4.2 - Escaping the Tax Trap - The Power of Pensions
The US and UK give you the power to beat the tax man (or at least delay him) with generous pension accounts, allowances, and best of all: free money to invest with.
This chapter is all about pensions. Before you drift off into thoughts of, well, anything more interesting, pensions can be as exciting as index funds, bonds, crypto, property and gold.
They are basically just accounts which allow you to potentially invest in whatever you like, and beat the inflation trap, but with the benefit of being able to shield your gains from the taxman for potentially decades. And then when you do have to pay tax, it’s often at a much lower rate than income tax.
The other benefit of these accounts is that often, your employer and the government will give you free money to put in them.
Did that catch your attention? Good.
Pensions in the UK & the USA
Pension accounts in the 2 regions work very differently, so I’ve written up a post for each region, with cheat sheets for each to get your head around.
Click on the links below for each region:
USA Retirement Accounts
UK Pensions
It’s really important to understand how the pension system in your region works. Once you do that - you can use it correctly to supercharge your escape fund without having to work or hustle harder.
And with free money from the government and your employer, we may have actually found the second free lunch in investing (the first being diversification).
Up Next: 4.3 - Pension Consolidation Made Easy: Transfer Old Pots & Dump High-Cost Default Funds
Find out what you have, and take back control of your investments and future.
Disclaimer: This content is for informational and educational purposes only. It does not constitute personal financial advice. Everyone’s situation is different — if in doubt, speak to a qualified, regulated financial adviser.