Intelligent Money - your investment questions answered

[JapanRed]

JulianPH said:

JapanRed said:

Hi Julian et al. I’ve never posted in this thread before but here goes. My head is all over the shop at the minute when it comes to finances. I suspect one of the best things I could do financially is pay into pensions.

Myself and my wife both work for the NHS and are members of that very generous pension scheme. Neither of us have pensions elsewhere. Neither of us are reaching the £40k annual allowance as we are both part time. We are 35 and 34 years old. I have £150k in a ltd co which I am sole director of.

I’m considering paying a chunk of this into pensions for us but have a few questions;

1) Should I pay lump sums into our NHS pensions?
2) Should I open new pensions, if so what? Would this be called a SIPP?
3) What are the differences between the above?
4) I’m the sole director of my ltd co. My wife is a shareholder - I’m assuming the Ltd co can pay into her pension as well as mine, is this correct?

I know you can’t give specific financial advise but if someone could give me an overview of my options I’d much appreciate it.

Thanks. Rob

Hi Rob

Nik will be along shortly to address the question of paying into your NHS pension as he has experience in this that I don't (which stemmed from the fact he was an option in a previous life!).

Personal Pensions and SIPPs (which are simply Self Invested Personal Pensions) are largely the same things these days as they all allow you to self invest (that is chose your own investments).

Our Private Client Pension, for example, allows you to pick, mix and switch between any of our investment portfolios, but it also comes with full SIPP commercial property functionality, enabling you to invest your pension into commercial property and have it receive the rent from this.

This is very popular with anyone that runs a business (including those in the medical profession).

Making pension contributions directly from you limited company is highly tax efficient, they do need to be seen as being reasonable though (so not in excess of profits, for example).

As your wife is not a director this may cause issues with making contributions for her though, unless she is an employee of the company (i.e. on the payroll, even in a small way).

Company pension contributions are made gross, so their is no income tax, employer NI and employee NI to pay and they are a deductible expense for corporation tax.

I hope that has answered everything (apart from the NHS pension point, which Nik will address), but as this is quite complex I would suggest you get in touch with Nik directly at [e-mail] and go over this on the phone (or face-to-face) to see what all your options are.

He won't tell you which one is the best for you (as you say, that would be advice), but he will give you complete information and guidance on all of your options (in plain English) that will usually result in the best course of action being blindingly obvious to you!

Cheers

Julian

Thanks Julian that’s great, I’ll email Nik now.

[JulianPH]

JapanRed said:

Thanks Julian that’s great, I’ll email Nik now.

No problem, he will be happy to help. Just seen my typo (bloody autocorrect!), I meant to say he was an optician in a previous life, not an option!

[nutey]

I'm looking for a bit of guidance with a sensible plan on what I could do with £40k that I'd like to get invested again.
It's split between savings for kids that can be left for approx 15 years and money for house improvements that's more like 5 years away. With IM could this be split into different investments (assuming you're still taking smaller investments from PH members) with appropriate risk levels?
I'd want them as ISAs (currently it's in premium bonds) so would I need to split the investments across the current and next tax year?
Thanks...

[JulianPH]

nutey said:

I'm looking for a bit of guidance with a sensible plan on what I could do with £40k that I'd like to get invested again.
It's split between savings for kids that can be left for approx 15 years and money for house improvements that's more like 5 years away. With IM could this be split into different investments (assuming you're still taking smaller investments from PH members) with appropriate risk levels?
I'd want them as ISAs (currently it's in premium bonds) so would I need to split the investments across the current and next tax year?
Thanks...

Hi Duncan

The recent changes to premium bonds is making many people consider switching out of them for obvious reasons.

I take it you wish to hold these investments within your own ISA and at a later date pass the funds onto the kids (rather than use a Junior ISA). This is quite common.

Yes, PHers can use the code PH2607 to remove the minimum investment criteria (and the initial charge) and yes, you can split, mix and switch over different portfolios, again with no minimums).

You can get £20k in now and anther £20k in on 6th April. If you have a partner you could do it all now using their allowance, should you wish to.

For the 15 year investment window you can afford to take a higher level of risk as their is sufficient time to recover from any falls.

To a large degree the same could be said for a 5 year investment window, though you may feel more comfortable reducing the risk/reward here.

Obviously coming from a risk free (well, apart from inflation eroding away at your money every year) environment and going back to investing again will also dictate your attitude for risk/reward.

It is probably a good idea to set a chat up with Nik ([e-mail]) to go over the different options and establish which ones/blend best suits each of your objectives.

Of course feel free to ask more here.

Cheers

Julian

[GR_TVR]

Intelligent Money said:

Hi Jon,

Now we have the size guide for the Jackets I will be putting together a confirmation e-mail and asking for the info we need to get your jackets and caps sorted.

You haven't missed anything it will be out before the end of this week.

Nik

I haven't missed this, have I? Getting major FOMO here!

[JulianPH]

GR_TVR said:

I haven't missed this, have I? Getting major FOMO here!

Did you not get back to Nik with his offer of free VIP hospitality, pit lane tour, grid walk and limited edition jackets..?

Oh dear.

[JulianPH]

JulianPH said:

GR_TVR said:

I haven't missed this, have I? Getting major FOMO here!

Did you not get back to Nik with his offer of free VIP hospitality, pit lane tour, grid walk and limited edition jackets..?

Oh dear.

Well that attempted wind up didn't go to well as I can see you are down for 2 tickets/passes to Silverstone!

The update was that when the passes go out to you your will also get an IM BGT baseball cap and a limited edition jacket with each pass.

Just let me know your jacket size (there is a list a few pages back.

Cheers

[GR_TVR]

JulianPH said:

JulianPH said:

GR_TVR said:

I haven't missed this, have I? Getting major FOMO here!

Did you not get back to Nik with his offer of free VIP hospitality, pit lane tour, grid walk and limited edition jackets..?

Oh dear.

Well that attempted wind up didn't go to well as I can see you are down for 2 tickets/passes to Silverstone!

The update was that when the passes go out to you your will also get an IM BGT baseball cap and a limited edition jacket with each pass.

Just let me know your jacket size (there is a list a few pages back.

Cheers

I'm glad I didn't see the first message before the second!

Thanks very much! I'll take a M and XS, please!

Really looking forward to it - hopefully see you there!

Gareth

[JulianPH]

GR_TVR said:

I'm glad I didn't see the first message before the second!

Thanks very much! I'll take a M and XS, please!

Really looking forward to it - hopefully see you there!

Gareth

The jackets will arrive with the passes. I hope to see you there too mate!

Edited by JulianPH on Sunday 23 February 23:38

[Phooey]

Just out of interest..

As a result of todays stock market slump - which of the IM portfolios are down the most since last weeks peak?

Why am I asking this? Waiting for my transfer from Standard Life (currently sitting in cash) to hit IMs cash account any day now! Could be a short-term opportunity for investors to inject some cash?

Cheers

Edited by Phooey on Monday 24th February 09:43

[JulianPH]

Phooey said:

Just out of interest..

As a result of todays stock market slump - which of the IM portfolios are down the most since last weeks peak?

Why am I asking this? Waiting for my transfer from Standard Life (currently sitting in cash) to hit IMs cash account any day now! Could be a short-term opportunity for investors to inject some cash?

Cheers

Edited by Phooey on Monday 24th February 09:43

We won't know the full impact of this morning's falls until we get the pricing feed tomorrow after close of business today.

I will give you an update tomorrow when I have the data.

I imagine IM Index 100 will be hit by c. 2% to 2.5% right now.

PH Equity has some stocks down and some stocks up pre trading, but the bell hasn't even rung yet in the US so this is a bit premature.

With regard to IM Optimum we have slightly reduced our weighting in Japan, but this is as much to do with the increase there in purchase tax from 8% to 10% as it is Coronavirus.

Also remember that the IM Optimum portfolios have exposure to gold (with the exception of IM Optimum Defensive, which doesn't need this hedge), which is at an all time high.

So don't panic, this may be a buying opportunity but it looks likely at these stage the discounts may not be a great as you might think.

As I said, I will update tomorrow.

Cheers

Julian

[nutey]

JulianPH said:

Hi Duncan

The recent changes to premium bonds is making many people consider switching out of them for obvious reasons.

I take it you wish to hold these investments within your own ISA and at a later date pass the funds onto the kids (rather than use a Junior ISA). This is quite common.

Yes, PHers can use the code PH2607 to remove the minimum investment criteria (and the initial charge) and yes, you can split, mix and switch over different portfolios, again with no minimums).

You can get £20k in now and anther £20k in on 6th April. If you have a partner you could do it all now using their allowance, should you wish to.

For the 15 year investment window you can afford to take a higher level of risk as their is sufficient time to recover from any falls.

To a large degree the same could be said for a 5 year investment window, though you may feel more comfortable reducing the risk/reward here.

Obviously coming from a risk free (well, apart from inflation eroding away at your money every year) environment and going back to investing again will also dictate your attitude for risk/reward.

It is probably a good idea to set a chat up with Nik ([e-mail]) to go over the different options and establish which ones/blend best suits each of your objectives.

Of course feel free to ask more here.

Cheers

Julian

Thanks Julian, I'll drop Nik a mail tonight to go through the options.

[JulianPH]

nutey said:

Thanks Julian, I'll drop Nik a mail tonight to go through the options.

No problem, he will be very happy to assist.

Please also excuse my terrible typos!

[Gallons Per Mile]

Hi Julian, I have a couple of questions:

Looking at your posts about PH Equity back there ^ and its performance with low volatility - should I consider swapping from IM Index 80 to PH Equity? What would the pros and cons be? Am I more likely to end up growing my money faster? Would it be considered riskier or less risky than my current investment?

Also, unless it's just me being a bit thick, is there a way to tell how much you've paid in to an ISA/how much allowance you have left for that financial year on the portal?

Actually, that was more than a couple of questions! The first one spawned a few more while I was typing this post...

[JulianPH]

Gallons Per Mile said:

Hi Julian, I have a couple of questions:

Looking at your posts about PH Equity back there ^ and its performance with low volatility - should I consider swapping from IM Index 80 to PH Equity? What would the pros and cons be? Am I more likely to end up growing my money faster? Would it be considered riskier or less risky than my current investment?

Also, unless it's just me being a bit thick, is there a way to tell how much you've paid in to an ISA/how much allowance you have left for that financial year on the portal?

Actually, that was more than a couple of questions! The first one spawned a few more while I was typing this post...

Hi Craig

Pros:

• Higher historic performance returns with low historic volatility.

• Managed, so it has the ability to make adjustments as thing change.

Cons:

• Massively less global diversity (though this could also be a pro!)

• Slightly higher annual charges (0.67% for PH Equity v 0.57% for IM Index)

Basically, IM Index 100 tracks the world. PH Equity tracks 10 of the largest companies/brands in the world (and has the benefit of human management to adapt when required).

When you take most of the world out of the picture you remove a massive amount of volatility and downside, but you are left with your fortune resting on just 10 companies (albeit 10 companies worth a combined $3 trillion and present on every continent).

PH Equity is a contrarian investment strategy that goes against the herd.

I really like this approach as I don't like to go with the herd, but it is not for everyone. I buy and hold based upon fundamentals, whilst constantly reviewing my positions.

With every single investment decision I focus on the fact that this is my money (so I try not to be stupid) and my client's money (so I try not to be too clever and take risks I will be accountable for).

It is a triple test. My money, your money, my daughter's future. This does tend to concentrate the mind!

My suggestion would be to look at the investment strategies, not the past performance. We want to extract the best from the future, as the past has already gone!

If buying and holding 10 mega sized companies that many people use on a regular basis makes sense to you, then PH Equity is highly compelling without any past performance figures.

Do a tick box approach. How many of these companies do your family use regularly:

• Colgate Palmolive

• Unilever

• Amazon

• Netflix

• Diageo (Guinness, Bell's, Johnnie Walker, Smirnoff, Baileys, Gordon's, Tanqueray, etc.)

These are our largest holdings in PH Equity. If this appeals to you then it is something you should consider and you can always talk to Nik or me about this further. The smaller holding include boring stuff (Coke Cola, Nike, etc.), but things that people always buy from, even when money is tight.

If you would rather track the world then this is also a proven and established model that makes sense.

There really is no right and no wrong answer. It is all about personal preference.

I know that wasn't a completely straight answer, but FCA rules prohibit me from saying anything that could be classed as even a "judgement call". let alone a "recommendation".

I hope this longwinded answer has been somewhat helpful. As always, please post here or contact Nik or me to go over things further.

Cheers

Julian

Edited by JulianPH on Tuesday 25th February 13:58

[Gallons Per Mile]

Thanks for the reply, Julian. It's quite informative but I think I might like to talk to you a bit about it first...

JulianPH said:

Pros:

• Managed, so it has the ability to make adjustments as thing change.

Cons:

• Not managed (some people may consider this a pro!)

This confused me a bit. Not hard, granted, but which one is it?!

I take it from this sentence...

JulianPH said:

Basically, IM Index 100 tracks the world. PH Equity tracks 10 of the largest companies/brands in the world (and has the benefit of human management to adapt when required).

...that it is managed.

JulianPH said:

When you take most of the world out of the picture you remove a massive amount of volatility and downside, but you are left with your fortune resting on just 10 companies (albeit 10 companies worth a combined $3 trillion and present on every continent).

Understood. Less eggs in basket = less eggs that it's possible to break. Something like that?

JulianPH said:

PH Equity is a contrarian investment strategy that goes against the herd.

I really like this approach as I don't like to go with the herd, but it is not for everyone. I buy and hold based upon fundamentals, whilst constantly reviewing my positions.

I like that idea too. The historical numbers speak for themselves. It's obviously a strategy that has worked in the past.

JulianPH said:

It is a triple test. My money, your money, my daughter's future. This does tend to concentrate the mind!

Yes, exactly. I'll want to put some money towards you for my daughter too, but I'll have to wait until a monthy saver account term is finished.

JulianPH said:

My suggestion would be to look at the investment strategies, not the past performance. We want to extract the best from the future, as the past has already gone!

I think that's the main bit I'd like to talk to you about - the investment strategies part. I fully understand that past performance has no bearing on what might happen in the future.

JulianPH said:

Do a tick box approach. How many of these companies do your family use regularly:

• Colgate Palmolive

• Unilever

• Amazon

• Netflix

• Diageo (Guinness, Bell's, Johnnie Walker, Smirnoff, Baileys, Gordon's, Tanqueray, etc.)

At least 4/5, but does pilfering my brother's Netflix login count?!

Any views on my other question about the portal, or is it blindingly obvious and I shouldn't be allowed near it?!

[JulianPH]

Hi Craig

Probably easier for us to chat over everything and then post here for others. I am very happy if you would prefer to do this here though.

Cheers

Julian

[Gallons Per Mile]

Yep, probably is! I've PM'd you

[JulianPH]

Gallons Per Mile said:

Yep, probably is! I've PM'd you

Give me a minute (or a a while!), my wife has cooked tonight!

[Gallons Per Mile]

Mrs GPM just did the same. I've eaten my own weight in chicken/pasta/vegetables/tomato based sauce!