ISA you can take action, take rhe money, pension you have no option.

Great video. Surely it’s worth highlighting the other benefit of workplace pensions, that being employer contribution so your monthly investment into the savings pot is far greater than the ISA?

6 percent year is low ! Even my investment accounts I’m on a minimum 10 this year has been 30 percent

Your maths makes no sense how can someone put 750 per month in a pension with un matched do u know how much you would have to be earning

Leaving out inflation makes this comparison pointless. As debasement doesn’t look like stopping perhaps ever than inflation is a massive isssue 🤷‍♂️

0.03% of the population live to 100 - so whats the point of that illustration. & of course theres the pension getting nabbed by the pension company so wife not getting a couple joint savings, and of course with an isa you have the Capital, with a pension its given over to a company

Great comparison video, thanks. I wonder if it'd be feasible to do an updated version now that pensions are going to be hit by IHT?

Soon in one year Im 55. Not much in isa. Learning and learning. Pension is small too. Thank you for video. I know one thing all my life I used to plan things minutes steps looks where to go how what after what- nothing went as planned. Life is such unpredictable thing.

Interesting food for thought, my ideal is to as you say, have both a S&S ISA which I will draw upon once I hit the tax point from my pension, though as I write this out now, wouldn't we get hit straight away with tax due to the state pension being taxed? Anyway loosely my ideal situation is to be able to draw down 12k from pension and another 12k from ISA every year to get me a yearly sum which will sit into a savings account and be used when necessary, on top of that (again, ideal situation though I am planning for it) is to have a 3 year cash buffer so if the stock market shits the bed I'll have these funds to eat into should they be necessary. It'll require a ton of capital but I've got a decent amount of time on my hands before I need to be concerned.

What if you are early 50's tho, still worth privately investing in your own pension (non company contributed) is this enough time to get viable growth?

This is almost apples to oranges as pension is taxed at drawdown, and ISA was money already taxed that you took from pocket and put into the ISA. The real question is, which ISA are you referring to, presumably one that has stocks and shares as a standard cash ISA will never have enough return rate to be worth your while. (EDIT: Lookin at video date, this was probably around the lifetime ISA, which is only available to some persons.... )And since most persons don't want to actively invest(or even passive fund) in the stock market, the ISA is just complicating something your pension already achieves. Additionally all the years the pension is appreciating and compounding interest year on year, it was doing so with money that cost you lest up front. £100 into your pension costed you £60-£80 + appreciates to XX value. £100 into your ISA costed you ~£120 as it was taxed down therefore you have less of a starting pot and less you contribute each month/year = less money to appreciate and grow and leaves you on X value, which will be less than the pension including it's taxes at drawdown.

Great video with good explanation. I am 30 years old and I use the stock and share ISA. My only problem with the pension is let’s say I only focus to put money in the pension and have 200k which I can’t take out and by the age of 50 I need an operation which on private will cost me 30k but I don’t have this money saved. With an ISA I can access the money any time

So far I'm doing good, approaching retirement with about 800k in savings. Transitioning from building wealth to spending can be scary, especially with soaring inflation. My question is, after maxing out my tax-advantaged retirement accounts, what next?

Remember there's also the Lifetime ISA, where you get the 25% top up form the government (which is the equivalent of the 20% tax saving of a pension contribution before tax) but you don't pay tax taking money out. Obviously there's a penalty to withdraw before you're 60 but maxing out you £4000 per year allowance surely works out better than a pension or a standard ISA.
I'd personally rather put my money into that than paying off the mortgage early - especially if you have a lower mortgage interest rate than you get on your ISA. As much as people like to pay their mortgage off early for peace of mind, I think it's logically a bad investment decision.

“When they get to age 100”
Some people need a reality check
But cool video :-)

what about lifetime ISA vs SIPP?

This video needs to be pulled as IHT will also apply to pensions going forward.

This didn't age well

Ok but your positivity about the pension is a larger pot and no inheritance tax for a wife. Well I’m not married and I have a large sum saved in ISAs and investments that I can do what I like with it to suite my own needs at any time of life. If I get ill I can spend my money, help others and pay for medical bills and die more comfortably in a private hospital. That’s good use of my money I’d say. Better that than a pension company pocketing the lot. I do agree that investing is key and investing and building knowledge to make informed decisions is key. I thank you for what is a fantastic channel. I really appreciate your insight.

Could do with a repeat of this video, under the new rules!

We could do with replacing this video with an updated version that reflects the fact that pensions are also going to be subject to IHT from 2027.

So now there is IHT on pensions it is better to have ISA's when looking to keep investments to pass down?

Smart planning on this u would invest ur 20k a year (if u can afford it) in ur ISA and any more should go in ur pension.
And try and avoid inheritance tax by butting them in a trust, by doing so u can set the date they can access the gift, they receive it 7 years b4 they can access it then no tax is due. U can afford to do this by having the pension atleast as high as the ISA and future planning can help reduce the inheritance tax, ur better of speaking to a financial advisor to do this.

im in my late 30s, i didnt think about my retirement , but when i watched your chaneel.viedo, it is really helpful and knowledgable. thanks