The Anonymous Widower

The Alternative Annuity

The government has stated that it will be abolishing the rule on annuities that means that insurance companies chew up a large proportion of your pension in adminstration charges and incompetence. Whether they actually will abolish it is open to question, as I suspect that insurance companies will be difficult to throw off this particular gravy train.

There is an old joke, which goes something like “How do you make a small fortune?” with an answer of “Start with a large one! and give it to a financial advisor!”

I am not a financial advisor, but I’ve lost millions due to their incompetence.  Don’t worry as I’ve also made millions by completely ignoring their advice! So on balance I know a good investment when I see it and a bad one, when no-one else does. I should say that I don’t invest in stocks and shares as I’m then at the mercy of a market over which I have no control. I do wish sometimes, that in the past, I’d used my technological knowledge to buy a few stocks.  As an example, I told people that Alan Sugar would be a star in the early 1970s, as what do you get if you give technology to a man, who made his first money flogging car radio aerials and electronic goods from a van?  But I had no money to invest when he took Amstrad public. I also met one of the founders of 3Com at Comdex in Las Vegas and thought they were a good thing!  They had a tiny stand there which was probably about the size of Alan Sugar’s van.

So do I regret a life of missed opportunities? No! I’m with Piaf on this one!

Life is just a series of pauses,  waiting for the next bus to come along.  Luckily the buses are getting bigger, better and more comfortable.

It is two years and a couple of months, since I first put the money from C’s Porsche Boxster into Zopa. I added a bit from my pension fund and a few thousand here and there, so that now I’ve got about £50,000 invested.  Not a large fortune by any means, but typical of the sort of pots many people of my age have in savings. Every month now, it repays me about £3,000 back in interest and repaid loans, which I reinvest immediately, so the pot is growing! I have had three loans go bad on me, but I’m only £350 down on them and one has even started repaying its debts.

So if you look at the sort of cash flow, you get with Zopa, it is a sum paid paid in, which gives you an income over a period of years, not unlike an annuity.  But without all the charges!

So does a retirement financial strategy go something like this.  As you approach retirement, you put a small sum into Zopa, so that you get comfortable with the  concept. Then as you get happier, you transfer your money accordingly.  There is one problem with Zopa though; that is that it is not liked by financial advisers.  After all where’s the commission?  If they are Zopa investors themselves they may get a bullseye, if they introduce a new investor, but that’s not going to make anybody rich.

Zopa though will be followed by other imitators.  Some will be better, but the ones I’ve seen so far are not, often because they have tried to accommodate the dreaded financial adviser.

December 11, 2010 - Posted by AnonW | Finance | Banks, Zopa