SIPP recommendations or should I be doing something else?
Discussion
Would appreciate some advice and a nudge in the right direction. I know I should do something but with the vast array of choices it feels easier to do nothing than take action.
I'm 48, own my own business and earn a decent wage/dividends to sustain my lifestyle and put some cash away. I became mortgage free recently and own a commercial property outright (that my business operates from). I also have circa £500k in a couple of pensions from previous employment. I have a good chunk of cash in ISAs and easy access accounts. I have plenty of toys and aren't planning on moving house (so no big expenditures coming up).
In the past any excess profit that I didn't want to retain in the business would be paid out in dividends and I'd squirrel the cash away (most of which was used to pay down the mortgage when my deal expired). However I now have an eye on retirement and would like to stash my excess profit into some kind of pension wrapper. I'm not an active investor but would probably seek to place the money in a few funds where I think there could be some growth.
I *think* the answer is a SIPP - but which one? Or should I be considering something else?
Cheers...
I'm 48, own my own business and earn a decent wage/dividends to sustain my lifestyle and put some cash away. I became mortgage free recently and own a commercial property outright (that my business operates from). I also have circa £500k in a couple of pensions from previous employment. I have a good chunk of cash in ISAs and easy access accounts. I have plenty of toys and aren't planning on moving house (so no big expenditures coming up).
In the past any excess profit that I didn't want to retain in the business would be paid out in dividends and I'd squirrel the cash away (most of which was used to pay down the mortgage when my deal expired). However I now have an eye on retirement and would like to stash my excess profit into some kind of pension wrapper. I'm not an active investor but would probably seek to place the money in a few funds where I think there could be some growth.
I *think* the answer is a SIPP - but which one? Or should I be considering something else?
Cheers...
Have a read of this article for an intro to SIPP pension providers:
https://moneytothemasses.com/saving-for-your-futur...
Speak to your accountant as you could make company pension contributions direct into your personal SIPP as a tax deductable expense.
All the companies mentioned above are some of the popular SIPP providers. They are simple a shop where you pay the shop/ pension provider a platform fee and the investment firm a fund fee for managing the underlying investment.
When you review the SIPP accounts, drill down below the headline numbers to check the varies fees / charges and services on offer, as the cheapest depends on your individual activities, holdings, and investment value.
Then you have the issue of deciding where to invest your money.
https://moneytothemasses.com/saving-for-your-futur...
Speak to your accountant as you could make company pension contributions direct into your personal SIPP as a tax deductable expense.
All the companies mentioned above are some of the popular SIPP providers. They are simple a shop where you pay the shop/ pension provider a platform fee and the investment firm a fund fee for managing the underlying investment.
When you review the SIPP accounts, drill down below the headline numbers to check the varies fees / charges and services on offer, as the cheapest depends on your individual activities, holdings, and investment value.
Then you have the issue of deciding where to invest your money.
Do you have a limited company? If so you might think about a SSAS, and then transfer to a SIPP at a later date.
For example, you can put more into the SSAS over and above your annual allowance by lending the company money and charging say 5% interest, or own the property and have the company pay rent.
From https://www.moneyhelper.org.uk/en/pensions-and-ret...
"A major benefit of an SSAS is that it can offer more flexibility on where the money can be invested.
This can include investing in assets that aren't generally available for many other types of scheme. For example, an SSAS is able to buy the company’s trading premises and lease them back to the company.
Subject to certain terms and conditions, it might also lend money back to the company and buy the company’s shares.
An SSAS can also borrow money, subject to terms and conditions, for investment purposes. For example, the SSAS might raise a mortgage to help the scheme buy the company’s premises. And the mortgage repayments might then be all or partly covered, by the rental income the company pays the SSAS."
For example, you can put more into the SSAS over and above your annual allowance by lending the company money and charging say 5% interest, or own the property and have the company pay rent.
From https://www.moneyhelper.org.uk/en/pensions-and-ret...
"A major benefit of an SSAS is that it can offer more flexibility on where the money can be invested.
This can include investing in assets that aren't generally available for many other types of scheme. For example, an SSAS is able to buy the company’s trading premises and lease them back to the company.
Subject to certain terms and conditions, it might also lend money back to the company and buy the company’s shares.
An SSAS can also borrow money, subject to terms and conditions, for investment purposes. For example, the SSAS might raise a mortgage to help the scheme buy the company’s premises. And the mortgage repayments might then be all or partly covered, by the rental income the company pays the SSAS."
Edited by Somebody on Friday 31st January 15:08
Somebody said:
Do you have a limited company? If so you might think about a SSAS, and then transfer to a SIPP at a later date.
For example, you can put more into the SSAS over and above your annual allowance by lending the company money and charging say 5% interest, or own the property and have the company pay rent.
From https://www.moneyhelper.org.uk/en/pensions-and-ret...
"A major benefit of an SSAS is that it can offer more flexibility on where the money can be invested.
This can include investing in assets that aren't generally available for many other types of scheme. For example, an SSAS is able to buy the company’s trading premises and lease them back to the company.
Subject to certain terms and conditions, it might also lend money back to the company and buy the company’s shares.
An SSAS can also borrow money, subject to terms and conditions, for investment purposes. For example, the SSAS might raise a mortgage to help the scheme buy the company’s premises. And the mortgage repayments might then be all or partly covered, by the rental income the company pays the SSAS."
If there's one case where proper advice is worth paying for, then yours is it.For example, you can put more into the SSAS over and above your annual allowance by lending the company money and charging say 5% interest, or own the property and have the company pay rent.
From https://www.moneyhelper.org.uk/en/pensions-and-ret...
"A major benefit of an SSAS is that it can offer more flexibility on where the money can be invested.
This can include investing in assets that aren't generally available for many other types of scheme. For example, an SSAS is able to buy the company’s trading premises and lease them back to the company.
Subject to certain terms and conditions, it might also lend money back to the company and buy the company’s shares.
An SSAS can also borrow money, subject to terms and conditions, for investment purposes. For example, the SSAS might raise a mortgage to help the scheme buy the company’s premises. And the mortgage repayments might then be all or partly covered, by the rental income the company pays the SSAS."
Edited by Somebody on Friday 31st January 15:08
My IFA does something similar to that outlined above. He owns the premises his business operates from and then his business pays "him" rent. Definitely something worth looking into.
It’s a massive subject area.
The SIPP is only a tax wrapper, you can hold the same funds in a SIPP, ISA or GIA.
I would have a read of the Monevator site, which is great for passive investing. There’s lots on there about passive index funds and example portfolios.
There’s also tons on here too.
Given your rather excellent business, shame you’re down south, it might pay to get some actual professional advice.
Essentially for me I think you’d be looking at a nice diversified set of index funds, world trackers, small cap, value and bonds.
I.m currently reading Tim Hale’s book which is widely recommended.
The SIPP is only a tax wrapper, you can hold the same funds in a SIPP, ISA or GIA.
I would have a read of the Monevator site, which is great for passive investing. There’s lots on there about passive index funds and example portfolios.
There’s also tons on here too.
Given your rather excellent business, shame you’re down south, it might pay to get some actual professional advice.
Essentially for me I think you’d be looking at a nice diversified set of index funds, world trackers, small cap, value and bonds.
I.m currently reading Tim Hale’s book which is widely recommended.
Looks like a SSAS may be expensive to setup and maintain over time.
I have a SIPP with Iweb Share Dealing and it is a breeze. It costs £180 per annum if you have more than £50k. You can trade most listed shares, funds, investment trusts and gilts/corporate bonds and that's all I'm interested in. You can access your 25% tax free lump sum by filling in a few forms.
You get tax relief on payments into your SIPP which is far better than paying the tax now and paying into an ISA imho.
If you want low cost, tax efficient and easy to manage, then I think a SIPP is the answer.
I have a SIPP with Iweb Share Dealing and it is a breeze. It costs £180 per annum if you have more than £50k. You can trade most listed shares, funds, investment trusts and gilts/corporate bonds and that's all I'm interested in. You can access your 25% tax free lump sum by filling in a few forms.
You get tax relief on payments into your SIPP which is far better than paying the tax now and paying into an ISA imho.
If you want low cost, tax efficient and easy to manage, then I think a SIPP is the answer.
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