Intelligent Money - your investment questions answered

[B9]

Hi Julian

Thanks for your feedback on my previous pension post

I'm looking to open a S&S ISA and split the investment between a series of corp bonds I have a particular interest in (i.e. LON TW), and a managed fund offering medium risk returns.

Is this something you offer, and how do your funds compare to something like HL for the two scenarios?

Apologies in advance as S&S/ISAs are completely alien to me

[ddpunter]

Thanks Julian, much appreciated!
Will now try to get my little brain around it all

[JulianPH]

Brads67 said:

Afternoon all.

I have been reading this thread for a bit and have decided I'd like advice. From Julian and IM if I'm honest.

I'm 52 (nearly) I have a final salary pension which is deferred and two smaller private pensions plus a final salary pension I am paying into at the moment.

It now seems to me that the 3 pensions which are not being paid into could be doing better for me in regards to growth.

If I don't move house in the next 2 years, I would like to try and stop working at 55, I have some numbers in my head which would convince me to do it.

Can someone PM me or can you let me know who to contact to discuss the whole thing.

HI Brads67

Thanks for taking the time to look over this, we are happy to help.

The two smaller private pensions are pretty straightforward to address. It is just about evaluating the performance (when compared to other investments on a like-for-like basis), charges and flexibility (as required).

The deferred Final Salary pension becomes more complex as this involves giving up guarantees in exchange for a large cash lump sum that you can invest and withdraw from as you wish and leave as an IHT free lump sum as you wish.

The same applies to your current Final Salary pension. Conventional wisdom says not to move out of these and most of the time this is absolutely correct. However, there are some circumstances when this rule does not apply.

It is likely to be very beneficial for you to talk through all of this with Nik ([e-mail]) so he can let you know all of the options available to you and the pros and cons of each.

I will PM you shortly in any event.

Cheers

Julian

[JulianPH]

B9 said:

Hi Julian

Thanks for your feedback on my previous pension post

I'm looking to open a S&S ISA and split the investment between a series of corp bonds I have a particular interest in (i.e. LON TW), and a managed fund offering medium risk returns.

Is this something you offer, and how do your funds compare to something like HL for the two scenarios?

Apologies in advance as S&S/ISAs are completely alien to me

No problem whatsoever!

If you are looking at buying individual corporate bonds then there are many providers better placed than us to offer you this. Hargreaves Lansdown and Interactive Investor spring to mind, but a local stockbroker could offer this also.

HL mainly offers a "platform" from which you can select your own funds (and shares/bonds) though it does also offer managed funds.

These are very expensive when compared to IM (with an average annual charge of over 2% - compared to 0.57% to 0.87% with IM), come with no named financial planner (indeed, no financial planner whatsoever!) and the 5 performance has been below average in most (almost all) cases, average in others and only above average in 1 case.

I understand their service level is very good though.

Personally, I would highly recommend them if you want to buy and hold bonds and the like, just not for a managed fund/portfolio.

Our portfolios have much lower cost and the vast majority have delivered higher investment returns (when compared to HL).

There will always be a company that will have been able to deliver better performance in on area (that is the nature of things) other than PH Equity, which would have outperformed any fund since I built it 11 years ago.

When it comes to investing the most important question is not what you did, but your understanding of why you did it and how this stands going forward. This is vital.

With IM Optimum we delivered strong returns (better than average) despite having human intervention to select and change market weightings (thereby reducing volatility).

IM Index would not have been able to do this, so in a rising market did better.

PH Equity takes a completely different approach by focusing on stock selection.

Anyway, I am going on for far to long!

If you would like to buy these two bonds then you are possibly best to use a platform/stockbroker service for this. For a managed solution we are half to a quarter of the price (using round numbers) and provide you with unlimited access to a qualified and experienced professional.

Any questions just give me a shout (here or via a PM) or have a chat with Nik ([e-mail]).

Cheers

Julian

[JulianPH]

ddpunter said:

Thanks Julian, much appreciated!
Will now try to get my little brain around it all

No worries, don't knock yourself! (except for any comedy value - that is always fun!). Just send me a PM if you like and we can get it sorted.

[Mazinbrum]

JulianPH said:

I think you have been pessimistic in average annual growth of 4% over the next 30 years, but there is nothing wrong with that!

I'm also not sure (as I can't see the calculations) how you have arrived at the figures.

Please feel free to send me a PM so I can go over your calculations as, for example, £675,000 growing at a 3% compound annual would be worth £907,143 rather than £782,510.

Edited to add the blindingly obvious fact you have 6 years until you are 55, not 10, so please ignore my last point!

Cheers

Julian

Edited by JulianPH on Tuesday 3rd September 12:24

I got a CETV quote and this month it is 35x my annual pension (up 4% on last month and 17% since January for some reason!).
At this rate I can get a much better annual pension by transferring it out and drawing down. I know it is getting more difficult finding a provider willing to accept a DB transfer but what would concern me is transferring out and then suffering a market crash the month after it is invested.
I found a good calculator here - https://www.tidewaywealth.co.uk/p/151/drawdown-cal...

[JulianPH]

Mazinbrum said:

I got a CETV quote and this month it is 35x my annual pension (up 4% on last month and 17% since January for some reason!).
At this rate I can get a much better annual pension by transferring it out and drawing down. I know it is getting more difficult finding a provider willing to accept a DB transfer but what would concern me is transferring out and then suffering a market crash the month after it is invested.
I found a good calculator here - https://www.tidewaywealth.co.uk/p/151/drawdown-cal...

And therein lies a reason why transferring a final salary pension scheme is not suitable for most people - the loss of absolutes.

However, if you have moved into a well balanced and defensive investment portfolio you can mitigate much of this risk and benefit from the freedoms, flexibility and IHT free legacy planning a private pension gives you.

It is also worth remembering that you don't have to place your pension transfer straight into the markets. You can hold those 35 years worth of income in cash for now, or fixed interest gilts. You can also use this money to buy commercial property or land. You could place the lot in cash and drip feed it into the market over a time period of your choice, perhaps jumping in with a big lump sum in the event of a crash to but at a big discount.

Or you can do a mixture of all of the above as and when suits you.

However, this does not mean that transferring a DB pension is suddenly the best choice for people. Many people are naturally of the mindset that the absolutes of a DB pension are better suited to them than the flexibility, control and eventual IHT free legacy this can provide.

For others, the absolute opposite can be the case.

One thing I have learned over the years though is that if you are trying to talk yourself into a DB transfer, it is usually not the right thing for you to do.

Cheers

[Mazinbrum]

JulianPH said:

And therein lies a reason why transferring a final salary pension scheme is not suitable for most people - the loss of absolutes.

However, if you have moved into a well balanced and defensive investment portfolio you can mitigate much of this risk and benefit from the freedoms, flexibility and IHT free legacy planning a private pension gives you.

It is also worth remembering that you don't have to place your pension transfer straight into the markets. You can hold those 35 years worth of income in cash for now, or fixed interest gilts. You can also use this money to buy commercial property or land. You could place the lot in cash and drip feed it into the market over a time period of your choice, perhaps jumping in with a big lump sum in the event of a crash to but at a big discount.

Or you can do a mixture of all of the above as and when suits you.

However, this does not mean that transferring a DB pension is suddenly the best choice for people. Many people are naturally of the mindset that the absolutes of a DB pension are better suited to them than the flexibility, control and eventual IHT free legacy this can provide.

For others, the absolute opposite can be the case.

One thing I have learned over the years though is that if you are trying to talk yourself into a DB transfer, it is usually not the right thing for you to do.

Cheers

I'm just monitoring the values every month on a spreadsheet, it was 25x exactly a year ago, strange how its gone up so much. The flexibility of taking more and then reducing the withdrawal when (hopefully) the state pension kicks in and leaving an inheritance is very appealing.

[JulianPH]

Mazinbrum said:

I'm just monitoring the values every month on a spreadsheet, it was 25x exactly a year ago, strange how its gone up so much. The flexibility of taking more and then reducing the withdrawal when (hopefully) the state pension kicks in and leaving an inheritance is very appealing.

Absolutely! To me it would be a no brainer as I am perfectly happy to ride the markets knowing I have complete flexibility, my wife would get a 100% pension (rather than a 50% one) and at the end of the day my daughter would get the lot free on any IHT.

I was just pointing out that for others this may not be suitable.

[mikeiow]

Julian/Nik,
Just curious when you plan to 'launch/show' the IM Index offering as being formally available.

Along with the particular 'buy & hold' option (with some specific shares you picked) - you've mentioned this a few times (I think you refer to that as the "PH Equity"?).

Will those all appear on https://www.intelligentmoney.com/private-clients/o... at some point?

Cheers

[JulianPH]

mikeiow said:

Julian/Nik,
Just curious when you plan to 'launch/show' the IM Index offering as being formally available.

Along with the particular 'buy & hold' option (with some specific shares you picked) - you've mentioned this a few times (I think you refer to that as the "PH Equity"?).

Will those all appear on https://www.intelligentmoney.com/private-clients/o... at some point?

Cheers

Hi Mike

Next week,

Yes they will and i’ll post a screen shot tomorrow.

Cheers mate, have a great weekend

[Mazinbrum]

JulianPH said:

Absolutely! To me it would be a no brainer as I am perfectly happy to ride the markets knowing I have complete flexibility, my wife would get a 100% pension (rather than a 50% one) and at the end of the day my daughter would get the lot free on any IHT.

I was just pointing out that for others this may not be suitable.

Do you think that Tideway calculator is accurate Julian? I don’t see why it wouldn’t be but I’ve knocked up a spreadsheet which shows I’d run out money quicker than that calculator indicates.

[JulianPH]

Mazinbrum said:

Do you think that Tideway calculator is accurate Julian? I don’t see why it wouldn’t be but I’ve knocked up a spreadsheet which shows I’d run out money quicker than that calculator indicates.

It is basic, but I've played with it and it seems accurate to me. Feel free to send me the spreadsheet if you would like me to check over your calculations.

[Brads67]

Brilliant to talk with you today Julian. Very reassuring.

[JulianPH]

Brads67 said:

Brilliant to talk with you today Julian. Very reassuring.

No problem! I'm always happy to help and it was great talking with you.

Nik will be in touch promptly and we can start getting everything into place.

Cheers

[Mazinbrum]

JulianPH said:

It is basic, but I've played with it and it seems accurate to me. Feel free to send me the spreadsheet if you would like me to check over your calculations.

Don't think I can send an attachment here ?

[JulianPH]

Mazinbrum said:

Don't think I can send an attachment here ?

Just send me a PM and I'll reply. This will give you my email address so you can send the attachment.

Cheers

[tight fart]

Hi Julian, I have a small pot dormant pension with aviva, is that something I couldmove over to you?

[JulianPH]

Hi Richard

Yes, absolutely. Please get in touch with Nik ([e-mail]) if you would like to talk anything through, but the application process is very straightforward.

If you are interested in IM Index or PH Equity then the new application system will be live by the end of the week. IM Optimum is obviously available already.

You have reminded me to post a screen shot of the new application page!

Cheers

Julian

[DaveV6]

Nik,

Thank you so much for the chat today

Will speak to you when my company has got their act together and sort out the transfer.

Kind regards

Dave.

Edited by DaveV6 on Tuesday 10th September 14:08