Investing Trends

The thought of the word "pension", sends a shiver down most peoples spine…….unless you are an MP or Civil Servant, with the best pension OUR money can buy!

Let's face some key facts about UK Pensions:

• The income generated within a pension is taxed.


• The income we take from a pension is taxed.


• At some point we have to buy an annuity and our capital is lost.


• If we provide for ourselves we can lose State Benefits at retirement.


• Insurance Companies profit from "managing" our investments and they pay tax on their profits!


• If we create too much wealth in our pension, (£1.5m), we are not allowed to contribute further.


• We cannot invest in overseas residential investment property using our pension fund.


• Unless you are a sports star, you have to wait until at least age 50 to take your pension.

There is a pattern emerging here, the Government earn a fortune in tax from the UK pension market and we, the private sector, not only have to put up with this, but we have to help fund the bloated pensions of the Public Sector!

The good news is that there is a very good alternative... buy an investment property in Dubai. The concept is simple. You invest a deposit in a property, rent it out for say 10 years and clear the mortgage. Then you can enjoy the rental income ("Dubai Retirement Fund").

I have selected Dubai for this exercise, simply because it takes a lot to beat it. Here are just a few pointers as to why it might be a good location to base your investments.

• It is totally tax free, that's correct, no CGT, Income Tax or grubby Chancellor after your money!


• The population is continuing to grow faster than they can build property.


• Forecast GDP indicates continued economic growth and thus rental demand of property from Employers seeking to recruit and locate staff.


• Geographically acts as a trading zone for East and West.


• Property prices still relatively low.


• 70% mortgages allow you to achieve "gearing" of your investment, thus the growth return can be spectacular.


• On selected investments guaranteed rental returns are available.

So now you have grasped the concept, let me demonstrate some figures to you which illustrate the massive benefits of creating your very own "Dubai Retirement Fund".

UK Pension


£18000 invested over 10 years and 15 years respectively:

Fund after 10 years: £24,600 Income produced annually: £724


Fund after 15 years: £29,000 Income produced annually: £943

Notes:
Figures taken from Standard Life on line calculator, based on male aged 40.
All figures assume 2.5% RPI and 7% annualised growth and 50% widow's pension.
Pension RPI linked. All figures illustrated in today's terms.

"Dubai Retirement Fund"


£60000 property purchased, with £18000 deposit and £42000 capital repayment mortgage.

Value after 10 years: £60,000 Income produced annually: £4,800


Value after 15 years: £60,000 Income produced annually: £4,800

Notes:
It has been assumed that both the capital and income failed to grow over the terms to represent values in today's terms. The 10 year example is based on a mortgage at 8% interest and the 15 year example is based on a mortgage rate of 7.5%. In the event of death, 100% of the rental income would continue as income. The capital at the end of the term would continue to vest in the owner's estate.

Now, let's summarise the differences, whilst excluding the fantastic capital and rental growth opportunities: After 15 years the value of your Dubai property would be £60,000 paying £4,800 annual income. The UK Pension would have a value of NIL, because you have to trade your fund for an annuity of only £943 pa, which is less than 20% of the Dubai Retirement Fund! It's a really difficult decision isn't it?

In reality a lot of research has to be undertaken to ensure only the best properties are selected, which is where our team of specialists are well placed to help you.

The choice is now yours if you wish to make plans for your future wealth:

• Bury your head in the sand and hope that you won't grow old!


• Invest in a UK Pension and provide the chancellor with plenty of tax!


• ACT NOW and invest in a "Dubai Retirement Fund".