SIPP + Investment Options

dqnet · 9 February 2018 at 4:15PM

Hello experts,

I'm 35 and own my property with around 10k that I wish to do something with. I'm a low rate tax payer and because of a few health issues I will be taking some time out of work [living costs are covered from a separate source until I am back in work]. I would like to use some of the money I've saved over the last few years (10k) specifically for investment purposes and to drip feed around £250 a month into some sort of private pension / SIPP to accommodate the state pension later down the line. The £250 a month will be completely individual to the 10k one time investment.

I have a basic understanding of what a SIPP is and a basic understanding to investing and its risks. I've looked into the VLS60 and VLS80 options by vanguard and a few stocks and shares ISA's options. I've also looked into Hargreaves for SIPP options. From what I understand LISA's aren't as good as SIPPs in the long term.

I was wondering what your advise was on starting this path. I mean from the 10k I don't mind splitting this into smaller amounts to gain wider coverage while leaving the £250 a month to just go into a SIPP or private pension. I plan on retiring around 65 and was hoping to be able to utilise this money going forward.

Can someone advise..?

I know you experts have been asked this 100,000,000 odd times but maybe you could add a 1 to that number

Thanks.

Sun-Is-Fun · 9 February 2018 at 6:13PM

To be honest, SIPP probably would be best route as you get 25% uplift, e.g. put £100 in, £25 returned back from government = £125 total, but you won't be able to have access to it until you are 55 and is going to 57 I think in 2028.

You can put as much in as your wages to get the tax relief.

If you are taking time off from work and are not getting paid, this would be limited to £2880 net (£3600 gross) in any tax year.

The VLS funds you talk about are decent choices. Vanguard also do a target retirement fund you could look into as well.

cloud_dog · 9 February 2018 at 6:19PM

mjfp509 wrote: »

If you are taking time off from work and are not getting paid, this would be limited to £2880 net (£3600 gross) in any tax year.

This is a very valid point. If you are comfortable with regard to putting £10k in to a pension then you need to get it done within the tax year where you have sufficient earnings. Even if you choose to stagger the actual investment of the monies over the coming months.

With the lump sum money you are talking about I don't think you should be thinking of more than one or maybe two investment options and if you wish you could direct the £250pm in to a second or third investment option.

I'm a little unsure if you are looking for responses that offer up actual investment options (funds etc).

dqnet · 9 February 2018 at 7:56PM

Thank you both for your responses. In answer to the points raised;

Yes, unfortunately I wont be working for at least 4 months but since I've never had a private pension / SIPP I was wondering if this was a good option or would it be better to just invest the money into a few funds? Maybe put the entire £2880.00 into the SIPP and the remaining £7000 into two VLS options?

Presently I haven't been doing any future planning and I really need to wake up to the options and was wondering if you could point me in the right direction and advise me.?

Thanks.

cloud_dog · 9 February 2018 at 8:02PM

dqnet wrote: »

Yes, unfortunately I wont be working for at least 4 months but since I've never had a private pension / SIPP I was wondering if this was a good option or would it be better to just invest the money into a few funds? Maybe put the entire £2880.00 into the SIPP and the remaining £7000 into two VLS options?

Have you been working this FY? If so, do you have sufficient earnings this FY to deposit the £10k (or most)?

If you do, then why wouldn't you just deposit the money this FY, and then you can do the £2880 next FY. It really doesn't take long to open a SIPP/pension and deposit money.

dqnet · 9 February 2018 at 9:01PM

Unfortunately I haven't been working this FY no (which I believe restricts me to the £2880). Yes, the 10k is completely money that I can utilise for SIPP / Investments. I have another guaranteed source of income to keep me going for the time out of work which also gives me that extra £250 a month.

What do you think?

cjv · 10 February 2018 at 12:43AM

Not an expert here, but I opened a SIPP a few months ago through Cavendish if you would like to look at more options.

https://www.cavendishonline.co.uk/pensions/

Their fees are low for smaller amounts and my Impressions so far have been good, they have replied to my questions/SIPP instructions promptly.

Vanguard have stated plans to provide a SIPP this year. If you are only going to hold a Vanguard Fund it may be a cheaper option in the future. This is from their Twitter account:

Lots of you are asking us about Vanguard SIPPs. We are planning to offer one in 2018.

Cavendish do not charge for transfers out, so you could open one with them and Transfer to Vanguard when they offer their SIPP, or if you are not happy with their service.

dqnet · 10 February 2018 at 12:31PM

Thanks cjv, I'll have a look into them. Have you used these Vanguard funds? Maybe even these Vanguard retirement funds?

It's just I had this money and would immediately like to get it invested into my future pension plan but just don't know where to start.

dunstonh · 10 February 2018 at 12:55PM

Maybe even these Vanguard retirement funds?

A niche fund. Unsuitable for most. More expensive than their non risk-reducing funds. Start higher risk than the average risk profile and end up lower than the average. Not much to like about them unless you hapen to fit the exact niche.

dqnet · 10 February 2018 at 12:59PM

dunstonh, thanks for that mate. So if one was to go ahead with this SIPP, do you have any recommended SIPP providers / funds to choose when opened (HL, Cavendish or maybe wait for Vanguard)? Also, since I would be putting my total allowance for this year, which would leave me with the remaining £7000.00 would you advise half and half VLS60 and a VLS 80..? Thanks again.

Oh and one other thing, if I dont have a stocks and shares ISA, should I be considering that Vanguard ISA first before the VLS range?

Lungboy · 10 February 2018 at 1:55PM

I think you're getting a bit muddled, you buy VLS or an alternative from within the ISA or SIPP.

SIPP + Investment Options

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