Fund of Funds help

zutman

I have been looking at my pension plans i have and am looking at some advice as to move the 45k fund into a sipps and if i can put it into fund of funds or a tracker, dont know much about it yet thought i would start here, in a few years or so i will start to top these pensions up, or would it be best to just save in a cash isa i dont mind med risk

Thanks

Pete

jimjames

You might want to give a bit more info - like how far you are from retirement and how this fits into other plans/investments you have. Saving for a pension in a cash ISA is unlikely to give a good retirement when the rate is less than inflation.

zutman

I am 43 and now worrying about later years, I am and have been self employed for the last 25 years, my wife and I have small stakeholder pensions that we have not paid into for a while because of lack of funds, I have 1 worth 35k (Scottish widows contract in)and 1 worth 3k (NPI contract in)and my wife 10k(Scottish widows contract in) I realize that we need to start toping up at some point, we decided over the past years rather than save any money we would pay it of our mortgage which we have done and now paid if off (house is worth 300k and was hoping to down grade at retirement to release some cash good or bad idea ?) The question is our pension, do we put our pension funds (or some) in SIPPS as I am interested in self management or leave where they are and top up from there or simply top up in a cash ISA I have spoke to 3 FA and they all gave me different advice, its all getting very confusing, i also have a shares isa with the hsbc i have bought 2 k of shares very high risk but thought i would have a go, i saw fund of funds talked about and was wondering if this may be good for my old pension funds.

Voyager2002

A good rule of thumb is not to invest in anything that you don't understand. The job of an IFA is to make sure that you do understand the various options they suggest for you, so maybe the ones you saw were too focused on selling rather than explaining. You might consider paying an IFA a fee to explain things, rather than a "free" meeting, which of course is paid for by means of commission that the IFA gets on any products they sell you.

As for the house: yes, it sounds sensible to move from a larger to a smaller house once the family have grown up and left home, and smaller houses are generally cheaper than larger houses so there should be a chunk of money left over to help with living costs in retirement. Do be careful, however, since the population in general is ageing and so there might be less demand for larger houses then than there is now, so family houses might not be worth as much as you expect.

You might care to post again with a less specific subject. You want advice and opinions about planning a pension when you are self-employed, rather than a discussion about a Fund of Funds.

dunstonh

I have spoke to 3 FA and they all gave me different advice, its all getting very confusing

Investing is about opinion. So, you will get different advice. Also, the type of service you want and the type of client you are will change that. For example, a lazy investor or inexperienced investor is better off with portfolio funds like fund of funds. Whereas an active investor or experienced investor will usually prefer a more hands on approach whether they do that themselves or use the IFA to do it.

If you have had only the initial free meeting then I am surprised that any real data has been issued. Until you do a pensions analysis, see who comes out cheapest and has the options you want, you can never tell which provider is going to be best. You have a fair idea of the usual suspects but you wouldn't give any formal advice until you have done the research.

zutman

thanks for your reply, i do agree with the ft advice and i may well pay to get advice as you say, but our frozen pension pot of 40k ish, i am going to look into setting up a sipps account and do some reasearch over the next few weeks as to the best way to invest this money and top it up when the funds allow, i spoke about funds of funds because i think they are a bit less risky and this will at least get me started can you also give me any pointers as to the best not the cheapest sipps site i can use ??

thanks

dunstonh

i spoke about funds of funds because i think they are a bit less risky

Fund of funds are not more or less risky. You get cautious versions, medium risk or adventurous ones. Fund of funds just indicates a type of fund. Not the risk level of that fund.

can you also give me any pointers as to the best not the cheapest sipps site i can use ??

Not really. What an IFA would use will likely be different to the DIY market. Plus, I personally dont rate SIPPs for most people. A platform based personal pension so often ends up the best option, both in cost and options. Unless you want direct investments, then a SIPP can be an expensive folly.

jimjames

I use Hargreaves Lansdown for my SIPP and find their charges to be excellent. I'm not sure about others but the SIPP charges are no different to their ISA offering in most instances. From the experience I've had with personal pensions I've never been offered one with lower charges than HL but Dunstonh may know of other companies offering good deals.

dunstonh

I'm not sure about others but the SIPP charges are no different to their ISA offering in most instances.

THey are with HL. HL dont rebate any trail on the SIPP. They do on the ISA.

From the experience I've had with personal pensions I've never been offered one with lower charges than HL but Dunstonh may know of other companies offering good deals.

Platform based personal pensions tend to match those of SIPPs. They key thing to note with pension contracts is that they illustrate using the TER. Whereas ISAs and unwrapped illustrate using the AMC. So, you need to be careful when comparing dedicated pension funds with unit trusts.

zutman

so i would be better keeping my pension with the scottish widows and top up where i can, as the rate its going to grow is not all that different if i was to move it to say sipps or a managed fund of funds but i know what you are going to say no one known how both funds will grow anyhow

Thanks for your advice i can see a bit clearer i think

dunstonh

so i would be better keeping my pension with the scottish widows and top up where i can, as the rate its going to grow is not all that different if i was to move it to say sipps or a managed fund of funds but i know what you are going to say no one known how both funds will grow anyhow

SW PPP and retirement account are quite good (the latter is better for large values). The stakeholder is basic but that is par for the course with stakeholders. Platform based pensions are increasingly becoming more competitive and offer flexibility that the older style pensions do not.

Many balanced fund of funds or multi-manager funds in SIPPs offer nothing that cannot be achieved cheaper and better in a personal pension, or even some stakeholders. There has become an assumption, due to successful marketing by sipp providers, that SIPPs are cheaper and better. That is not necessarily the case.

We had a poster here some time back that transferred out of Aegon personal pension that was invested in a managed fund which he could get with a TER at 0.6%. He transferred it to HL and used their multi-manager funds with an AMC of 1% (but TER of 1.91%) thinking it was cheaper than what he had and would perform better. He was wrong on both counts. If that had been an advised sale, it would be a mis-sale. However, he fell for the marketing and internet spin that SIPPS and DIY were better. Now, had he used index trackers only or been more proactive with the investments and built a portfolio where the investment flexibility is needed, then that can be a different matter. In those cases you are utilising the features and options that make it better. If you are just going with a multi-manger fund or fund of funds then you are typically wasting your money.