Retirement Planning / Investing Advice
Discussion
In my mid forties I’ve decided I really need to start planning better for the future, my retirement and my family. I appreciate this is too late, however better now than never. As a result, I have some questions for you all, and would love your advice:
1. I keep hearing about the S&P500 performance over long periods of time. What is the UK equivalent, or can I invest from the UK? Or, is this not efficient due to currency conversion etc?
2. Which investing app / company should I use, and what happens to my money if the app company disappears?
3. Should I use a broker / advisor, or if selecting core, long term investments is it more cost effective to manage myself? I’m not long to chop and change, just invest in a core managed fund, plus a few businesses I fancy, such as Apple, Microsoft, Heinz…?
4. I have multiple pensions, with c100k in, although my current employer pays bare minimum. Should I combine, and overpay myself, or leave pensions as they are, on focus on the above instead?
5. What would you do in my shoes? Get a good FA, or start doing it myself, and what would be your approach? I’m looking to invest c£500 - £1000 pcm.
Thank you for any input!
1. I keep hearing about the S&P500 performance over long periods of time. What is the UK equivalent, or can I invest from the UK? Or, is this not efficient due to currency conversion etc?
2. Which investing app / company should I use, and what happens to my money if the app company disappears?
3. Should I use a broker / advisor, or if selecting core, long term investments is it more cost effective to manage myself? I’m not long to chop and change, just invest in a core managed fund, plus a few businesses I fancy, such as Apple, Microsoft, Heinz…?
4. I have multiple pensions, with c100k in, although my current employer pays bare minimum. Should I combine, and overpay myself, or leave pensions as they are, on focus on the above instead?
5. What would you do in my shoes? Get a good FA, or start doing it myself, and what would be your approach? I’m looking to invest c£500 - £1000 pcm.
Thank you for any input!
AudiSport said:
In my mid forties I’ve decided I really need to start planning better for the future, my retirement and my family. I appreciate this is too late, however better now than never. As a result, I have some questions for you all, and would love your advice:
1. I keep hearing about the S&P500 performance over long periods of time. What is the UK equivalent, or can I invest from the UK? Or, is this not efficient due to currency conversion etc?
2. Which investing app / company should I use, and what happens to my money if the app company disappears?
3. Should I use a broker / advisor, or if selecting core, long term investments is it more cost effective to manage myself? I’m not long to chop and change, just invest in a core managed fund, plus a few businesses I fancy, such as Apple, Microsoft, Heinz…?
4. I have multiple pensions, with c100k in, although my current employer pays bare minimum. Should I combine, and overpay myself, or leave pensions as they are, on focus on the above instead?
5. What would you do in my shoes? Get a good FA, or start doing it myself, and what would be your approach? I’m looking to invest c£500 - £1000 pcm.
Thank you for any input!
I was in a similar position in my early 40s. Found an IFA, tidied everything up and set me on correct path out of the wilderness. Very pleased I did too.1. I keep hearing about the S&P500 performance over long periods of time. What is the UK equivalent, or can I invest from the UK? Or, is this not efficient due to currency conversion etc?
2. Which investing app / company should I use, and what happens to my money if the app company disappears?
3. Should I use a broker / advisor, or if selecting core, long term investments is it more cost effective to manage myself? I’m not long to chop and change, just invest in a core managed fund, plus a few businesses I fancy, such as Apple, Microsoft, Heinz…?
4. I have multiple pensions, with c100k in, although my current employer pays bare minimum. Should I combine, and overpay myself, or leave pensions as they are, on focus on the above instead?
5. What would you do in my shoes? Get a good FA, or start doing it myself, and what would be your approach? I’m looking to invest c£500 - £1000 pcm.
Thank you for any input!
Finding a good IFA is the tricky part.
I think I’m needing to get some advice as well, sit down and look at wife & myself’s pensions and tell me what to do.
Currently I have a pension through my employer, an avc account via employer & a SIPP account through aj bell which I manage myself. Wife has around 3 or 4 pensions through past & present employer.
Although I’m probably not looking for any more products it would be good to realise how much more we should be sticking away in order to realise retirement goals.
Currently I have a pension through my employer, an avc account via employer & a SIPP account through aj bell which I manage myself. Wife has around 3 or 4 pensions through past & present employer.
Although I’m probably not looking for any more products it would be good to realise how much more we should be sticking away in order to realise retirement goals.
I think I would be doing:
Making sure I am getting the max from the employer contribution.
After that I would not pay extra into the employer scheme. Just enough to get their max free money.
Then the extra I would prob look at Vanguard SIPP or ISA depending on retirement age. They have retirement funds like the Target Retirement funds.
Worth reading into. If not that then something like VLS80 or 100 at the moment then de-risk into VLS60 or 80 closer to retirement.
Fees are the killer. Also your marginal tax rate will have an impact plus your likely draw down sum and thus tax rate at the draw down phase. So keep an eye on that.
HTH
IANAFA
Making sure I am getting the max from the employer contribution.
After that I would not pay extra into the employer scheme. Just enough to get their max free money.
Then the extra I would prob look at Vanguard SIPP or ISA depending on retirement age. They have retirement funds like the Target Retirement funds.
Worth reading into. If not that then something like VLS80 or 100 at the moment then de-risk into VLS60 or 80 closer to retirement.
Fees are the killer. Also your marginal tax rate will have an impact plus your likely draw down sum and thus tax rate at the draw down phase. So keep an eye on that.
HTH
IANAFA
Couple of roads you can go down.
One is advice and the associated fees and trying to pick and choose investment etc.
The other is understand your appetite for risk and keep it cheap and simple and invest in a suitable multi-asset fund or tracker.
Vanguard are good for this but there are others like HSBC or L&G.
Look at FTSE Global All Cap and the LifeStrategy range to get an idea what's out there.
If it's "only" £500-1000/month that's within ISA limits which is really simple or you could look at adding to a pension or starting a SIPP but that means locking it away so it depends whether it's money you may want to be able to access.
One is advice and the associated fees and trying to pick and choose investment etc.
The other is understand your appetite for risk and keep it cheap and simple and invest in a suitable multi-asset fund or tracker.
Vanguard are good for this but there are others like HSBC or L&G.
Look at FTSE Global All Cap and the LifeStrategy range to get an idea what's out there.
If it's "only" £500-1000/month that's within ISA limits which is really simple or you could look at adding to a pension or starting a SIPP but that means locking it away so it depends whether it's money you may want to be able to access.
I’d have thought with the numbers (age and amount of cash to invest and current pension situation) you’d want to be getting as much tax advantage as you can? I.e shovelling as much in pension as you could afford to get the relief.
I’m going to use my work scheme to do this and transfer it out. Seems cleaner to me but I may be wrong.
But there’s not probably enough detail here to suggest much, £100k at this point isn’t a huge amount it feels, adding as much as possible as soon as possible gives you the longest period in market for growth.
I’m going to use my work scheme to do this and transfer it out. Seems cleaner to me but I may be wrong.
But there’s not probably enough detail here to suggest much, £100k at this point isn’t a huge amount it feels, adding as much as possible as soon as possible gives you the longest period in market for growth.
AudiSport said:
In my mid forties I’ve decided I really need to start planning better for the future, my retirement and my family. I appreciate this is too late, however better now than never. As a result, I have some questions for you all, and would love your advice:
1. I keep hearing about the S&P500 performance over long periods of time. What is the UK equivalent, or can I invest from the UK? Or, is this not efficient due to currency conversion etc?
2. Which investing app / company should I use, and what happens to my money if the app company disappears?
3. Should I use a broker / advisor, or if selecting core, long term investments is it more cost effective to manage myself? I’m not long to chop and change, just invest in a core managed fund, plus a few businesses I fancy, such as Apple, Microsoft, Heinz…?
4. I have multiple pensions, with c100k in, although my current employer pays bare minimum. Should I combine, and overpay myself, or leave pensions as they are, on focus on the above instead?
5. What would you do in my shoes? Get a good FA, or start doing it myself, and what would be your approach? I’m looking to invest c£500 - £1000 pcm.
Thank you for any input!
Obviously no disrespect intended, but if your level of knowledge is such that are unsure on what the UK equivalent of the S&P 500 is are you really confident that you have stock picking ability to choose specific companies that you think will do well? That sounds pretty blunt, it isn't intended to be - I just think there's a hell of a lot of stopping points on the journey from "what is the S&P 500" through to being able to analyse a company future cash flow to ascertain whether it's over/under valued and what the right entry and exit point is into it. One is very much beginner, the other is expert.1. I keep hearing about the S&P500 performance over long periods of time. What is the UK equivalent, or can I invest from the UK? Or, is this not efficient due to currency conversion etc?
2. Which investing app / company should I use, and what happens to my money if the app company disappears?
3. Should I use a broker / advisor, or if selecting core, long term investments is it more cost effective to manage myself? I’m not long to chop and change, just invest in a core managed fund, plus a few businesses I fancy, such as Apple, Microsoft, Heinz…?
4. I have multiple pensions, with c100k in, although my current employer pays bare minimum. Should I combine, and overpay myself, or leave pensions as they are, on focus on the above instead?
5. What would you do in my shoes? Get a good FA, or start doing it myself, and what would be your approach? I’m looking to invest c£500 - £1000 pcm.
Thank you for any input!
Depending on overall portfolio size Interactive Investor is a good platform choice with it's flat £9.99 a month. Means someone with a £5k portfolio is paying the same as someone with a £5mn portfolio. Others like Hargreaves Lansdown will charge you 0.45% of your assets (depending on which investment vehicle you own) with the fund fees/investment fees on top.
You mention multiple pensions at £100k, is this £100k in each of the multiple, or multiple pensions with £100k combined between them?
One of the first things I"d do is look at how they are actually invested - a lot of pension schemes automatically put people into a UK/bond biased low risk plodder that generates way below market returns. Fund charges are something to explore too.
Generally with £500 - £1k a month it's hard to advise with little context about your overall financial situation, long term plans for retirement, appetite for risk etc etc. However at a headline level setting up a stocks & shares ISA and drip feeding monthly into either a global equity index tracker or a low cost multi asset fund is a solid option.
okgo said:
I’d have thought with the numbers (age and amount of cash to invest and current pension situation) you’d want to be getting as much tax advantage as you can? I.e shovelling as much in pension as you could afford to get the relief.
I’m going to use my work scheme to do this and transfer it out. Seems cleaner to me but I may be wrong.
But there’s not probably enough detail here to suggest much, £100k at this point isn’t a huge amount it feels, adding as much as possible as soon as possible gives you the longest period in market for growth.
This is the approach I am taking, build up the work pension then at some point further down the line transfer to my SIPP to take advantage of lower fund/platform charges and more choice of funds.I’m going to use my work scheme to do this and transfer it out. Seems cleaner to me but I may be wrong.
But there’s not probably enough detail here to suggest much, £100k at this point isn’t a huge amount it feels, adding as much as possible as soon as possible gives you the longest period in market for growth.
As much as I agree about shovelling as much in the pension as possible (mainly to avoid 40% income tax), there is a balance to strike so worthwhile putting some in the S&SISA and Savings where applicable.
- Not all work pension schemes (DC) are that bad to be fair, my last one had a good selection of cheap global equity passive funds..but my Fidelity SIPP was still cheaper!
Edited by VR99 on Sunday 19th February 15:08
gotoPzero said:
I think I would be doing:
Making sure I am getting the max from the employer contribution.
After that I would not pay extra into the employer scheme. Just enough to get their max free money.
Then the extra I would prob look at Vanguard SIPP or ISA depending on retirement age. They have retirement funds like the Target Retirement funds.
Worth reading into. If not that then something like VLS80 or 100 at the moment then de-risk into VLS60 or 80 closer to retirement.
Fees are the killer. Also your marginal tax rate will have an impact plus your likely draw down sum and thus tax rate at the draw down phase. So keep an eye on that.
HTH
IANAFA
I'd make the above suggestion - which is entirely reasonable - conditional on whether your work pension scheme is salary sacrifice based or not. Ask your HR team to confirm.Making sure I am getting the max from the employer contribution.
After that I would not pay extra into the employer scheme. Just enough to get their max free money.
Then the extra I would prob look at Vanguard SIPP or ISA depending on retirement age. They have retirement funds like the Target Retirement funds.
Worth reading into. If not that then something like VLS80 or 100 at the moment then de-risk into VLS60 or 80 closer to retirement.
Fees are the killer. Also your marginal tax rate will have an impact plus your likely draw down sum and thus tax rate at the draw down phase. So keep an eye on that.
HTH
IANAFA
If it is salary sacrifice then the savings on national insurance contributions will in most cases more than make up for slighty higher fees on your work pension vs someone like Vanguard or another low cost SIPP provider. This largely applies whether you are paying 20% or 40% tax. Particularly so if you are paying 20% tax because NI will be a further 12% so you will be receiving 32% tax relief inc NI savings. This is a huge difference.
So if it is a salary sacrifice scheme then put in as much as you can afford and make sure the fund choices are suitable for you. While work schemes often lack the huge choice of popular pension providers, there is usually enough choice to get pretty close to your preferred asset allocation.
And the fund charges on my own are about 0.27% for passive/tracker funds, so they needn't be excessive.
But from your comment on the S&P500 and UK equivalent it sounds like you are pretty far from being able to make such decisions at this point. Maybe you could do worse than leaving the default options as they are for now. But better to educate yourself rather than rely solely on IFAs imo, and keep an eye on the fees being charged on each fund. They shouldn't be much more than 0.3% and nowhere near 1% or higher.
Regardless you can always move pension pots later on, so you could contribute to your work pension for now but transfer to Vanguard, Hargreaves Lansdown, or whoever when you leave your employer or get nearer to retirement.
For simplicity and ease of management I'd never run more than two pension pots at once e.g. current work scheme plus one SIPP where you can keep all your consolidated pots transferred in from previous employers.
Edited by WayOutWest on Monday 20th February 12:30
The first thing I would do (if you haven't already), is find out what the fund choices and charges are for your current employer's scheme. The employer may only pay in the bare minimum they legally have to, but if you can pay extra via salary sacrifice and access some cheap FTSE/S&P tracker funds then you may as well just pay extra into that (and consolidate your existing pensions into it too).
If your employer's scheme is a bit rubbish then I'd carry on paying the minimum into that which you need to get their maximum contribution, and then invest everything else in FTSE/S&P trackers via whichever SIPP provider is cheapest (and probably consolidate everything else into that). I don't know who that would be, but Vanguard are often mentioned. I wouldn't pay an IFA a penny unless for some reason I absolutely had to, and I wouldn't be seduced into thinking that I had the ability to beat the market with my stock picking skills either.
FWIW I'm also in my early 40s and I'm making big contributions contributions to my employer's scheme investing in a 50/50 mix of FTSE All-Share and Global Equity trackers each with a 0.1% fee. I've been doing the same thing for years and will continue to do so until I retire. It's not exciting but it seems to work.
If your employer's scheme is a bit rubbish then I'd carry on paying the minimum into that which you need to get their maximum contribution, and then invest everything else in FTSE/S&P trackers via whichever SIPP provider is cheapest (and probably consolidate everything else into that). I don't know who that would be, but Vanguard are often mentioned. I wouldn't pay an IFA a penny unless for some reason I absolutely had to, and I wouldn't be seduced into thinking that I had the ability to beat the market with my stock picking skills either.
FWIW I'm also in my early 40s and I'm making big contributions contributions to my employer's scheme investing in a 50/50 mix of FTSE All-Share and Global Equity trackers each with a 0.1% fee. I've been doing the same thing for years and will continue to do so until I retire. It's not exciting but it seems to work.
Edited by Roger Irrelevant on Monday 20th February 13:45
Roger Irrelevant said:
50/50 mix of FTSE All-Share and Global Equity trackers each with a 0.1% fee. I've been doing the same thing for years and will continue to do so until I retire.
Why the big UK overweight out of interest? UK is about 4% of the world's stock market, so it's quite a big overweight bet on the UK you are making.Edited by Roger Irrelevant on Monday 20th February 13:45
I would (and did) go read Monevator and read up on passive investing.
https://monevator.com/category/investing/passive-i...
There's plenty of good information on there.
You're no too old, it's just going to cost more and the best time to start is now.
https://monevator.com/category/investing/passive-i...
There's plenty of good information on there.
You're no too old, it's just going to cost more and the best time to start is now.
simon800 said:
Roger Irrelevant said:
50/50 mix of FTSE All-Share and Global Equity trackers each with a 0.1% fee. I've been doing the same thing for years and will continue to do so until I retire.
Why the big UK overweight out of interest? UK is about 4% of the world's stock market, so it's quite a big overweight bet on the UK you are making.Edited by Roger Irrelevant on Monday 20th February 13:45
Roger Irrelevant said:
I honestly never thought about it too deeply. I saw that those trackers were available with very low fees, thought 'that'll do', and split my contributions between them. Most of the FTSE's earnings are from overseas anyway. I'm investing in (mostly) developed-world equities over a timeframe of decades; I'm not going to start thinking I'm a financial whizz that can second-guess the vagaries of geopolitics too eek out a few extra tenths of a percent, I'm happy to let time do the work and so far so good!
Fair play and happy it's working for you. Certainly no right or wrong with these things per se but a 50/50 split between a global tracker and a UK index tracker means your portfolio has circa 52% UK equity and 30% US equity whilst the global stock market has 4% UK equity and 60% US equity. So it's actually quite a big bet away from just buying global equities.If the UK outperforms you will be laughing, and no doubt this allocation will have done well last year in relative terms.
simon800 said:
Roger Irrelevant said:
I honestly never thought about it too deeply. I saw that those trackers were available with very low fees, thought 'that'll do', and split my contributions between them. Most of the FTSE's earnings are from overseas anyway. I'm investing in (mostly) developed-world equities over a timeframe of decades; I'm not going to start thinking I'm a financial whizz that can second-guess the vagaries of geopolitics too eek out a few extra tenths of a percent, I'm happy to let time do the work and so far so good!
Fair play and happy it's working for you. Certainly no right or wrong with these things per se but a 50/50 split between a global tracker and a UK index tracker means your portfolio has circa 52% UK equity and 30% US equity whilst the global stock market has 4% UK equity and 60% US equity. So it's actually quite a big bet away from just buying global equities.If the UK outperforms you will be laughing, and no doubt this allocation will have done well last year in relative terms.
okgo said:
Which provider is it?
And what product do you want to mimic?
I did a combo of two Blackrock funds in Royal London with 92/8% split which basically was then identical to FTSE global all cap from vanguard
It's L&G, they have 5 passive trackers covering US,UK, Asia Ex Japan, Europe and Asia Japan. The only EM offering is a pricey active JPM fund which is more expensive than what I would pay in my SIPP so not gonna bother as I have a passive tracker in the SIPP for EM and FTSE Global All CAP in the S&SISA has around 10% EM I think so covered for now.And what product do you want to mimic?
I did a combo of two Blackrock funds in Royal London with 92/8% split which basically was then identical to FTSE global all cap from vanguard
I hold VEVE in my SIPP for Dev World so might attempt to recreate that (to the extent possible) using the 5 passive trackers but it's creates a bit more admin with annual rebalancing...maybe a small price to pay.
Edited by VR99 on Monday 20th February 15:57
gotoPzero said:
... something like VLS80 or 100 at the moment, then de-risk into VLS60 or 80 closer to retirement.
'De-risk' prior to retirement advice has always intrigued me.
I suppose it makes a financial adviser appear knowlegeable, suggesting that they know what is going to happen in the future.
I was fortunate thanks to investments, that I was able to retire very early. For that reason, I hoped on average to be lucky and retired for a long time.
If I had 'de-risked' into a high proportion of bonds or cash equivalents, I might now be worrying about inflation and higher bills.
Obviously holding a sizeable cash buffer is always important, but the power of businesses to grow and provide a rising dividend income is huge. After all, nations rely on businesses and/or natural resources, if their economies are to prosper.
Say that you retired 20 years ago, your annual dividend income now will have increased enormously during those 20 years, far in excess of pension payment increases (state or employer) and also inflation.
The business world does not change, just because someone has retired. If equities and/or funds have performed satisfactorily for you during your working life, why change your strategy when you retire? The pandemic was an example of a really major unexpected event, but it did not result in my dividend income instantly going to zero. There was obviously a decline, but that peaked at minus 17%. Therefore still receiving 83% of the previous year. The pandemic did create an opportunity to buy or increase holdings in good businesses cheaply, but that is a separate matter. Some business sectors were in an awful situation, suffering continued costs but no revenue, whereas others continued trading reasonably well.
Simplistic but short answers to your questions:
1. The FTSE is the UK equivalent to the S&P - you could invest into an index tracker fund that buys in the S&P, FTSE, or both and also other global equivalents. Many folk invest in global tracker funds.
2. All asset management companies are obliged to ring-fence investors monies, so even if the asset manager goes bust your investments remain safe and are reallocated by the Financial regulator to an alternative management company. Vanguard are inexpensive, one of the biggest, and used by millions of individual investors (myself included)
3. If you know what you want to invest in then I'd recommend against paying an advisor. You can do it yourself through any number of online brokers. Interactive Investor is one such app that's easy to use.
4. Bit of a minefield, as existing pensions may have benefits that you should hold onto. You can still open a SIPP and self-manage future pension savings, but this one would probably benefit from professional advice on what and whether to consolidate.
5. I would (indeed do) do it myself. Best advice I can offer is to watch r listen to the "Money Matters" YouTube channel or podcasts - brilliant advice put simply from a professional.
Good luck
1. The FTSE is the UK equivalent to the S&P - you could invest into an index tracker fund that buys in the S&P, FTSE, or both and also other global equivalents. Many folk invest in global tracker funds.
2. All asset management companies are obliged to ring-fence investors monies, so even if the asset manager goes bust your investments remain safe and are reallocated by the Financial regulator to an alternative management company. Vanguard are inexpensive, one of the biggest, and used by millions of individual investors (myself included)
3. If you know what you want to invest in then I'd recommend against paying an advisor. You can do it yourself through any number of online brokers. Interactive Investor is one such app that's easy to use.
4. Bit of a minefield, as existing pensions may have benefits that you should hold onto. You can still open a SIPP and self-manage future pension savings, but this one would probably benefit from professional advice on what and whether to consolidate.
5. I would (indeed do) do it myself. Best advice I can offer is to watch r listen to the "Money Matters" YouTube channel or podcasts - brilliant advice put simply from a professional.
Good luck
VR99 said:
Linked to your comments re. country/regional weightings, what if the funds in a work pension scheme are using weird allocations e.g: 25% UK, 25% US, 20% APAC EX Japan etc..... what weightings would you use if building the portfolio from scratch...global market cap? I only ask as MSCI/FTSE have slightly different weightings and classifications for Dev Vs EM...so there isn't really one single view of the market. I was thinking to start with US as 55% and UK 10% then build the rest out from there.
I think if I was personally setting up my own global tracker using various regional trackers I'd stick pretty closely to the composition of the MSCI ACWI or FTSE All World. There may be an argument for a slight overweight to UK or Emerging Markets if someone is convinced the whole market is wrong and the US shouldn't be 60% of a global index. UK and EM perhaps represent better value, so someone probably could make a compelling argument for a slight overweight/tweak here and there. But I'd be reluctant personally to have a massive bet like 50% UK or 50% Japan or whatever as it goes from passive investing to actually running my own active fund made up of underlying passive investments and I don't feel qualified to do that.
Over a 20/30/40 year time period being wrong making a bet against the market can cost a lot. I'd hate to return 4% a year over 40 years when the market returns 7% for example (would mean £100k returns £480k instead of £1.49mn)
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