Warning re Stakeholders/Personal Pension vs SIPPS

deemy2004

oceanblue wrote:

You may be right; however, most of my clients would not even understand what "Time Tells Trend ! Fx Trader Extraordinaire" means, let alone choose to use it as a postscript!

LOL... but they have nothing .... okay hardly nothing to do with 'INVESTING' in shares, IT's and Index Linked Bonds.....

cheerfulcat

deemy2004 wrote:

Yeh

How hard is it ?

If the market goes up and your portfolio goes down then you need to take a look to see why and make changes.

If the market goes down and your portfolio goes up then you don't need to bother with anything.

If the market goes up and your port goes up similar amount or more then do nothing.

If the market goes down and your port goes down similar or less then do nothing.

Not rocket science.

In scenarios one and two you are describing a portfolio with a negative correlation to the market. Why do you need to make changes in scenario one ( market up, porty down ) but not in scenario two ( market down, porty up )? It is the natural behavior of a bearish portfolio...

oceanblue wrote:

Running a Self-Invested Personal Pension is a complex area of financial planning; it needs careful attention and regular maintenance. If you feel you are up to it, great...just don't let EdInvestor's simplistic analysis deceive you into thinking that it's anything like switching credit card balances every six months.

I would say that it can be just as simple or complex as the investor wants it to be. Switching credit card balances every six months sounds like a nightmare to me, btw, whereas keeping a weather eye on my investments, including asset/sector balancing is a doddle; horses for courses, perhaps?


Regards

Cheerfulcat

EdInvestor

Even if your portfolio is mainly invested in equities, it depends entirely on the strategy you use as to how much time or monitoring your SIPP takes. I have a "no tinkering" High Yield Portfolio or shares, so I never do anything at all, it's very relaxing

Not only that, because I do virtually nothing, I pay virtually no charges. Even better

Any "Long Term Buy and Hold" portfolio, by its very nature is a non-trading strategy and thus will not take up much time.

BTW quite a good article
here in the Indy today looking beyond all the hype of property in SIPPS now stopped, and focussing on their main value - the opportunity to get your pension out of the grip of the !!!!!! lifeco funds and into good performing investments at low cost.

deemy2004

cheerfulcat wrote:

In scenarios one and two you are describing a portfolio with a negative correlation to the market. Why do you need to make changes in scenario one ( market up, porty down ) but not in scenario two ( market down, porty up )? It is the natural behavior of a bearish portfolio...

No its NOT !

Its indicative of being in the right sectors which outperform the market as a whole. - And I was referring to market changes on a day to day basis. i.e. a quick check on making sure things are going okay.

As an aside, may I ask why you sometimes refer to Ed as female? You seem to use it as an insult...be careful how you answer :-)

Regards

Cheerfulcat

Eh ? - Youve lost me ?.... where have I referred to Ed as a female.. and NO I have NOT insulted Ed by design or error ... so no divide and rule please

cheerfulcat

Deemy, my other remarks were meant for oceanblue. Sorry for any misunderstanding; I will make it clearer.

ReportInvestor

Here we go again. Another newspaper pushing SIPPs for the average Jo(sephine) .

David Prosser, Personal Finance editor of the Independent

"....A £1,000 investment made five years ago in the average UK stock market-invested personal pension fund is today worth £919 - the money would have been worth £1,010 had it been invested directly in the stock market.

Most pension savers have no idea how badly their money is being invested. Pension fund performance statistics are only ever published in specialist publications, and while insurers must provide regular updates, savers have no way of knowing whether or not they are getting good value.

From April, however, almost all savers will have access to low-cost Sipps, as the pension simplification rules make it easier for providers to offer the plans. The big advantage of Sipps is that savers are not restricted to the funds run by the insurer administering the plans. Instead, you can opt for your contributions to go into mainstream unit and investment trusts.

There is nothing magical about these funds. But crucially, the unit and investment trust industries are far more transparent - performance statistics are now published in every national newspaper.

Also, competition in this industry is much fiercer. As a result, average performance is better - £1,000 invested in the typical unit trust five years ago is now worth £972, almost 6 per cent more than the average pension fund....."

dunstonh

"....A £1,000 investment made five years ago in the average UK stock market-invested personal pension fund is today worth £919 - the money would have been worth £1,010 had it been invested directly in the stock market.

Complete and utter rubbish. What he would be better doing is comparing like for like. Compare, for example, Jupiter Income Trust as a pension fund with a provider (inc charges) against the same fund as a unit trust fund (inc charges). Of course, most of these funds weren't available 5 years ago so its an easy headline for him to make.

Comparing a typical equity fund from 5 years ago with a pension does against a unit trust does not take into account the changes with pension funds in the last few years.

from article.... Pick the right funds and you can really outperform. The best pension fund is at just £1,263 over five years, compared to the £1,836 generated by Rathbone UK Special Situations, the top unit trust.

That isnt the best pension fund over 5 years. We have to assume he limited his options to UK all companies, otherwise eastern european funds would be there. In which case Winterthur Fidelity Special Sits was best pension fund over 5 years with £1842.

Either he has picked balanced managed sector on pensions against UK All companies sector on unit trusts or he has eliminated all personal pension funds and just looked at stakeholder pension funds.

from article...Who knows what savers might have earned from property held in a pension,fine wine or art.

All of which have done well over 5 years. Go back longer and stockmarket comes back as top. Notice no mention of classic cars. Probably as classic cars suffered a price crash some years back. Funny how the papers can be selective in picking sectors that are in growth. Everything is subject to a price crash. Property is due one, or at least limited growth in future. Art is subjective on values and wine is subject to demand and desirability. Nothing is guaranteed. I would love to see 1990s figures for those things. Property would be a big loser.

ReportInvestor

You make some valid points, but the fact remains that over £100bn of pension money is in the sort of underperforming balanced managed funds that you believe he is using for comparison.

Sunday Times - August 2004

So it's hardly surprising that journalists are pleased to recommend a new approach like SIPPs to their readers.

How did so much money in the past get to high charge, underperforming funds? Thank goodness that 2/3 of life & pension business these days is through IFAs .

EdInvestor

From the link - The Allied Dunbar Balanced Managed fund dominates the sector at more than £10 billion.

How utterly pathetic. The non-performing balanced managed fund at Allied Crowbar (famous for its swingeing charges)is double the size of Fidelity Special Situations, which for many years has been the best performing fund in the UK.

Isn't it obvious why people are so utterly fed up?

al_yrpal

oceanblue wrote:

I agree with what you say, Deemy, but, for most of my clients, retirement means holidays, helping children/grandchildren, gardening, holidays (they like holidays!) They don't want to spend time managing their investments

Blimey, I'm (nearly) typical! With just that list, I would feel superfluous, and ready to be put down.

Managing my investments personally, is very interesting and rewarding, although I do agree that lots of people are scared of it.

I got fed up with this board, where you can't discuss investments and learn. Am now registered at 'the Fool' learning lots.