ISAs should be more aggressive than sipps
Comments
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LISA for a homeowner is a bit like a sipp, without LTA, access later. For me on the tax credits a sipp is superior at the mo
At the moment I'm focusing on ISA for our wedding in a few years time, vls20 for that... After that ISA will be for pre sipp access retirement
I definitely won't cash in dB pension while still accruing, the accrual is the most rewarding stage by far. I'm not decided whether I will cash in later, but on the face of it I don't expect to live more than 25 years over state pension age, I'd like to leave something and I could remain cautiously invested in flexible drawdown. But the safety of dB may make me brave, then again if pension credit exists maybe I can be brave anyway
All world for whole portfolio is a reasonable way to do it that I'm almost becoming, although direct EM allows me to maintain a tilt, I'll review how beneficial I expect that tilt to actually be
10% max because diversification/ risk reduction is all I'm trying to do. The small (5%?) EM exposure in the s&p doesn't seem sufficient to smooth it from tables I've seen, and the small fund probably has no exposure0 -
MatthewAinsworth wrote: »LISA for a homeowner is a bit like a sipp, without LTA, access later.
And also if your planning has gone wrong you can simply pay a penalty and get the money back out early from a LISA which you can't do with a SIPP ; whereas if you are able to keep it in the LISA product to age 60 you get a bonus that you don't get with a normal ISA. So, quite a handy product.
But yes the (up to) 61% relief from doing SIPP to improve tax credits is definitely superior to the LISA bonus if you're not likely to be a 40%+ taxpayer in retirement or at risk of hitting lifetime or annual limits and don't value the crutch of early access or freedom of timing of withdrawals.10% max because diversification/ risk reduction is all I'm trying to do. The small (5%?) EM exposure in the s&p doesn't seem sufficient to smooth it from tables I've seen, and the small fund probably has no exposure
The small cap fund has no direct exposure at the "country of listing" level because it's specifically a developed markets smallcap tracker. Similarly the SP500 will have no exposure from country of listing (100%USA). Both will have some assets and incomes in emerging countries ; though largecap companies with their scale advantages have their fingers in more pies and are more likely to trade across borders.
However, US is physically more distant, so in a smallcap tracker you'll find a company in Hong Kong or Singapore that has a very mainland China customer base while the S&P 500 company based out of Texas might not have any Chinese customers at all. If you want "proper" EM exposure - and there's no reason not to want it - there is no substitute for buying a fund that buys companies listed in (or geographically near to) that region.0 -
An insurance against the world changing, the developed world indexes might add new countries but would miss the rise
I imagine the volatility could give a good rebalancing bonus...0 -
MatthewAinsworth wrote: »An insurance against the world changing, the developed world indexes might add new countries but would miss the rise
I imagine the volatility could give a good rebalancing bonus...
Often your posts are like cryptic crossword clues that I can't solve.0 -
MatthewAinsworth wrote: »Stoozie - it's be a possibility if I aimed for it, and cashed in dB pension, but I can just put equities into isa, not cash in dB, prioritise ISA and retire earlier to completely avoid itSave 12 k in 2018 challenge member #79
Target 2018: 24k Jan 2018- £560 April £26700 -
Coryls - having some em covers you in case em countries get big and the developed world falters
And em is better than bonds for rebalancing bonus - em is highly volatile, good historical yields, low correlation
Stoozie - maybe, but retiring before we get pension access might be more desirable - what's efficient financially isn't necessarily what's efficient with the limited time we have to live - yolo0 -
Many of OP's replies were a difficult read, I admit I skipped most. This "pearl of wisdom" makes no sense, it is bad advice and/or bad theory. A SIPP is pre-tax. As a basic general rule, it is always preferable to make losses on accounts to be taxed, not one like ISA that has already been taxed. On top of this, an ISA allows ability to access at any time hence it is better to take risk on SIPP, etc. that can not be accessed for years to maximise loss recovery time.
My SIPP lost several thousand this year on 2 very risky investments. The loss is approximately the size of the tax relief I received, so not a net loss as had I not invested it as SIPP I would have paid it as income tax. Gross nature of SIPP minimises losses and gains are at worst neutral, possibly amplified depending on specifics.0 -
Hoc - over the long term I'm planning this around growth, not losses, want that growth to be tax free0
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MatthewAinsworth wrote: »Hoc - over the long term I'm planning this around growth, not losses, want that growth to be tax free
Shame on me for taking this thread seriously and taking the time to reply. Looking at the more recent comments this is all one big wind up with nonsense replies.0 -
Hoc - why are you making losses?0
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