Advice please - my general situation and Vanguard life in particular!

nearlyretired2004

Advice please…. But first apologies for the VERY long post.

As some of you may know from my previous posts, I am now fully retired (very early!..) from 55 (I’m now 57….) and have been part retiredfrom 49.

I have three pensions coming in that exceed my monthly outgoings by circa £550 per month, biggest one final salary index linked, one more occupational which is fixed and a drawdown SIPP. Mortgage 84K on value of about 250K at VERY low rate tied to base rate, so no incentive to pay off.

In addition I have a substantial amount (over 200K), which forhistoric reasons is ALL in cash. (probable move abroad now on indefinite holddue to ill health of mother…..). Over 45K of this is in cash ISA’s.

When interest rates were around 5-6% I was happy to stay in cash, but now feel I should get at least some of my money trying to beat inflation!

I have an IFA and for the first time last year used my S&S ISA allowance and knowing nothing apart from the very basics, took his advice on product and went with SIPPcentre S&S ISA and on his advice split equally as follows :

ABERDEEN EMERGING MARKETS A ACC
BLACKROCK BLK GOLD & GENERAL A ACC
INVESCO FD MNGRS PERP LATIN AMERICA ACC NAV
INVESTEC FUND MGRS UK SMALLER COS A ACC NAV
J P MORGAN NATURAL RESOURCES A ACC

First question - my ISA is at the moment only showing about 3.5% profit - should I not have hoped for more given the performance of the markets over the last year?

I see that for‘small’ amounts such as the basic ISA allowance, most on here would not recommend use of an IFA - I only used him because I was in a wider meeting on my position.

Wanting to now put more into equities, but still not having much more knowledge I have been reading with interest the thread on Vanguard life Strategy.

Would this be a good way to go and would people recommend drip feeding to benefit from (what I believe is called….) time/cost averaging or all at once with the ISA allowance?

(By the way, I have Tim Hales ‘Smarter investing’ on order from the library!!)

Any other suggestions given my situation gratefully received !!

Jegersmart

Hi there

I personally like the funds chosen although if you look at some of the sectors they invest in JPM Nat Res and Blackrock Gold - they have taken a bit of a beating over the past 2 years - so the 3.5% is probably about fair. The book you are about to read is pretty good and also if you find further interest you can get access to some research from banks and other financials where they can give you clues as to the sectors and markets to look at if you so prefer. Lifestyle is good for people who have no interest in making decisions themselves.

J

Neverland

You have some very risky and high cost funds there, no surprise an IFAS recomended those

I would be looking at doing the investment yourself on a low cost platform

You have the right idea about Vanguard's low cost index tracker funds

There are some good UK-centric investment blogs out there like Retirement Investing Today and Monevator that can show you how to build up low cost index linked fund you can manage yourself online

No doubt a whole bunch of independent financial advisers who haunt this board like hyienas looking for scraps will now proceed to advise you otherwise

nearlyretired2004

Thanks both for the useful comments ......

In every other way I've been satisfied with the advice from the IFA ..... would any of the IFA's on here (or anyone else - the more the merrier!!) like to comment on the selection of funds and possible use of Vanguard ( I realise you cant 'advise' on here )

Dunstonh.....?? Aegis....??

As always, thanks for taking the trouble to read and reply........

grey_gym_sock

the funds you're holding are quite specialized - there are less volatile funds available (though volatility is not really the same thing as risk).

are they your only investments? because if you have just these investments, and a much larger pile of cash, then the overall volatility of cash + investments is very low, because the cash provides "ballast", while the funds provide some inflation protection (though they may not be large enough to provide enough inflation protection).

it might be more conventional to go for less specialized, less volatile funds - such as lifestrategy, which is spread around the shares of the biggest companies throughout the world. since that's a far broader investment than the 5 funds (emerging markets & latin america represent a very small % of the total value of quoted companies around the world; gold & natural resources are sectors which cover quite a small % of total value; smaller companies are - by definition! - a smaller % of current value), in theory you could commit a larger sum of money to lifestrategy with similar risk to a smaller investment in the 5 funds. however, if you want to keep most of your cash liquid, that might not be advantageous.

if you did want to add some lifestrategy, but were still keeping a lot of cash free, i'd probably go for the 100% equities option. because the idea of including some bonds (which is what the rest of lifestrategy is when equities are < 100%) is to provide some ballast, and you'd have that with cash anyway.

nearlyretired2004

Thanks all!

Guess these funds were chosen because I had indicated I was prepared to take a bit of 'risk' with a relatively small amount of my cash to try to acheive some growth .....

Grey Gym .... my IFA pointed out to me that my SIPP provides me with some exposuer to the markets .... currently circa £65K. I also have circa 5K in 'direct' shareholdings.

Looks like I may go wth Vanguard with this years allowance. I will re-read the Vanguard thread, but can anybody save me some time and tell me which is the cheapest platform to buy this in an ISA?

And any more comments very welcome ........

jingleberry

I am in a very similar position to you. I retired early and have a pension which is more than enough fortunately. Like you I've accumulated £200K which until recently was all in fixed term cash deposits. I was happy with this because the rates I was receiving were higher than inflation - not anymore! I have £56K maturing in April and I need to do something with it, so I've begun investing in funds- it was quite a wrench having to risk my life savings for the first time.

Earlier this year I put about £12K in M&G corporate bond acc, £7K in Vanguard equity income index acc and £2K in invesco global equity income acc. I've just placed an order tonight to invest in Vanguard 100% equity life strategy acc. I've been using Hargreaves Landsdown - the Vanguard funds each attract £24pa platform fees. The others dont have a platform fee on HL but of course the fund managers AMC is higher. I've also looked at Charles Stanley - they specialise in 'clean' versions of funds where the fund managers AMC is normally less. However Charles Stanley charge 0.25% of the asset value pa, so £25 per £10K invested.

In suummary, for traditional funds that normally levy an AMC of >1% pa Charles Stanley is probably cheaper overall because funds from them will have a lower AMC to set off against the 0.25% platform fee. For low cost and clean funds where Hargreaves Lansdown levies a £24 platform fee, such as Vanguard, Hargreaves Lansdown is probabaly cheaper for investments >£10K because their £24pa fee will stay the same regardless of how much is invested. For smaller amounts Charles Stanley's 0.25% platform fee will be lower than Hargreaves Lansdown

Neverland

nearlyretired2004 wrote: »

Thanks all!

Looks like I may go wth Vanguard with this years allowance. I will re-read the Vanguard thread, but can anybody save me some time and tell me which is the cheapest platform to buy this in an ISA?

And any more comments very welcome ........

Try here:

http://monevator.com/category/investing/passive-investing-investing/