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    • dunstonh
    • By dunstonh 18th May 17, 1:20 AM
    • 88,105 Posts
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    dunstonh
    This IFA (the one offering SJP)
    SJP do not retail their products via IFAs. Mainly as an IFA wouldn't recommend SJP products as they are damned expensive and easily improved upon elsewhere.

    SJP only retail their products through their own tied sales force/FAs.

    IFAs love coming across SJP clients as they can blow them out of the water in terms of cost and options.

    Any SJP sales rep pretending to be an IFA should be reported for false representation.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
    • bowlhead99
    • By bowlhead99 18th May 17, 1:28 AM
    • 6,405 Posts
    • 11,334 Thanks
    bowlhead99
    So i'd give up £450 just from the off for their advice. That's only to begin with.
    Originally posted by Not Me Officer
    The issue you have is one of cost, no matter who you use, because you are investing what is, frankly, a very small amount of money in the grand scheme of things (you mention being below the £10k bare minimum per person that they would want you to be investing, to deal with your affairs).

    If someone has a £250k pension pot to review and invest, or £100k of ISAs, then the cost of getting that reviewed and making the right decisions instead of the wrong decisions might be relatively low in the context of your overall pot.

    For example, hypothetically you have a meeting with the IFA and give him some work to do making sensible investment choices with regard to your needs and expectations, coming up with a plan for how to invest the money and making sure it is all properly documented to meet his regulatory compliance obligations, and then going ahead and actually executing the plan by filling out the product applications and getting the money deployed. The IFA will spend several hours on that stuff.

    If he is running an expert professional business paying not just his own salary costs but rent and rates for his premises, employee costs and compliance services, training etc and professional insurances, not to mention a profit margin on top - maybe he would set the hourly rate at £200 for an example. Just like a lawyer or accountant might. So the five to ten hours of work on a £100,000 or £200,000 portfolio might be costing the customer £1000-2000+. As a one-off fee, that's 1-2% of what you are looking to invest. SJP would want more than that because they are at the end of the scale where they are charging Waitrose / M&S prices rather than Aldi or Costco prices. But a 'normal' IFA it might be around that sort of pricing for the initial work on a decent sized portfolio.

    The problem is, that if you go along to him with only £10k to invest:

    - he might be able to scale down the charge a little for the part of his cost that goes to cover his liability insurance (because if he is only managing £10k instead of £200k there is not as much risk of potential liability for giving you advice that was not fit for purpose), and

    - he won't have to spend quite as much time on it, because with only a small amount of money you would not be using more complex solutions and allocations

    - but the other costs don't go away (his premises costs and employment costs and training and compliance and so on and so forth). He is not going to scale the job down to just filling out a twentieth of the product application forms and doing a twentieth of the research and compliance documentation needed and only photocopying the first centimetre of your passport when you present proof of identity, just because you only have a twentieth of the money to invest. You still want the whole service.

    - so he can't just charge you with your £10k a twentieth of what he charges the £200k customer because it is a lot more than a twentieth of the work.

    This means that for a small investor it can be proportionally extremely expensive to buy professional advice. If you had to pay a £1-£2k fee on a £10k investment it would be crippling and would take years and years for the investments to generate enough profits over and above inflation to even get you back up to where you started in real terms. Whereas, as described above, the IFA might want/need that money to compensate his firm for doing the work for you because you don't want him to only do a twentieth of the work.

    So, with £200k+ to invest you might be looking at 1% initial fee. With £100k, more like 1-2%. Perhaps with £50-75k, 3%. Lower than that, probably bigger percentages because that's the only way the advisor can get paid enough for the hours of work he is spending. Or, some advisors would just not accept the small customers at all because it is not worth their time. Take it to extremes and a person with only £1 to invest would still think 5% initial was as much as they could afford without losing a big chunk of their assets to fees, yet the adviser can't practically do any work at all for fivepence of fee income.

    Someone like SJP would want more because they have their expensive money-making business to be running and they need to pay the individual advisory firm where your adviser works. So at 'only' £10k invested per customer, the 4.5% initial fee is a veritable bargain, because you are only paying for a couple of hours work and the advisor is likely spending more than a couple of hours getting everything done.

    You mention you walked away from another IFA because you didn't feel he was listening to you and what you were looking for. Likely the reason for that is that he is not going to be able to spend any real time putting together a proper customised solution for you, because you are only investing £10k and would baulk at paying him more than £500 for his work because costs at that level or higher would cripple your portfolio. For the advisory relationship to have the slightest chance of being at all profitable for him he would have to put you in the most basic of products with the bare minimum of work to cover the risk profiling questionnaires etc. But generally we can presume IFAs do not want work at the "£10k of assets" level unless it is an add-on to an existing customer or family relationship, or the relationship is likely to grow substantially (e.g. someone only has a small initial deposit but is investing thousands a month or has a major inheritance due).

    Such a shame it's turned out like this. When the IFA sorted our mortgage they showed us all what was available to them, loads of options and we hoped there'd be similar with this which is why we got back in touch with them as we had such good vibes off them, only to find out they're pushing only one product?
    You mentioned that the adviser seemed better with your mortgage. But there are a few factors there.

    One is that a mortgage involves large amounts of money. For example, borrow £200k for a house, pay it back over 25 years costs £350k, it can be well worth getting a professional to help you source a better deal if you have bad or complex creditworthiness affairs, or simply don't have a lot of time to shop around or don't know where to start. On many tens or hundreds of thousands of pounds, the value you get from advice can be substantial. For your pension, you don't have many tens or hundreds of thousands of pounds.

    The other is that picking a mortgage from a limited pool of lenders is something that you can narrow down to a shortlist and then point at that list on screen and agree which one is the cheapest or most sensible without too much trouble once the advisor has identified your chance of acceptance based on their fact find. Whereas investing involves a lot of opinion and subjectivity, and even once you have identified which company to go with there are still a massive set of permutations of what funds could be held in that product depending on your target returns and your acceptance of risk. So if the advisor 'showed you all that was available to them' it would be 30,000 investment options which could all be held in different proportions resulting in near infinite possibilities.

    So, investment and pensions advice is complex, and expensive, and quite possibly too expensive for your level of assets and income. Treading the right financial path to retirement is important, but we don't all buy professional advice for our pensions just like we don't all buy sports cars (even if travelling from one place to another quickly and safely and comfortably might be important). The richer people might be more likely to buy sports cars because they can afford it. Some of the less rich people might just learn to DIY and build a kit car rather than an expensive one. Or buy something standard 'off the shelf' rather than going to the museum of automobile exotica where all the cars have interesting customisation and the salesmen will try to convince you why their offering is the best.

    Your best bet if your finances mean you're struggling to put together £10k of initial investment and more than a few hundred a month, is either going to be to 'DIY' with a standard personal pension offering from one of the major suppliers or just put it in your workplace pension. Your chance of getting a good result with the options inside your Now or Nest pension will improve if you research and understand it more. At £10k, the IFA or SJP FA would only be using a very simple and straightforward solution with you. So, paying 5% initial and an ongoing monitoring fee etc is going to be hard to justify, because really all you are paying them to do is not make a complete clanger of a decision and avoid the scenario where you go direct to a mainstream provider, self-select and end up selecting something stupid.

    Certainly the workplace pensions from Now and Nest will make it hard to select something 'stupid' because they don't have hundreds or thousands of options. Their standard middle of the road options might not be as good as the things you can find elsewhere but you would still have your money at work in the investment markets.


    If she was to go to an IFA herself, what questions should she be asking?
    The questions you suggested for your wife to ask are fine. For people with more complex affairs there is more to ask. Really what you want to do is get the IFA to explain why at your level of money to invest (i.e. low) it is worth paying for advice and how the costs of doing that will impact the overall returns compared to just using workplace. Personally I'd think it's only likely to be worth buying advice if there is a risk that you would make a really silly choice in your workplace one and you need to be set on the right path.

    I would instead try to learn more about investing concepts and just DIY it. But DIYing it with £10,000 doesn't mean learning how to build a ten-fund portfolio that you construct yourself. It just means making some basic sense of the different 'one-fund, mixed asset solution' choices available, in terms of how they work and what they invest in.
    Last edited by bowlhead99; 18-05-2017 at 7:16 AM.
    • Not Me Officer
    • By Not Me Officer 18th May 17, 10:09 PM
    • 208 Posts
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    Not Me Officer
    SJP do not retail their products via IFAs. Mainly as an IFA wouldn't recommend SJP products as they are damned expensive and easily improved upon elsewhere.
    Originally posted by dunstonh
    Interesting you say that.

    It's been about 4-5 years since we used this IFA for our mortgage. I remember quite clearly back then their website. He had a high role, may have even been director back then also but on "The Team" was listed the boss who the company was named after. The IFA we saw was specifically listed as an IFA. I remember this because back then i remember everything i read said i should speak to an IFA and not just an FA so i was specifically looking for the IFA label.


    However looking closer now, it doesn't actually state IFA at all any more like i thought it did. I can't see it anywhere on their website. The boss (who the company was named after) is not listed on "The Team". The chap we see is in a directory role and if anything it appears he's now the main man so i wonder if he's bought it out but kept the name. The IFA (or FA) we were seeing actually is no longer listed on "The Team" at all. Other staff are except for him. I can find an about me section on the website just from googling his name.


    So it certainly appears you may be right - he's no longer an IFA.
    • Not Me Officer
    • By Not Me Officer 18th May 17, 10:38 PM
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    Not Me Officer
    bowlhead99 - jeez where do i start. Firstly thanks a lot for your detailed response.

    I appreciate our deposit is not 'a lot'. It may be to us but i understand in the grand scheme of things it's pennies. Although it does make me wonder ..... when does not a lot cease being not a lot, not worth it & start to become a lot and worth it?

    the 4.5% initial fee is a veritable bargain
    You talk of £200k vs £10k. You'll have to explain this one to me.
    4.5% is 4.5% whether it's of £200k, £10k or 10p it's the same thing. So as i try to make sense of all of this & gather information so i can make a decision, i'm seeing post after post saying SJP are costly but then you seem to say they're a bargain?

    Now this is honestly without sarcasm, i must've misunderstood somewhere but they can't be costly and then a bargain so i must've misunderstood. Maybe when people say they're costly they're not talking about the 4.5% part?

    You mention you walked away from another IFA because you didn't feel he was listening to you and what you were looking for. Likely the reason for that is that he is not going to be able to spend any real time putting together a proper customised solution for you,
    Maybe so but when i walked in there asking to start a pension and then he told me a pension is no good to me i should save in a SS ISA i'd say that's not listening. I still think a pension is better for me. We went with him anyway because we knew we needed to start putting aside.

    Then we mentioned increasing our exposure to risk as we became more comfortable than we initially were with investing and he just plain ignored it and put us on a risk 2-3 of a slider scale of 1-10 as far as risk went. I was looking at somewhere around 6-8 on that scale. I'd say 2-3 was very cautious. After this we left him.

    unless it is an add-on to an existing customer or family relationship,
    I guess this is why he was/is entertaining us - we are existing customers of his.




    As for the DIY approach. I can do all the reading in the world but i don't know what funds to select really and more importantly i don't know when to switch from them to something else. Like say a chocoholic having 3000 different chocs to choose from & being told they can only select 3. How do they choose?

    I went on to Hargreaves Lansdown website earlier & i saw they have ready made portfolios. That helps someone like me a lot who doesn't know where to begin. However i know there's going to be two likely issues:
    1) I know people on this forum say HL are costly (so that pans that choice instantly)
    2) I'm sure people will poo-poo the selection HL gave.

    It was this...



    I have no idea whether that's good, bad, ok or what. Probably better than what i could do myself. I'd guess that many here would say it's ok but not great.


    The other point i raised though was knowing when to move. With a bank account you move when the rate drops & when there's something with a higher rate - real simple.
    Let's say i bought into the above screenshot. I wouldn't know when it was time to move from that or not. If it kept dropping then that's when people say it's time to buy right? "Buy low" but when to move? I certainly don't know.

    I asked a relative of mine who is actually with HL if they could screenshot me their portfolio for this post here.
    They didn't go to an IFA, they went DIY like i feel i'm sort of being advised here (until my pot gets bigger at least).
    Like me they didn't have a clue & they say they still don't have a clue but unlike me they had the confidence to go out and just select and see what happens. They did it blindly. Nothing guided them to any of the funds really. They hopped on HL and did a mixture of seeing what was doing well at that time and also the 150 fund list and made a bit of a selection from there at the time.

    Though they don't know when it's time to move on from the funds so they've just stuck with them throughout (6 years).



    I asked them why the two Standard Life ones at the bottom which seem so similar. They said it's because when they invested one month they must have selected the wrong Standard Life fund in error, meaning to select the one they had previously invested in.

    They have no idea how diversified it is, whether it is low medium or high risk on the whole, whether any fund is individually low medium or high. They invest monthly at random. They see how much they have to put over that month & they spread the amount around their portfolio at random. One (existing) fund could be selected just as easy as the next one.


    And that is exactly how it would be for me. I could read the websites, the books etc but it doesn't necessarily mean i'm going to know what i'm doing. Like i say, i would be exactly like they are. The only difference is they were happy to just give it a go on their own & see what happens.

    Oh and i did ask why all the accumulation, they said that any money it generates they want it staying within the pot. It's all for retirement. They think when it says "income" that it's for a here & now income to take out of the pot which they don't want to do.
    • AlanP
    • By AlanP 19th May 17, 1:50 PM
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    AlanP
    Don't worry Not Me Officer, you are not alone in struggling to get your head around all this as you start out.

    First things first - Are either of you Higher Rate taxpayers, or will you be in the foreseeable future?

    Pensions become more attractive than a S&S ISA if you are as HMRC gives you back the tax you have paid on your pension invested salary.

    For example if you are a BR taxpayer and put £400 of your own money into a pension each month whoever you use will ask HMRC for an extra £100 on your behalf to make it up to £500 in your pension pot.

    If you are a HR taxpayer that same thing happens but in addition you ask HMRC to adjust your Tax Code to reclaim the extra tax you have paid on that pension deposit.

    So you don't pay tax on a pension as you put the money in but you do pay tax when you draw on your pension in later years subject to whatever "No Tax" income level is in place at the time i.e. your Personal Allowance which forms part of your Tax Code.

    The majority of people, even if they are a HR taxpayer whilst working, will be either a non-taxpayer or a BR tax payer in retirement.

    So thinking that through a HR tax payer contributes to a pension and gets 40% tax relief on the way in, when they retire and only pay BR tax they 20% on the way out.

    If you pay gain 20% on the way in and pay 20% on the way out then there is less benefit to using a pension as a savings vehicle and this may be why the other IFA suggested a S&S ISA as the outcome would be broadly the same in monetary terms, ignoring for now what can be taken from a pension tax free (25% of the pot value) but with more flexibility.

    For example you could "retire" at 45/50 and take money out of the ISA to live on, with a Pension you can't access it until ~55+.

    Additionally you could, if you were fortunate enough to become a HR taxpayer in a few years time, move out of the ISA into the Pension and get the higher tax relief benefit a mentioned above.

    If this was his thinking he certainly could have explained it better to you.

    As for choosing Funds etc - Keep It Simple and DO NOT move in and out very often (if at all in the early years at least).

    None of us actually KNOW when is a good time to sell Tesco and buy Amazon at the individual share level, equally we do not KNOW when it is a good time to sell Fund A and buy Fund B instead. We all have opinions but that is all.

    Instead do some research - and that applies whether you DIY, use an IFA or use SJP - so that you have more understanding around the terminology and the principles involved.

    The more you understand the better informed your decisions will be. You may decide that, even after increasing your level of understanding, you would prefer to get someone else to make recommendations to you on what to do specifically which is fine. However you will hopefully know enough to look and listen to what is offer and think does it "feel / look" right?

    I'm not a car mechanic or a car salesman but I know enough to make a reasonably informed decision when I buy a replacement 2nd hand car and can interpret what the nice man in the garage is telling me.

    Have a browse through the monevator.com website, particularly the Investing for Beginners series of articles and start the research there. The Open University run an online Intro course as well which again will help.
    • MonroeM
    • By MonroeM 19th May 17, 2:21 PM
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    MonroeM
    I know SJP are very expensive and only sell their own products but I do know a few well educated and professional people that use them (including my sister) and they more than happy with the results.

    My sister knows I am currently very interested in researching funds etc for my own investments so she has shown me her pension portfolio and the performance of her funds and I have to say they seem impressive. She holds Global Managed, UK Equity (Neil Woodford), International Equity, SJP North American, Greater European and the SJP property fund in her pension portfolio.

    Expensive funds are not the best however if some people are happy with the results and service then SJP must be doing something right.
    • dunstonh
    • By dunstonh 19th May 17, 2:42 PM
    • 88,105 Posts
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    dunstonh
    I know SJP are very expensive and only sell their own products but I do know a few well educated and professional people that use them (including my sister) and they more than happy with the results.
    SJP have a reputation for being very slick and professional. Their documentation is glossy and that can be powerful.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
    • ColdIron
    • By ColdIron 19th May 17, 4:57 PM
    • 3,157 Posts
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    ColdIron
    Nothing wrong with their funds as I say, it's the charges. Heinz Baked Beans taste just as good whether you buy them from Harrods or CostCo
    • StellaN
    • By StellaN 19th May 17, 8:37 PM
    • 139 Posts
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    StellaN
    Nothing wrong with their funds as I say, it's the charges. Heinz Baked Beans taste just as good whether you buy them from Harrods or CostCo
    Originally posted by ColdIron
    Yes,I've just looked at the performance of the Global, North American, International Equity and Greater European funds and I've been very surprised! That also takes into account the absurd charges but they are good funds that seem to work well.
    • Not Me Officer
    • By Not Me Officer 19th May 17, 9:50 PM
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    Not Me Officer
    AlanP

    First things first - Are either of you Higher Rate taxpayers, or will you be in the foreseeable future?
    No we are not and unless the threshold gets drastically lowered then we never will be. We both earn around the £20k gross area.


    We were thinking more of a pension over a SS ISA for a few reasons.
    The fact that some benefits being means tested & your ISA would get included in this but a pension not. Right now we don't claim benefits but who knows what tomorrow brings?
    Also the fact that the ISA is just there in one lump whereas the pension is like a wage (so you can't blow it all in one). Not that we will blow it or will want to but that the preference of both of us would be to have it drip fed to us and not just all in one lump.
    Also with it being in a pension it's locked away until we're 55 minimum (unless that ever changes). There may be temptation to dip into it in an ISA. Not that i think we will be tempted but it's possible and we'd rather that not be an option.

    and this may be why the other IFA suggested a S&S ISA
    He suggested an ISA because we were buying our house. He said we may need the money. I told him time and time again that it will not be used for the house deposit no matter what. It's retirement money, not house money & that will not change. He kept insisting though. It was quite irritating but i guess the bloke didn't know me & therefore didn't know that when i say i mean something then i mean it!

    We never touched the money.

    Also then later when we asked to increase risk he just didn't.


    I do appreciate that nobody knows when to buy/sell. However going DIY i would select some funds, probably based on a HL pre-set portfolio based on risk. Once they are set then i would just stay with them .... forever. With money going up i would think great i'm making it. Then when the money goes down i'd be thinking ok well buy low they say and i'd just stay with it.

    Whereas others would have a 'feel' of when they need to look at moving/selling. I wouldn't have that 'feel'.

    But go DIY they say. What harm can you do with small amounts they say.
    I don't really have a clue what i'm doing even after reading i say.
    • StellaN
    • By StellaN 19th May 17, 10:29 PM
    • 139 Posts
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    StellaN
    Nothing wrong with their funds as I say, it's the charges. Heinz Baked Beans taste just as good whether you buy them from Harrods or CostCo
    Originally posted by ColdIron
    OK, but at the end of the day if customers are willing to pay the excessive charges but are happy with the overall performance then why should we criticise?
    • Eco Miser
    • By Eco Miser 20th May 17, 12:46 AM
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    Eco Miser
    Also the fact that the ISA is just there in one lump whereas the pension is like a wage (so you can't blow it all in one).
    Originally posted by Not Me Officer
    Did you miss the "Lamborghini option" now available with pensions? It's possible to take the lot at once if you really want to. (Not sensible, as there will be a lot of tax to pay, but possible.)

    Meanwhile my ISA is drip feeding me a nice supplement to my pensions from the natural income, while still growing in value (neither actually guaranteed).
    Eco Miser
    Saving money for well over half a century
    • bigadaj
    • By bigadaj 20th May 17, 7:09 AM
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    bigadaj
    OK, but at the end of the day if customers are willing to pay the excessive charges but are happy with the overall performance then why should we criticise?
    Originally posted by StellaN
    Because they are making themselves less well off through ignorance. You can lead a horse to water and people can make their own chances but it still doesn't mean those are the right choices.

    High charges can be masked, for example over the last year a very average equity heavy portfolio may well have increased by 25% or so in sterling terms; many people are still ignorant of this and don't see it's just a devaluation really, particularly of sterling but in effect if all currencies. On that sort of growth people don't mind paying an extra 1% annually and even the outdated and significant 5% initial charges can be absorbed.

    However over the longer term, with an incredibly low interest rate environment then the likelihood is that stock market returns will revert to long term trends, so a few per cent year plus a similar amount in dividends, and 2% effective charges on a portfolio making 5-6% per year, and obviously losing money in certain years, may make the excessive charges a little more obvious and unpalatable.
    • Not Me Officer
    • By Not Me Officer 20th May 17, 10:06 PM
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    Not Me Officer
    Did you miss the "Lamborghini option" now available with pensions? It's possible to take the lot at once if you really want to. (Not sensible, as there will be a lot of tax to pay, but possible.)

    Meanwhile my ISA is drip feeding me a nice supplement to my pensions from the natural income, while still growing in value (neither actually guaranteed).
    Originally posted by Eco Miser
    I'm aware you can take the lot at once but it's a little different isn't it.

    To word it another way, pensions give the option to pay out as a monthly wage whereas unless i've misunderstood ISAs, they don't.
    • bigadaj
    • By bigadaj 21st May 17, 12:02 AM
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    bigadaj
    I'm aware you can take the lot at once but it's a little different isn't it.

    To word it another way, pensions give the option to pay out as a monthly wage whereas unless i've misunderstood ISAs, they don't.
    Originally posted by Not Me Officer
    You can arrange to oay a monthly sum from any isa, whether that be from income, growth or capital or any combination.
    • greenglide
    • By greenglide 21st May 17, 10:53 AM
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    greenglide
    In many ways it is easier from a S&S ISA than it is for a pension.

    I dont recall having seen a cash ISA that lets you set up a regular payment but I could be wrong!
    • Not Me Officer
    • By Not Me Officer 21st May 17, 6:50 PM
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    Not Me Officer
    You can arrange to oay a monthly sum from any isa, whether that be from income, growth or capital or any combination.
    Originally posted by bigadaj
    I wasn't aware of that one. Thanks.

    So to those challenging my last couple posts, why should/would i take out a S&S ISA over a pension (or even a pension over a S&S ISA) then?

    There's still the benefits thing which i haven't seen challenged yet.

    I know benefits is a sore topic for many. No i'm not on any & no i don't see myself as being a benefit bum, however one day i may end up in the position where i have to or am eligible to claim means tested benefits for one reason or another (basically nobody knows what tomorrow may bring and if there's little difference between S&S ISA and pensions up to that point....)
    • sandsy
    • By sandsy 21st May 17, 7:15 PM
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    sandsy
    Yes,I've just looked at the performance of the Global, North American, International Equity and Greater European funds and I've been very surprised! That also takes into account the absurd charges but they are good funds that seem to work well.
    Originally posted by StellaN
    The fund pricing takes into account the fund charges - but SJP levy a bucket load of charges on top of that which isn't reflected in the price of the units.

    Every charge levied by SJP which is higher than from a competitor means the SJP returns have to be higher than from a competitor for the same outcome.
    • bigadaj
    • By bigadaj 21st May 17, 9:21 PM
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    bigadaj
    I wasn't aware of that one. Thanks.

    So to those challenging my last couple posts, why should/would i take out a S&S ISA over a pension (or even a pension over a S&S ISA) then?

    There's still the benefits thing which i haven't seen challenged yet.

    I know benefits is a sore topic for many. No i'm not on any & no i don't see myself as being a benefit bum, however one day i may end up in the position where i have to or am eligible to claim means tested benefits for one reason or another (basically nobody knows what tomorrow may bring and if there's little difference between S&S ISA and pensions up to that point....)
    Originally posted by Not Me Officer
    Different solutions for different problems.

    Pensions are locked up until 55, you get tax relief on contributions but payments from them above the tfls are taxable. Don't forget that teh rules around pensions have changed radically in the last ten years, they were very much more restrictive until quite recently.

    Isas will allow access, no tax relief but they grow and be laid out tax free.

    For many people the means tested benefits thing will be a little irrelevant, you can of course put yourself into a position of claiming benefits and have a large pension pot locked away but that doesn't seem to be a pleasant or even sensible way of living your life.
    • Not Me Officer
    • By Not Me Officer 21st May 17, 9:56 PM
    • 208 Posts
    • 22 Thanks
    Not Me Officer
    Different solutions for different problems.

    Pensions are locked up until 55, you get tax relief on contributions but payments from them above the tfls are taxable. Don't forget that teh rules around pensions have changed radically in the last ten years, they were very much more restrictive until quite recently.

    Isas will allow access, no tax relief but they grow and be laid out tax free.

    For many people the means tested benefits thing will be a little irrelevant, you can of course put yourself into a position of claiming benefits and have a large pension pot locked away but that doesn't seem to be a pleasant or even sensible way of living your life.
    Originally posted by bigadaj
    I agree (last statement).
    I'm quite prepared to be shown the right direction as i don't pretend to know the ins and outs of this. On that note the way i'm looking at it is that my mother for example never used to be on benefits other than any child related benefits (not sure if they are means tested). She worked since she was 15.
    Then in time she became unable to work and now claims benefits related to this.

    So rewind x-years and she'd have never seen it coming but it's happened.

    Now as far as i understand it, and since she had to declare all her savings (no problem) if her 'retirement savings' were in an ISA then this would then impact on her benefits whereas if they were in a pension then they wouldn't. Correct?
    Also in the grand scheme of things there's little difference between the two right? Aside from the being able to access ISAs and not pensions etc. When i say little difference i mean you can invest in the same things, shift what you're invested in over time so on & so forth. ISAs you get taxed on the way in and pensions on the way out. So as far as making money goes there's little difference. It's not like ... if you invest in a pension/ISA then that will earn more, work harder than the ISA/pension is it.

    So in her case it would be better to have been in a pension than an ISA (she's actually in neither tbh but just for arguments sake let's assume she was...) right?
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