The financial planning journal

An investment that gives a 72% return overnight

1 February 2021

Believe it or not, there is a risk-free investment you can make which gives you a 72% return overnight. Fortunately, it’s not some extremely high risk, esoteric investment scheme, that will see you locked away forever or losing all your cash – it’s just a pension.

Pensions might sound boring to most people, but they are actually one of the most phenomenal vehicles for growing your money. 72% may seem a little bit farfetched but, if I take you through the numbers, you’d be quite amazed by the outcome:

If you’re a basic rate taxpayer and are paid £1,000, it will be taxed at 12% for national insurance and 20% for income tax. As a result, this arrives in your bank account as £680. For a higher rate taxpayer, anything over the £50,000 threshold suffers an additional 2% in national insurance, and a whopping 40% in income tax.  As such, this will land in your account as £580 – a fairly disheartening reality.

No need to worry though, as you can resolve this entirely simply by popping the money straight into your pension. Most pension schemes are now salary sacrifice which means national insurance just disappears, and all pensions are completely gross of income tax. No tax to pay at all!

By putting the money in your pension, your £680 will increase by £320 (47%!), and if you’re a higher rate taxpayer, it will result in a £420 uplift. You almost double your money. That’s a 72%, risk free return, before you’ve even considered how you’re going to invest it or compounded growth. It’s pretty phenomenal and there’s no other return like it.

So, it might be time to re-think pensions because they’re not actually that boring and you can make easy money.

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