So I'm thinking of starting with a Stakeholder Pension but....

jem16

JuniorSherlock wrote: »

Well yes, I realise that but I figured that a pension is specifically set up for long-term investment and if I chose the right one, would require very little input from me.

A pension is only a tax wrapper, just like a S&S ISA.

What matters are the funds that you choose to place inside. From both the S&S ISA and pension, the choice is identical. If you're going with a fund and forget strategy then you need to choose a suitable fund for that purpose.

But now I'm being told that a Personal Pension may suit more and to be perfectly honest I've no idea what the difference is, if any.

Stakeholder pensions only have a limited choice of funds, all of which are internal. When they first came out stakeholders lowered the costs but nowadays a personal pension can actually work out cheaper so most stakeholders are getting a bit redundant.

All these products sound the same, they all carry risks and yet setting up a Stocks and Shares ISA seems easier than a pension and you don't have anyone suggesting that you consult an IFA for that.

It's no easier or harder to set up a pension or a S&S ISA. Both require you to choose a provider and then to choose funds. For low amounts, it's not really in IFA territory and whilst your total pot is under £20k there's not much you can do wrong. Choose a balanced managed fund or Lifestyling option until you're more confident perhaps.

I would much rather set it all up myself and be £300 better off but as the system is made so complicated, I'd need to be an economics whizz to figure it out. Plus I don't want someone coming here trying to sell different financial products to me (he's already mentioned Life Insurance on the phone), but when you're faced with a bunch of products that all sound the same yet are somehow magically different, then I guess you have to hand over the cash and your trust to someone who for whom the differences are probably abundantly clear.

I am relying on this guy to choose my pension funds for me, rather than trusting myself with my very little knowledge of the shares index, to do it.

Cavendish Online is a good place to start and there are only 5 providers to choose from.

However if you really don't feel confident paying to get started may well be your best choice.

JuniorSherlock

Hey you know, you should be an IFA yourself.

The guy's coming round now so I guess I'll see it through but I wish I had received your advice a little earlier, I might have acted differently.

Lokolo

JuniorSherlock wrote: »

Hey you know, you should be an IFA yourself.

The guy's coming round now so I guess I'll see it through but I wish I had received your advice a little earlier, I might have acted differently.

Well you don't have to sign on the dot there and then, just see what he says, find out what hes like, how much he charges and you can post information and people can give an informed opinion.

JuniorSherlock

Yes, I'll do that although I don't want to give the guy a wasted journey. He has to make a living too I guess. He only gives a free half hour, not sure what happens if he stays longer than that, will he charge by the hour?

I'll certainly post what he says. I might not have a huge amount to invest in a pension but I would appreciate any advice given as I do want to make the most of what I have.

xylophone

http://www.lgps.org.uk/lge/core/page.do?pageId=101781
Have you looked here?

And here is the Cavendish link should you decide to go it alone
http://www.cavendishonline.co.uk/pensions/

jem16

JuniorSherlock wrote: »

Hey you know, you should be an IFA yourself.

Lol! Thank you but I've still a long way to go to equal their knowledge.

The guy's coming round now so I guess I'll see it through but I wish I had received your advice a little earlier, I might have acted differently.

A good idea to see what's on offer but you may have to commit to get anything worthwhile, which is only right.

atush

The things is, you sound like a newbie investor who would panic.

Investments can go down as well as up. If you are scared of this, an IFA who can do a risk assessment for you would be worth the money in your case.

You have to keep whacking money in monthly, and not look too closely during market volatility as it could make you crazy. If you are invested over a wide range of funds, you should be fine in the long run.

JuniorSherlock

Right, update is that the IFA came round.

As the first half hour was free it was very frustrating to have this half hour taken up with a lengthy explanation of what they did, what I should expect, what to do if I have a complaint, how I can still see someone else, etc, etc. So I was into the paying bit and hadn't learnt anything new.

Then we went through my financial situation and I have to say, some of the questions were very personal, such as how healthy we are and if we smoked or drank. He did make an attempt at getting me interested in Life or Critical Illness cover which I declined. I only wanted pension advice and by this point I was getting really frustrated.

The last half hour was taken up with talking about my attitude to risk and pensions. He mentioned the Aviva one and multi-manager schemes which I had already looked at myself and to be honest, I only didn't get one out myself because I thought that someone unacquainted with the finance world, like myself, probably needed something different.

In short, he didn't tell me anything I didn't already know. At the end he explained the charges were £300 or I could pay through the scheme I chose. They would charge me 0.75% and as time went on this could be negotiable.

He telephoned yesterday to suggest a pension scheme by Scottish Widows which is a multi-manager type fund charging 0.9% pa.

I do feel as though actually, I could have saved myself some money by going with the advice on here. It looks quite similar to the Cavendish one. Yes I know he will keep an eye on it for me and do annual reviews but then so would I, after all it's my money invested so I'm bound to.

I was also disappointed to hear that many pension schemes won't accept monthly payments less than £200, so where does that leave the rest of us on low incomes? Having to choose from the dregs as usual I suppose.

I really don't know if getting an IFA was worth it to be totally honest. My attitude to risk is medium. I know that stocks and shares can fall and I know that if they do, you just have to be patient and keep them in there. Over the long run they should do ok, so long as you don't panic. I am not a panicker but obviously when you work hard at a manual job and save every penny, you do get a little light-headed about the thought of investing it and possibly not getting back what you paid in. Money does not come easily to us and we have made many sacrifices to save what we have.

But at least I will soon have some kind of pension in place and even if it just pays out £3k a year when I'm 65, it's better than a slap in the face with a wet kipper.

atush

two things. While you may have been concerned about personal questions, they are VERY important where pensions are concerned. As you get higher rates on annuites if you are a smoker or have a reduced LE. And if you are really at high risk of dying early, an annuity might be something that isn't right for you at all.

Second, you will see rises and falls in your investments, but are VERY unlikely to ever not get back what you put in- for two reasons. One is, that you only put 80 in and get 100 in your pension. AS the other 20 is tax relief. Which means you could see a drop of 20%, which is high, and still not get into negative territory. Then there is the great effects of time. If you go thru a bad period such as the credit crunch, the next year you'll find the investments not only recover, but grow. So you don't actually lose anything int he end.

When you DO lose is if you sell funds after a fall, w/o waiting for them to recover, or don 't buy more of the funds when the price is low.

dunstonh

As the first half hour was free it was very frustrating to have this half hour taken up with a lengthy explanation of what they did, what I should expect, what to do if I have a complaint, how I can still see someone else, etc, etc. So I was into the paying bit and hadn't learnt anything new.

At least it was compliant with the rules. Even if the amount of disclosure required nowadays is crazy.

I have to say, some of the questions were very personal, such as how healthy we are and if we smoked or drank.

If you think they are personal, wait until you need life assurance, income protection or an annuity.

I only wanted pension advice and by this point I was getting really frustrated.

They still have to cover off the areas and that you didnt want to talk about them.

I was also disappointed to hear that many pension schemes won't accept monthly payments less than £200, so where does that leave the rest of us on low incomes? Having to choose from the dregs as usual I suppose.

£100 is the most common figure as a minimum. Although some are higher. The basic schemes cater for the small contributions.

Yes I know he will keep an eye on it for me and do annual reviews but then so would I, after all it's my money invested so I'm bound to.

Honestly, would you do that? Most may start with that intention but very few do.