Help deciding which multi-asset fund to invest in

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  • chucknorris
    chucknorris Posts: 10,785
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    edited 7 January 2018 at 9:15PM
    Rich99 wrote: »
    OK, in regards to your earlier comments, I think I'll go with a platform. Now I just need to go & read up on all of them!!

    Regarding these comments about ISA or SIPP, I don't quite follow - why does an ISA win if I become a higher rate tax payer later? I'm just into the 40% bracket now, but there's no way I'll end up in the 45% bracket before retirement.

    My earlier prudential pension that I started when I was 18, I was only getting 20% tax relief going in, but I'll be paying 40% tax taking it out (although because of the TFLS that reduces to 30%)!
    Chuck Norris can kill two stones with one birdThe only time Chuck Norris was wrong was when he thought he had made a mistakeChuck Norris puts the "laughter" in "manslaughter".I've started running again, after several injuries had forced me to stop
  • BLB53
    BLB53 Posts: 1,583 Forumite
    Assuming I'm not planning on touching the invested money till retirement whatever happens, and I'd like to invest in the consensus 85/lifestrategy funds, is there any disadvantage to going the SIPP route?
    If you are happy to lock away until 55 (or 57) you will be better with a sipp - especially as a HR tax payer who may become standard rate after retirement.
    I think I'll go with a platform. Now I just need to go & read up on all of them!!
    Here's an article on the diy invesor site which may help
    http://diyinvestoruk.blogspot.co.uk/2016/08/selecting-your-diy-pension-platform.html
  • AlanP_2
    AlanP_2 Posts: 3,250
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    Pension route makes sense if it is definitely for post 55/58 due to tax relief especially if you are a HR Taxpayer.

    Other options are L&G Multi asset range or HSBC Global Strategy as mentioned earlier. All are aiming for same broad outcome and investor but all subtle different in their approach.

    No right or wrong answer on which is best until you look back with 25 years hindsight.

    Whichever one you go for, and whichever variant in your chosen range check it occasionally and ask on here about whether it is still appropriate as new products come out and this change.
  • economic
    economic Posts: 3,002 Forumite
    Rich99 wrote: »
    OK, in regards to your earlier comments, I think I'll go with a platform. Now I just need to go & read up on all of them!!

    Regarding these comments about ISA or SIPP, I don't quite follow - why does an ISA win if I become a higher rate tax payer later? I'm just into the 40% bracket now, but there's no way I'll end up in the 45% bracket before retirement.

    you do not pay any income tax on shares held in an ISA. So if you are in a 40% tax bracket its highly beneficial. with a pension you dont either but you do pay income tax when you drawdown. In an ISA there is no concept of a drawdown and taking money out is not counted as income for tax purposes.
  • AlanP_2
    AlanP_2 Posts: 3,250
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    Rich99 wrote: »
    OK, in regards to your earlier comments, I think I'll go with a platform. Now I just need to go & read up on all of them!!

    Regarding these comments about ISA or SIPP, I don't quite follow - why does an ISA win if I become a higher rate tax payer later? I'm just into the 40% bracket now, but there's no way I'll end up in the 45% bracket before retirement.

    Ignore 45% rate. If you a BR taxpayer now but will be a HR taxpayer in a few years then saving in a SIPP now will only get you 20% relief, so put it in an ISA for a few years and then when into HR bracket put it into a SIPP as a lump sum and get 40% relief.

    As you are just into HR your pension contributions may only be at BR at the moment.
  • Audaxer
    Audaxer Posts: 3,506
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    AlanP wrote: »
    Pension route makes sense if it is definitely for post 55/58 due to tax relief especially if you are a HR Taxpayer.

    Other options are L&G Multi asset range or HSBC Global Strategy as mentioned earlier. All are aiming for same broad outcome and investor but all subtle different in their approach.

    No right or wrong answer on which is best until you look back with 25 years hindsight.

    Whichever one you go for, and whichever variant in your chosen range check it occasionally and ask on here about whether it is still appropriate as new products come out and this change.
    And as your investment grows no reason to just stick to the one multi asset fund. VLS60 and HSBC Global Strategy Balanced both have a similar percentage of equities, but the HSBC fund has much less UK equity than VLS and includes some property, whereas VLS doesn't.
  • ValiantSon
    ValiantSon Posts: 2,586 Forumite
    TheTracker wrote: »
    Most people wouldn’t go direct to a fund house like vanguard or blackrock, they’d go to a ‘platform’ like HL, iWeb, II etc. These are like fund supermarkets where you can buy any of a wide range of funds. Platforms also offer access to tax efficient wrappers like ISAs and SIPPs, which fund providers are less likely to. However, companies like Vanguard are beginning their direct to consumer services in the UK and may eventually compete with platforms. You can use different platforms at the same time, though do be careful where you place any one year’s ISA allowance.

    If only investing in Vanguard funds then their platform actually offers very good costs at 0.15% platform fee. So someone buying VLS80 would generally be best served using the Vanguard platform unless they had a fairly hefty investment, in which case a fixed fee platform may well be better.

    However, the OP is considering using both Vanguard and BlackRock so they would need to use an alternative.
    TheTracker wrote: »
    Choosing a platform/broker is a task in itself. Try looking at “Snowman’s spreadsheet” or Monevator’s Low Cost Brokers comparison for a start. Which you choose depends on portfolio size, whether you choose ETFs or funds, how much customer service matters vs price, and so forth.

    OP, the link for Monevator's comparison table is http://monevator.com/compare-uk-cheapest-online-brokers/
  • Eco_Miser
    Eco_Miser Posts: 4,708
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    TheTracker wrote: »
    Choosing a platform/broker is a task in itself. Try looking at “Snowman’s spreadsheet” or Monevator’s Low Cost Brokers comparison for a start.
    SnowMan's spreadsheet is at http://forums.moneysavingexpert.com/showthread.php?t=5583030

    The Monevator site has lots more useful info and opinion on investing.
    Eco Miser
    Saving money for well over half a century
  • Rich99
    Rich99 Posts: 55
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    Thanks all for the helpful comments so far. Just trying to get my head around SIPP vs ISA. From what you've all said, SIPP gives me tax relief when I deposit, so I get 'free' money added to my investment. However when I withdraw from the SIPP, I'll be taxed. With ISA, there's no initial uplift, but anything I withdraw is tax free?

    So which actually works out better in the long run?
  • Linton
    Linton Posts: 17,063
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    edited 8 January 2018 at 10:08AM
    Rich99 wrote: »
    Thanks all for the helpful comments so far. Just trying to get my head around SIPP vs ISA. From what you've all said, SIPP gives me tax relief when I deposit, so I get 'free' money added to my investment. However when I withdraw from the SIPP, I'll be taxed. With ISA, there's no initial uplift, but anything I withdraw is tax free?

    So which actually works out better in the long run?

    Correct - just one extra which makes a lot of difference. When you withdraw money from a SIPP you get 25% tax free.

    Which works out better in the long run depends on your tax situation, the figure below assume that all your contributions and pension are each taxed at the same rate.

    If you pay basic rate tax payer whilst working and pay no tax in retirement SIPP wins by 20%.

    If you pay basic rate tax or higher rate tax both whilst working and in retirement SIPP wins by 20% X 25% =5%

    If you pay higher rate tax whilst working but basic rate in retirement SIPP wins by 25%

    If you pay basic rate tax whilst working but higher rate in retirement ISA wins by 10%.

    The danger is that if you put too much in a SIPP:
    a) You could exceed your LTA with dire tax results
    b) You cant withdraw all the money in the SIPP during your lifetime without paying higher rate tax.

    In practice to enable very early retirement and retain flexibility it is sensible to use both SIPPs and S&S ISAs. Perhaps put enough into your employers pension to gain the maximum employer contribution and if necessary enough into your SIPP to get you down a tax band if you are a higher/top rate tax payer with the rest going into S&S ISAs. The extra flexibility being worth a 5% reduction in net value.
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