Reply With QuoteI strongly recommend you find a good local independent financial adviser initially at least to set up your portfolio a a sound basis.
A lot has has happened over the last two and a half years and it has brought me into the real world and made me realise planning for the future and making certain you are able to enjoy your later years is massively important.
Anyway, in the last 6 month me and my family have gone from renting off my father in law to owning the property with no mortgage. I am now starting to plan for my retirement (ideally in 20 years!) I am self employed and currently am not paying into any pension and only have a basic (very bad) savings account. I have read on here of all people using investment plan such as vanguard and others and am wanting to start doing the same. It would need to be managed as I currently have zero knowledge on this!
Can anyone set me on the right footing to start? And then secondly best places to read and learn about investments to eventually become more able to choose my own investments.
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I strongly recommend you find a good local independent financial adviser initially at least to set up your portfolio a a sound basis.
Agreed.
An IFA is just like a plumber, you know you could do the job they do. But if you did it yourself it would be sloppy, and come back and bite you.
One can't be good at everything.
Outsource your knowledge needs
6-8% of your monthly into a pension is a good start (>10% ideal) and then 5-10% into varied savings including ISA's etc would be a broad start for volume. But it's the destination for the funds that's the real key.
Congratulations indeed on your realisation!
I’m recently (early) retired at 58 although I still do some consulting work as it suits me.
Was fortunate in having a DB scheme at work which peaked at the LTA as I decided to retire
I cannot stress enough how much you need to think and plan ahead these days if you want a decent lifestyle in your later years.
A million pond pot will see your income at about 35k/ year before tax and I’d suggest you need to lay away enough per month to get you there.This would also allow a lump sum to draw down on for cars etc if you’re careful.
Massive assumptions about the future of course but paying well now will give you choices you will want, believe me. Personally I’d advise against assuming that you may inherit money- (too many assumptions again for me) if it happens , all well and good.
Good luck, you appear to be in a minority of people who consider this these days!
Ps don’t consider myself financially “savvy” as such (in the same way as others such as Devonian of this forum)but I am speaking from the experience of drawing a pension and it’s relation to the amount saved into the pension pot
Last edited by GOAT; 7th July 2019 at 15:03.
Good advice above, but equally as important, you need to understand what your FA is taking as a % for managing your funds/ISA,s etc. Costs are key especially over a 20 year investment plan
This ^^^^^^^Originally Posted by Plastic_Magpie
Plus don't forget for every 1 you put into your pension HMG will give you 20p, plus they will give you 20p in Tax relief (assuming you are paying 40%). The downside is you cannot access your pension pot until you are 55.
Also don't forget that your LTA (Life time Allowance) is currently 1.055M - after which the Tax man will take 55% on every penny over. It's a nice problem to have, but still a problem.
Whoever does not know how to hit the nail on the head should be asked not to hit it at all.
Friedrich Nietzsche
Wouldn't bother with IFA, invest in a tracker, get a subscription to Investors Chronicle or similar and DIY. It's not rocket science.
I keep hearing the advice, find a good IFA. But how to you do this? Its bad enough finding a plumber or electrician and if there work is shoddy you know pretty quick. With an IFA the end results could presumably be disaterous.
I knew went to school with some people who trained as an IFA. Barely a GCSE between them.
Also, how do people get a pot of a million? 40 years at 50k is only 2 million. Thats before tax an everything else?
To simplify things Id break it down initially into - necessities and luxuries, with things like pensions and ISAs being luxuries (bare with me). So lets look at the necessities first. Ill assume you are married with dependent children for this exercise.
If you couldnt work tomorrow through illness what would you live on? If you had died yesterday how would your wife and children live?
Youre self employed so Id strongly suggest looking at income replacement. Whilst youre fortunate enough to be mortgage free if you have dependant children Id recommend life cover to replace your income in the event of death. Critical illness cover too if its affordable. These things are really necessities just like car insurance or home insurance, but unlike them they arent mandatory so people often wont do them. Ive come across people putting 500 Or 1,000 a month away for example in pensions and have no insurance what so ever. They become ill, cant work and bang it stops. 50 a month to protect yourself and 450 in a pension would be far more logical.
Pensions and savings are really luxuries because you can only afford to fund them as long as you have an income - the income is the necessity! Imagine paying 500 for one month, falling ill and never being able to work again and having. . . . 500 in a fund. Or having a policy that potentially pays hundreds of thousands out. Remember you hope all insurance is a waste of money as no one wants to claim, but just in case.
Once youve done that you can then decide on planning for the future. Before considering a pension, make sure you have a few months income saved up as anything paid into a pension cant be accessed until at least 55. Then decide on a monthly figure you can afford every month. It has to be realistic in two ways - firstly that you can actually afford to keep it up, but secondly that its actually going to be worth something at the end of it. Without a mortgage Id be suggesting 10% or more if possible of net income, but I dont know your circumstances. Play around with pension calculators online to get a realistic idea. To get going a low cost balanced/managed fund would be ideal and as it grows and your knowledge improves, possible diversification into a variety of funds. Understanding you risk is important.
An IFA would be ideal for all this so ask your friends for personal recommendations. I would imagine that if they look at the whole picture For you, theyll be able to set up a low cost pension for you, or at least advise on it.
If you want to do it yourself, Im sure you can. Look into risk and find funds thats suitable to what you feel comfortable with. Most pension companies should have a good description of the funds and its aims.
The most important thing of all though is to put money away as young as possible for as long as possible. Youll be so glad you did. This is all very generic as I know nothing about you, so just take the points that are relevant to you. Good luck.
Good advice above. The problem with finding an IFA is they are only really interested if you pay them an ongoing charge as a percentage of your holdings for managing them, which gets expensive, destroys gains and likely doesn't result in better performance. What would be most useful and what most people need, who don't have the time or expertise to do it themselves, is set up some low cost passive trackers in appropriate tax free wrappers so that people can manage it themselves.
Thank you so much for the great advice so far.
So from this I have taken a subscription to investors chronicle and started to research local IFAs. I will start to read up more on risk and try and get a decent understanding.
Currently looking over two platforms?
Nutmeg being one and vanguard being another.
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Thank you for your advice. My problem and one of the reasons I dont already invest in a pension is the line of work I am in I am paid daily and it is impossible to get an idea on a monthly figure as I may be 3k one month and like from now till September it will be maybe 300 tops!
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Agreed, me neither...I do everything myself also....wire and plumb houses, bricklaying, dentistry, brain surgery, and a little bit of gardening when I have the time. It's all very easy, takes no time at all, and anything you get stuck with is either available on forums or youtube.
Suppose you're one then.
Unfortunately Vanguard dont do SIPPs yet though you can buy their highly regarded funds (Lifestrategy etc) in other providers SIPPs eg HL.
For someone in your position use an IFA at least to start with. You are keen to do the best for your retirement which is half the battle. What you dont have yet is the knowledge as to how to do it and how to maximise tax advantages etc which IMHO you do need an IFA for in order to put you on the right path.
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Under those circumstances I would go down the pension route so as to get the tax benefit from the government.
If you pay for example 6% in then when you earn less you will pay in less. You can usually take a holiday and you can pay more in when you have it.
You can pick a fund like an ISA for the money to go into but as a pension it will accumulate quicker. My pension goes into an Aegon fund which has a variety of products including cash based, all the way through to higher risk emerging market funds etc
You can access it at 55 subject to the provisions for that. Obviously an ISA you can access any time but you dont get the tax relief benefit.
Id use an IFA based on a personal recommendation but this government website aims to help with that
https://www.moneyadviceservice.org.u...744.1562538831
Track every day's earnings for a few months and you'll definitely get an idea of the monthly income. We do this in our business religiously. Knowing exactly what is coming in, and going out, is equally essential in domestic financial settings imho.
Are you self employed or ltd company?
The reason I ask is that you say you get paid daily.
There's a big difference if you are.
Cheers,
Adam.
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Self employed some trader. I get paid as my students pay me. The grading income is good but sporadic.
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Thank you for the great advice so far! I ha e spoken to 4 financial advisors who have all spent time gong through my circumstances and what I am looking at. One is wanting to charge 550 to set up a pension and a couple of funds he says he will research. The others have all advised be no to use a IFA just yet! They all say invest in tracker eg vanguard for a year or so and once you have 15-20k built up then use an IFA as their fees would not make it worthwhile when starting from scratch?
So I am considering starting using. Hargreaves and getting a stocks and shares ISA and also investing into a vanguard 80 to start me off.
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Thought now was a good tone to update this thread.
I have now set up a Pension through a family friend who is a partner in a wealth management company he took me through a lot of information and guided me this has been set up and a contribution set.
I have now also got cover of a set monthly amount payable until my youngest is aged 21 if either myself or my partner pass away or are critically ill.
And to finish off the first step of my future planning I have set up an ISA on HL with the Vanguard 80 and am contributing to this regular.
I am learning more and more daily through investors chronicle and podcasts.
Would appreciate any other suggestions going forward. My next plan is to take out a basic lump some life insurance policy for me and my wife for around 100k each to give a nice cushion if something does happen to either of us. Which would allow all debt to be paid and a good amount left over.
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I'm self employed and looking to add to my pension funds so...Vanguard are launching their SIPP very soon, they have said "early 2020". As soon as it opens up i'm going to plough some serious money in.
I have an ISA with them already - VLS80 - and so far good service and returns - i like their ethos.
The future is uncertain, i.e. you dont know what the performance on any investment will be.
Two conclusions to be drawn from this:
1) dont trust any fund manager / stock picker, they also do t know what the future will bring, but they charge you a fee for pretending they do (seems you are already doing this, using Vanguard (cheap index tracker).
2) the main factor you can control is cost. Always keep your costs down, in practice that means cut out the middlemen, as they charge a fee for their services, too.
Have you checked whether HL is really the cheapest platform to manage your funds, compared vs. AJ Bell, Interactive Investor etc?
Whats the benefit of this family friend who is a partner in a wealth management company? How much does he charge you?
An example: long term you can expect a stock market performance (on average) in line with the growth rate of the economy (in real terms, post inflation). So lets say thats 3-5% per year. If your wealth manager charges 1%, and the fund platform another 1% then you have effectively halved the return available to you. My mantra: keep your cost down...
What’s “a partner in a wealth management company”?
Most if not all wealth management companies are not IFAs and tend to be “biased”, charge higher rates and not offer value for money.
and why have you set up an ISA investing in Vanguard 80 with HL when you could have done it with Vanguard direct at less cost?
Vanguard are soon to launch their own SIPP with industry low account fee of 0.15% - Im currently in LS80 (Ofc 0.22%) with HL but will switch when they are up and running... why pay 0.45% to HL in fees.
Trying to sort out my wifes old Friends Life with profits pension to see if moving it to a SIPP would be better, but its proving a headache.
EDIT: just saw you are talking ISA not pensions, in which case Vanguard would have been the better platform for investing in LS80.
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Yep, it's dead easy.
Don't overlook management styles, asset mix, check for due diligence, fund alpha/beta and sharp ratios, taxation etc and you're more or less good to go. Also, know where you need to go with your investments to make growth in a negative or falling market.
Agree. Costs are certain, performance isn't.
The FT on passive /index trackers, quite timely: https://www.ft.com/content/1c4382c6-...3-9a26f8c3cba4
A login is needed to read the article but an abridged summary would be something like this:
- Active managers build the market.
- Passive trackers are great for investors but piggyback on the expertise of others
- In time - maybe already - too much of the market will be owned by passive trackers for them to remain passive
Started out with nothing. Still have most of it left.
I suspect thats St Jamess Place. They call everyone partner there, really they are all self-employed (more like a franchise model) I hate St James Place, bad fees, bad advice (Woodford anyone?)
Last edited by WolfiesPapa; 16th January 2020 at 23:57.
Thats what I was thinking but didnt say! Wealth Management Company always rings alarm bells for me
Thats the company. Please pm me for more info.
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Plenty of info online
https://www.thetimes.co.uk/article/w...-off-9q7q0q8z0
https://chatfieldprivateclient.com/t...-jamess-place/
https://www.yodelar.com/insights/st-jamess-place-review
https://www.thetimes.co.uk/article/s...unds-t27nj2k72
Wolfe’s post sums them up- I know there are two sides to every debate but there is no smoke without fire,there are a lot better options
Never put a penny in SJP. If that's where your money is going now then stop immediately and go for a lower cost provider for a SIPP. Your ISA should also be at vanguard (0.15%) instead of HL (0.45%)
You said you don't have a mortgage? Were you gifted the home outright or are you still paying for it, just not via mortgage?
If the first then I'd be saving every penny you aren't paying on housing into your (new) SIPP for maximum tax relief. If you are already behind then now is the best time to catch up.
Ok firstly no I was not gifted the home. And no I am not paying for it any other way. I paid for the home with the loss of both of my parents by the age of 35. Upon losing my dad his house was left to me with a small mortgage on it. We sold this home, the house I grew up in and paid off my dads estate with the money left that I inherited I was able to buy the house me and my wife was renting off her parents. Enabling us to be rent free and mortgage free. I would give it all back tomorrow for my mum and dad back. But I cant.
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Apologies, I certainly didn't mean to evoke any bad feelings. Was just trying to get a rough judgement of your outgoings to see how aggressive you could be with the savings.
At your age you certainly aren't way behind, so no need to be too aggressive. I'd always be looking to save a fairly large amount of your earnings now though, especially when you have lower outgoings than you potentially may have in future if you buy a bigger house etc.
But most importantly, read up on SJP and get out of that sharp!
Spot on!
St Jamess Place (SJP) used to charge exorbitant Exit fees when one wanted to move assets held with them elsewhere.
Anyone here know if thats still the case? I seem to remember that this practise was disallowed by the regulator a year ago or so. I sincerely hope so!
@Orginal Poster: Have you committed to SJP / signed a contract with them?
The sad reality is that these partners at SJP are a bunch of 3rd tier experts that didnt get a job at Goldman Sachs and now try to go after unsuspecting wealthy(ish) indivuals. Whatever it is, their fees are exorbitant. Avoid! (How much do they charge you for that fancy office youve met and the advice?)
As numerous poster have already written, Vanguard is the place to go. Not only their funds, but open both an ISA and a SIPP (available very soon) with them.
Then definitely use your annual tax allowance (10k for higher rate tax payers) and remember that you can still use your pension allowance for the last 3 (?, please check) years, too. So thats 40k tax free right there.
I'll be retiring in a couple of years and I expect we will be ok.
But seeing mention of figures at a million etc etc,maybe someone could explain how someone just starting out in work,and who might go thru life in low paid jobs can achieve those numbers!,they can't and won't is my guess.
It will be hard enough to rent let alone buy a property and save as someone mentioned above,500 to 1k a month for a pension!!.
Sadly most of the hardest working people on the planet are the lowest paid,and will continue working until ready to drop,they still won't have amassed an amount to keep them if/when they retire,if they even managed to save into a pension!.
Wise words to say save for your old age,the reality for many is having to actually have enough to exist on now......sad but true.
Please can I recommend this book: https://www.amazon.co.uk/Long-Short-.../dp/0954809327
Does what is says in the tin, at 0.31 for a used copy (although I suspect Amazons algorithm might ramp that price up the more of you click on the link?) you cant do much wrong. Really recommended.
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I have signed with them and set up a DD but no payment has yet been taken. I have messaged the family friend and sent him the articles. I am looking through the TC now to show the fees for moving elsewhere
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Reading this thread with interest as I'm thinking of starting my own private pension and want to borrow the forum's collective wisdom but from what I've read (and knowing SJP's reputation) I wouldn't bother sending the family friend links so he can objection handle you. Just cancel and back out of it.
Ok bad photos Im sorry but charges as per their tc
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Im sorry but thats the reality is that theres no alternative (unless you hope for a future Corbyn-like government that starts expropriating and redistributing accumulated defined contribution schemes).
Also, compound interest is your friend: the earlier you start and the lower you keep the cost the more youll end up with.
Could not anyone save 200 a month?
Thats maybe one watch less to purchase per year, maybe Netflix rather than the Sky Mega package, maybe a few pints less on a weekend.
Its about priorities.
Not trying isnt really the solution I think.
Im not a lawyer. Any clauses on exit charges? Cooling off period maybe (i.e. your cancellation right within a certain period).Ok bad photos Im sorry but charges as per their tc
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Im sorry if youre losing a family friend over this, but really if he was a true friend he would have not advised to to invest with them...
I think you'd need to ask the poorest person you know personally,and ask them if they have 200 spare each month.I agree priorities are paramount,but not to the point of not having what most take for granted whilst on a much higher income and standard of living.Making sacrifices on a day to day basis to hopefully have something when retiring at maybe 66!,I suppose that's what some people make their decisions on,whether it be the correct decision who knows.
I still maintain not everyone can save,and if they did it wouldn't amount to a great pension tbh......IMO.
There is no cancellation terms in the tc!
There is this though on early withdrawal charges
https://i.imgur.com/zEGBtLU.jpg
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I guess the big question is how much did you put in with them? You said you signed a direct debit but haven't paid yet? Is it as simple as 6% of nothing?
I have put zero in atm. So I am presuming I can just pull out. I will be asking that on the call tomorrow.
So my question now is wait for vanguard or what other SIPP providers are recommended?
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Agree with this dont go with them. You could do far better- even DIY option with A J Bell and a Vanguard Lifestrategy fund.
those charges are what I expected and are too high.
Just as an example I paid my IFA 1.5% initially and my TOTAL ongoing charges are 0.7%
Charges impact massively on your final fund as its not just the charge in any year but the loss of compound growth in the years after.
Interesting thread, which I have skimmed through just now.
Are most people carrying out these sort of investments as an alternative or alongside employer administers pensions. For example my works pension is administered by Royal London. I had originally opted out but planning to get in it soon. Given the tax advantages I am assuming all who are on PAYE are in their work administered schemes? Or am i missing something!?
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