Vanguard Life Strategy

gterr

badger09 wrote: »

Or a new dishwasher

Yes, you're right, as usual. And given at least 10 years to invest, I suppose it makes sense not to waste it.

Its just that there seem to be so many rules around Flexible Drawdown, and my head is already hurting from S&S ISAs, AMCs & TERs, platform charges, balanced portfolios, pound cost averaging etc etc. :eek: More reading required!

I must admit that I had discounted starting a SIPP, because both myself and husband will just about use up our tax allowances with bits and pieces of occupational pensions plus current part time work (which will be replaced by state pensions later). There's no way we'd be able to reach the £20,000 income (I presume that would be each, rather than for a couple) so we would not be able to have flexible drawdown. For this reason I had planned to stick with S&S ISA contributions.

We have a lump sum of approx 150k coming next November, and I'd planned to put it into a S&S account and then move the max to S&S ISAs for each of us each year, taking a modest income initially from the unwrapped S&S account and later the ISAs.

Should I think again about SIPPs?

grey_gym_sock

well, if it's 20% tax relief on the way in, and 20% tax on the way out, then the gain is just from the tax free lump sum. it's a 6.25% boost. (100 * 80% = 80 in; 25 + 75 * 80% = 85 out.)

if you want to stay invested, you'd have to use capped drawdown. the charges for that can be a bit high, so there may be minimum pot size for which they'd make sense.

jamesd

The £20,000 is per person, not combined.

If you're after income, yes, you should think about SIPP use. It's more efficient by that 6.25% at basic rate. More than that if you pay higher rate tax now and basic rate in retirement, or if you can pay in by salary sacrifice.

You might find it best to make pension contributions first then use capped drawdown to get you the money to put into the ISAs. Just take the maximum permitted pension income because you'll be shifting the part you don't need into the ISA rather than spending it.

You do need to consider what capital you might need. It's perhaps also worth noting that a 75 year old can get a level annuity at 8.2% of capital value. If you needed £10,000 of income to get to flexible drawdown that would cost £122,000 if in good health. Less as you get older, so while flexible drawdown may not be achievable today or ever for you, for some it may just be a matter of time before an annuity becomes inexpensive enough to make it doable.

For the lower cost providers all it takes is ten thousand or so for the capped drawdown costs to be reasonable. £75 every three years for a GAD calculation isn't particularly costly.

gterr

jamesd wrote: »

For the lower cost providers all it takes is ten thousand or so for the capped drawdown costs to be reasonable. £75 every three years for a GAD calculation isn't particularly costly.

Thanks. Neither of us have a SIPP at present, and are basic rate tax payers and will remain so. (In fact, we may just fall out of tax when the new allowances come in.) We are moving into retirement now. I already just have a little occupational pension income plus a disability benefit. Husband has part time low paid work, but will quit this within the next two years. So, we'd be probably only be looking at the £3600 per year SIPP investment and wanting to start taking an income (from somewhere: SIPP, S&S fund) pretty much straight away. Would the costs make sense for us? This lump sum coming in November has to work really hard for us!

Maybe it would be possible to invest £3600 per year into a SIPP for a few years whilst we are moving the lump sum into S&S ISAs, and take the income from the unwrapped meanwhile. I'd have to do the calcs but maybe we could invest in SIPPS for about 6 or 7 years, just possibly longer, this way before taking capped drawdown. Worth it?

(Sorry: seem to have diverted this thread: Perhaps I should move it to a fresh one?)

eaustin

I have just come across this thread, I am considering using the balance of my current ISA allowance and employ a passive investment strategy. I am considering a Vanguard LifeStrategy equity fund.

I am not sure whether I should use part or all of my remaining allowance. From 1 April I am considering drip-feeding into a fund. Is the difference between the acc and inc fund that in the acc fund dividends are re-invested whereas with the inc fund any dividends would be paid in cash?

I currently have funds invested via BestInvest so I assume this would be the best platform for me to purchase additional funds. Does anyone know whether I can have my BestInvest account as a joint account or would my OH have to open a separate account to invest their funds?

gadgetmind

eaustin wrote: »

Is the difference between the acc and inc fund that in the acc fund dividends are re-invested whereas with the inc fund any dividends would be paid in cash?

Yes. There isn't much difference when holding within an ISA so it's just down to where you want the income flow to go.

I currently have funds invested via BestInvest so I assume this would be the best platform for me to purchase additional funds.

BestInvest charge £60pa to hold any Vanguard trackers or equities. This is a flat fee per account. Other providers have different fee structures so it's down to pot size and/or the number of trackers you want to hold. Hargeaves Lansdown are pretty good for a single LS tracker at £24pa.

Does anyone know whether I can have my BestInvest account as a joint account or would my OH have to open a separate account to invest their funds?

All ISAs are individual and there is no such thing as a joint ISA.

blizeH

Both my girlfriend and I have ISAs exclusively with the Vanguard Lifestrategy fund now (me at 80% equity, her at 60%) - I'm a little worried about putting all of our eggs into one basket so to speak, so am considering splitting my money between two funds... can anyone recommend something good to complement the LS accounts?

Or are they really that good and it's okay for us both to exclusively put our S&S ISA money into this fund? Thanks

eaustin

gadgetmind wrote: »

All ISAs are individual and there is no such thing as a joint ISA.

Thanks. I know there is no such thing as a joint ISA. My question, badly phrased, was whether me and my OH can have separate ISAs within a joint account with BestInvest or whether we would need to have separate accounts with BestInvest.

gadgetmind

Separate accounts at BestInvest is the only option that I know of. You can however link the accounts both to make seeing everything easier and to also benefit from the low fees and bigger rebate by pooling what you have on the platform.

eaustin

gadgetmind wrote: »

Separate accounts at BestInvest is the only option that I know of. You can however link the accounts both to make seeing everything easier and to also benefit from the low fees and bigger rebate by pooling what you have on the platform.

Thanks Gadget - most helpful.