Can some one please give me the official UK formula used by Unit Trusts to calculate the effect of charges?

Question

Their key features show the effect after no more than 10 years. None of them shows mere. Why? Are they all in cahoots? I want to calculate it at up to 40 years.

Using ISAs for pension is far better than using private pension schemes with annuities in the end.
I have figured out a good formula, but the answers are a little out and I am a perfectionist. Any way, there is nothing like the official formula.

Answer 1

Even 10 years is totally pointless - who knows what Interest rates are going to be next month let alone what they will be in10 years.

Only God could tell you what will happen to your money in 40 years == in fact I would bet MOST of the Unit Trusts won't EVEN EXIST in 40 years (go see how many existed 40 years ago )

I already explained that Pensions get Tax relief on Contributions (22%) and ISA's don't == so ISA's are NOT the best choice (they are limited to £7000 contributions per year, Pension is limited only by your salary (yes, you CAN contribute your ENTIRE Salary into a pension))

£500 a month in an ISA at 5% for 10 years gives you £115k (before charges) .. same in a Pension gives you £147.5k (before charges) = dfference £32k

The Stock Market long-term rate of return is said to be 12%.

40 years at 12% :-
ISA £5.9 million, Pension £7.5 million

Difference = £1.7 m !!

Why don't you just run the maths ??
Any slight difference in charges is nothing compared to this ..

Answer 2

ok , to do an ISA quote as it were using a spreadsheet of calculator, the simplest and probably the best way id going to be look at the funds AMC and also their trustee /custodian costs ,say 1.4amc for Midas Balanced Growth and 0.1 for custodian ect so total 1.5 the growth rate on a illustration is 7% so unless you want to be sad enough to work it out on a day by day basis just use 5.5% as the growth rate. As an Aside Steve B is a well known and respected name in the pensions industry the real Steve Bee is the pensions guru and industry spokesman for Scottish Life,yes pensions get tax relief but i would suggest that the real Steve Bee would understand that for a basic rate taxpayer the pensions argument is somewhat flawed.yes tax relief is wonderful but the rules and regulations when you actually want to draw benefits are not ideal, and certainly not flexible i would say that the trade off for the bribe of tax relief is often not worth the problems later , yes pension works in some situations however the ISA savings option can work just as well, at the moment no body is going to tell me what to do with my ISA portfolio at 75, and have you tried to transfer a pension down to your children lately?

Answer 3

For finance solutions

Answer 4

We want = your money x 100