It's interesting that one of the tax free investment/savings choices in the UK is basically a lottery.
Thank the power of the horse racing/gaming/gambling lobby.
Many years ago when I lived there, I had an IG Index account - who market themselves as a "financial spread betting" service. At the time, you could buy/sell futures and options with them but it was presented in a way that emphasized that you were "spread betting" - but the mechanics were the exact same and expiries all lined up with the obvious counterparts in the liquid futures space.
So because you were NOT investing but gambling, "winnings" were tax free.
I just googled and they're still going - presumably still offering the same betting "service".
It's funny to see the efforts that scam and pure gambling services go to to try and present themselves as staid and serious "investment" business while IG Index offered access to well-regulated financial markets but kept reminding you that you were betting.
In theory, all the money wagered is money that has already paid income tax at some point so why tax it again?
Most obviously, it doesn't cost to enter. So the most you can "lose" is a missed interest income from putting the money in another source.
After that, it's definitely the fact that the algorithm is designed to both pay a certain percentage of people and always have specific return. [1]
You are also limited to how much you can enter to 50k.
With all that in mind, at the end of the day it feels like many small wins over time, with the super random chance of occasionally having a big-ish payout.
It's definitely designed to feel like a lottery, but in reality is way more akin to normal savings than a lottery.
Also tax man: Oh did you get that money by luck? Good for you, man.
Also tax man: Did you get inherit money by having been born into a wealthy family? Gimme some of that money.
Also tax man: Were you born into the royal family? Good for you, man. Pardon me, I mean, your highness.
Pensions are more tax efficient and offer a better option of investments (companies) than what is effectively fiat interest going into a lottery pool.
If you have cash in premium bonds you might die young then pay inheritance tax.
Better give your kids cash earlier to live off or invest to avoid this, and so they can over-stuff their pensions ;). Not many people think that far ahead (60 year horizon)
Annuities maybe, but those aren’t the only kind of pensions
pension
a regular income paid by a government or a financial organization to someone who no longer works, usually because of their age or health> A pension (/ˈpɛnʃən/; from Latin pensiō 'payment') is a fund into which amounts are paid regularly during an individual's working career, and from which periodic payments are made to support the person's retirement from work.
A pension is a financial instrument. There’s no need to purchase an annuity, which means a pension organised correctly can be passed on to your children or spouse, and there’s no lottery or gamble angle.
A dictionary: https://dictionary.cambridge.org/dictionary/english/dictiona...
The wikipedia definition is strange. A pension is not a fund. A pension fund is a fund! (There is also a wikipedia page for that!)
Apart from that how is “regular income paid by to someone who no longer works“ different from “periodic payments made to support the person's retirement from work” anyway?
The word pension is overloaded. A SIPP is a pension, the state pension is a pension, and people refer to their annuity as pensions too.
> A pension is not a fund. A pension fund is a fund!
The word fund is being used in two different ways here. A pension is a fund, but is not a Pension Fund.
I'm familiar with retirement accounts and pension plans in a number of countries but not in the UK. I see that in the UK "pension" is often used a short-hand for "pension scheme" (it seems a relatively new development which I've not seen reflected in dictionaries).
For what it's worth, the wikipedia page for Personal_pension is redirected to Personal_pension_scheme: "A personal pension scheme (PPS), sometimes called a personal pension plan (PPP), is ..."
> The amount of energy needed to refute bullshit is an order of magnitude bigger than that needed to produce it.Err, you could start by not making wild inferences and replying to assertions that weren't made.
A single investment is basically gambling. Where it moves is largely impossible to predict or (for a nobody like me, who wouldn't have the means to engage in market manipulation) control. You can reduce the randomness/risk by spreading out your investment across multiple stocks. That's just the central limit theorem. For the market as a whole, on a long enough timescale, the historical aggregate trends upwards, but is still effectively random.
> What the fuck are you investing in for retirement if not stocks?
I can be critical of something and still acknowledge the reality that I am effectively forced to engage with it. I generally invest in a few index funds to reduce the variance and mental overhead, but it's still there.
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In one way it's much worse than "mainstream" gambling: its value depends on society holding the shared delusion that stocks (both in general and yours in particular) are actually worth something. That leads some people to become incredibly invested in maintaining that delusion, since they know what's at stake for them. This thread could be considered an example of where that mentality leads.
And as you said yourself:
> The amount of energy needed to refute bullshit is an order of magnitude bigger than that needed to produce it.