Investing in funds into a SIPP

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JivingJason
JivingJason Posts: 18 Forumite
in Pensions, annuities & retirement planning
Hi,
I have posted earlier. I work in the /nhs and have no other retirement plans except for a pension ( nhs). For retirement or if I slow down at 55, I am keen to open a sipp a/c with AJ bell( dont want to go to the very cheap ones as am unsure of quality of service).
Plan to invest in
1. VLS60
2. L and G multi 5
3. HSBC balanced
3 funds to spread the risks
just one question
What if the market tanks? Do you guys feel insecure?
Any advise
Jason

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  • dunstonh
    dunstonh Posts: 116,376 Forumite
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    What if the market tanks?

    Not if but when.
    What is your definition of tanking? (seeing as the media treats 1% in a day as a plummet when it is just normal movement)
    Do you guys feel insecure?

    Not in the slightest.
    3 funds to spread the risks

    Three virtually identical funds investing in virtually the same places does not spread risks much at all.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • JivingJason
    JivingJason Posts: 18 Forumite
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    Hi Dunston
    Thanks.
    Reason for buying at least two funds are to spread the risk. What if Vanguard tanks?
    I am concerned about a 20 to 30 percent decrease in values. .
    The market feel a bit shaky..
    Jason
  • cloud_dog
    cloud_dog Posts: 6,044 Forumite
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    Not wanting to put words in to dunstonh mouth but, what he means is that the funds you have listed all invest in much the assets and regions therefore, if one 'tanks' they will tank as they are all invested in much the same assets split / investments areas.

    The funds you've listed have a defined asset / investment area allocation which by its very nature tries to reduce volatility. Having three funds which do the same thing does not additionally reduce volatility; they will simply replicate each others volatility with some variances depending on the exact make up of the three funds.
    Personal Responsibility - Sad but True :D

    Sometimes.... I am like a dog with a bone
  • andy001
    andy001 Posts: 119 Forumite
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    cloud_dog wrote: »
    Not wanting to put words in to dunstonh mouth but, what he means is that the funds you have listed all invest in much the assets and regions therefore, if one 'tanks' they will tank as they are all invested in much the same assets split / investments areas.

    The funds you've listed have a defined asset / investment area allocation which by its very nature tries to reduce volatility. Having three funds which do the same thing does not additionally reduce volatility; they will simply replicate each others volatility with some variances depending on the exact make up of the three funds.
    well said..
    I'm not a Financial advisor.
    Please seek independent financial advice.
  • JivingJason
    JivingJason Posts: 18 Forumite
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    Okay,
    I get the point. .just feel a bit insecure in investing in one fund.
    Jason
  • cloud_dog
    cloud_dog Posts: 6,044 Forumite
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    JivingJason wrote: »
    Okay,
    I get the point. .just feel a bit insecure in investing in one fund.
    Jason
    And in my opinion that is a perfectly valid consideration. But....you are mixing your 'comfort' with using one fund, with trying to mitigate market volatility. The two are not linked.
    Personal Responsibility - Sad but True :D

    Sometimes.... I am like a dog with a bone
  • dunstonh
    dunstonh Posts: 116,376 Forumite
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    I get the point. .just feel a bit insecure in investing in one fund.

    all three of those funds are fund of funds. So, you are not really investing in fund.
    What if Vanguard tanks?

    You are not investing in Vanguard. They just are the administrator for their funds.
    I am concerned about a 20 to 30 percent decrease in values. .

    All three funds have around a 25% loss potential. So, if that is a concern you should reduce your equity content. However, that will also reduce your positive returns in growth periods. In effect, you would be moving from a zig zag line to a more wavy line.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
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    JivingJason wrote: »
    I get the point. .just feel a bit insecure in investing in one fund.

    Then choose one which gives the broadest diversification of the portfolio as possible. Allow the fund manager to select investment allocations.
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