I really, really hope you can cancel/terminate this without paying 6%, that’s just robbery.
As to what to do next, read the book I recommended, and by the time you finished that Vanguard will offer their own SIPP.
I happened to speak with them today (on a different matter, I work in the City of London) and was told they will open SIPPs this tax year, so before early April.
There's a chap called Julian Penniston-Hill who has made himself a large presence on Pistonheads and is currently a thread sponsor there (the Finance forum).
On the Finance forum he has a sticky thread for his firm Intelligent Money (who are also this year's BT GT Championship title sponsors). It's possibly one of the best finance threads anywhere on t'internet for beginners and the financially naive.
Julian has succeeded in attracting a large number of Pistonheaders to use his firm, including its 'free' financial planning service (financial advice without the sales element). And it would do you zero harm and quite possibly be of great interest to you to have a look at that thread and others on Pistonheads' Finance forum.
Julian's major bonnet bee is fees - especially excessive fees - as the destroyers of investment. His firm's are very reasonable and he has put many an IFAs nose out of joint both on PH and elsewhere in arguments on this contentious issue.
Last edited by wolf; 17th January 2020 at 00:05.
I have read the majority of replies here and it’s looking like you plan to invest a few hundred per month income permitting.
I would suggest you investigate a Lifetime ISA as you’re under 40, you can put in 4K per tax year and the government will give you an additional 25% taking the total to 5k per year. I would use this and the ‘free’ money to invest with somebody like AJ Bell in a tracker fund.
Any additional pension contributions you want to make above 4K per annum you could do so via a SIPP.
I’m not sure I agree. A LISA has its place (we just taken out one for our son for house purchase) but you can only contribute to you are 50, you can’t take benefits until you are 60, you might get 25% bonus but you don’t get any tax relief. If you do need the money before then there is a 25% penalty which might mean you get less than you pay in. There aren’t many LISA providers but if you are going for one to invest in funds then AJ Bell are the cheapest. Advantages are the money coming out isn’t taxable.
Long terms Stock Market return (US Index) is 10%. After inflation and fees (assuming index tracker fees at 0.5% all in) that's around 7%. Be careful about FTSE 100 trackers as the UK index historically has a lower return due to the high number of banks etc that form part of the FTSE as opposed to the number of tech companies in the US index. That's why you often hear of more conservative growth estimates when engaging with UK IFAs as opposed to US experts.
For me, that Vanguard Lifestrategy 80 is the right approach as it takes a global approach and you will get that 10% long term return (which may look like 10%, 18%, -8%, -28%, 20%, 17% etc as markets are volatile). I'd maybe stick some into Fundsmith as well as he seems to have outperformed the indexes long term.
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Anybody want to recommend an IFA around London way . Either near Battersea or Watford ? Mid 40’s and current financial plan is to buy a boat and retire To live on buttons in the med..
To make my point:
https://www.google.com/amp/s/fortune...ollar-bet/amp/
Embarassed to say I don't know. As I have been opted out I haven't done that research but will do. I will find out.
Apologies OP, I appreciate this may be slightly OT from your original query, but thought I thought it would be beneficial to ask the question here rather than start a new thread (and is linked in a roundabout way!)
don't think this has been mentioned yet ? but a very good read and some useful guides to brokers/ charges/ savings etc
https://monevator.com/
I am retiring this year ( 63) more through good luck than judgment I have ended up with 5 pension pots two DB and I have to have IFA advice if I want to do anything other than take a poor income from it which will cost me no matter what .
Just had a response from Vanguard.
In order to transfer to them it needs to be done in cash eg sell fund in existing sipp then transfer the cash to vanguard then re-buy the fund.
Looks like i will be out of the market for a time. Based on this i might hold off as the initial demand might cause problems for vanguard.
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That’s one of the biggest downsides moving from one SIPP to another, the time it takes from your old provider selling the existing funds (converting them into cash), then the time it takes to transfer the cash (your cash) over to the new SIPP provider.
Believe some new regulation coming to speed that process up, as completely unreasonable, especially as the provider holding your old SIPP has no incentive moving faster. (I can see if I can dig out the article from the FT talking about this).
Your 2nd point i somewhat disagree though: if I understand you correctly you’re worries that initial demand will cause Vanguard accepting so much cash that they can’t timely invest?
It is if the CETV is over £30000. And he will struggle to find an IFA to do it and when he does will get charged a hefty amount. FCA are all over DB transfers and many IFAs can’t get PI insurance or choose not to as it’s too expensive.
exactly this! as per craigs post, and they want 1.5 % of the total pot! and that's goes into thousands \!
Last edited by mitch1956; 18th January 2020 at 16:11.
A bit us specific, certainly nothing to do with british tax schemes etc. But the basics are covered here very thoroughly.
https://jlcollinsnh.com/
There is actually a whole tz uk like subculture called fire(financially independent, retire early). Google is your friend.
An IFA can be helpful if you can find a good one (recommendations are ideal).
Here's a basic flowchart which shows a good hierarchy of how to start
https://i.imgur.com/BfHzwr9.png
Have a read through this:
https://www.pistonheads.com/gassing/...=206&t=1786977
On the ‘performance’ of active fund managers, those trying to outperform the markets: “How a herd of cows trampled on human stockpickers” https://on.ft.com/3aEidNg
you should get in ASAP as it is free money. OK you do have to pay in but the cost of providing a decent pension is far higher than people seem to appreciate.
Royal London are a highly regarded provider of pensions and often used for auto enrollment solutions by employers; probably not as good/cheap as an individual arrangement but your employer needs to meet their responsibilities in a straight forward solution. Allowing for your tax relief and the employer contribution you need to take advantage of whatever is on offer.
The total going in will be in the region of 7-8%, but for a decent pension, double that might be more appropriate.
lots of people who take this subject seriously will either pay more into the employer scheme or have a second scheme that they run themselves.
for the OP as alluded to, I'd look to pay whatever you previously paid in housing costs if affordable, into a pension or other savings. Doesn't have to be monthly if you have variable income, you can make adhoc one off payments; this does rely on you managing your money and not 'investing' it elsewhere if it is burning a hole in your pocket.
It is very unfortunate how you have come into your current financial position but does offer you the opportunity to have a proper go at planning for your financial future as you are mortgage free..
Very interesting this thread, Firstly can you rename yourself from WolfiesPapa to Andy Dufresne (Shawshank )
Reading through it seems Vanguard is a good way to go for the independent investor without the use of an IFA but they do have lots of differnt funds, to give the uneducated investor (like me) an idea of how to use this as a vehicle for future pension/lump sum what would be the best way forward, with say a £30K lump sum to start with.
I'm 46 so no spring chicken but I should be able to add around £5k - £10k a year in lump sums throughout the year, I have no real retirement date in my mind as I enjoy what I do and have plenty of free time, as long as that feeling is there then I'll keep going..
Last edited by murkeywaters; 21st January 2020 at 12:06.
Thank you :)
My second son has become quite jealous about the fact that he’s not included in my user name. I’ll consider changing it.
Re which Vanguard fund: if you are completely in the dark about stocks vs other assets, volatility and risk/reward payoff (see comment below) Vanguard has a handy ‘auto pilot option’, believe they are called target retirement funds or something like that. So if you wanted to get your money out for retirement in 20 years you would pick the ‘Target retirement 2040” fund etc.
These options auto-invest in other Vanguard funds and over time shift the asset allocation until at retirement its 100% cash.
Cheers
(And by the way: unless you know immediately what these terms mean you are in the dark - which is fine by the way, you absolutely don’t have to! - Just don’t waste your money on someone who pretends they are).
Thanks for the info, before your reply came up I had a quick look through the Vanguard website and I came up with the Target retirement fund 2040 too so something for me (and others) to look into.
One investment my mother has acquired from my father passing away is an Invesco Perpetual ISA in the £30k range, in previous years it grew very well but in recent times it has lost around 10%, would transferring this over to a Vanguard ISA or LifeStrategy 40 policy (medium risk) be more beneficial?
Almost certainly yes, for two reasons: Invesco’s fees (much higher than Vanguard) and management style (active vs passive).
Pleased to hear the Investors fund has done well, but almost certain it could have done better, because these guys charge high fees and tend to underperform.
I’m no IFA (that’s the last thing I’d like to be), but that’s what I would do if I were you.
Is that really a good thing? I ask only because most of us would hope to enjoy a retirement of at least 20 years or more. Having all of your retirement funds earning only 1.5%-2% at best during those 20 years seems to be sacrificing something.
I understand that you need to be more cautious as you get nearer retirement. Also, getting into almost any type of reasonably mainstream retirement saving is better than doing nothing. I have a SIPP as well as a more traditional managed personal pension.
Just curious if I have missed something.
I like the idea of Vanguards target retirement funds but when i open a SIPP with them (hopefully before April!) i will be in VLS80 until 5/10 yrs before retirement. I will then make a judgement about moving to VLS60 / 40 etc at the time but i want control to make that decision (right or wrong)..
It is akin to flying a plane in autopilot vs manually. The former works for many (most?) cases, the latter is highly recommend when landing a plane.
Target retirement funds take the barriers to entry away, make it easy to start and not worry about one’s investment, rebalancing etc
If you like doing all that yourself (as I do), then by all means I would not not take that option.
But for a Vanguard beginner, I would.
Makes sense?
You are completely correct and that's not what the target retirement funds actually do. Assume WP just wrote his post quickly without thinking of the details.
They go from 80% equity, 20% bonds at around 30 years to retirement down to around 50/50 near retirement age and drop to a minimum of 30% equity at age 75 and stay at that level.
Absolutely, the benefit of taking away the fear of getting started is clear.
Even more so noting anton363’s point that the tapering is much more shallow than that; still 50/50 at retirement which makes even more sense.
A couple of years ago I was a novice and I am still far from an expert, hence asking the questions, and I appreciate the helpful answers.
That’s the best possible outcome in my opinion, as your share certificates, ETF units etc would be transferred one for one to the new SIPP.
My experience with transferring from one SIPP provider to another has been more negative.
When I did this two years ago neither Interactive Investor, AJ Bell or Standard Kife allowed for an in specie transfer.
I do hope things have indeed changed!
By the way, and just to be very clear: neither am I affiliated with Vanguard, nor do I get anything from them for promoting them here.
I just genuinely believe that the old joke that says the last useful innovation coming from the finance industry was the ATM 50+ years ago is no longer true, passive investing is the true unsung innovation.
Here is a deeper look at how they came about, in form of an obituary for one of the true innovators of the 20th century, Jack Bogle, RIP
Jack Bogle, index fund pioneer, 1929-2019 https://on.ft.com/2Gb3I5C
I did an In Specie from HL to AJB last year
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This thread is a really good read. Certainly made me think about investment options.
I've started reading the long and short of it book recommended earlier it's good to see that the comments on this thread echo what I think I've understood from the book so far!
At the moment I just have a PAYE pension, looks like some form of S&S ISA will be a good addition in the not too distant future.
The thing I'm not sure about is, does it make more sense to overpay the mortgage or invest some / all of that money into a fund as mortgage rates are so low?
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