SIPP Investments - Funds or 'Others'?

Bosun

I have a SIPP which is invested 100% in stocks and shares and has performed fairly well over the last couple of years broadly in line with the general increase in the stock market.

However, I am a little concerned with the potential volatility of shares as my retirement date looms and want to explore what other potentially better performing options are available to me with maybe fixed returns. I have spoken to a couple of professionals who have suggested amongst other things Dolphin GmbH, Overseas Car Park Spaces, Jules Holland Jazz Clubs and various Care Home Investments. All of these offer a fixed rate of return of between 8-15% and are unregulated. Interestingly both of these professionals are telling me that they are confident enough that they have actually invested their own as well as clients money in these opportunities. I would want to see proof of this before thinking about going ahead with their recommendations.

There was a recent thread on the MSE forum which appeared pretty damning about the Dolphin investment model which is offering the highest rate of return, but I would really like to hear from anyone who has perhaps actually invested in any of these or similar investments as to their experiences, good or bad. I would prefer to hear actual hard evidence/facts rather than general hearsay as to whether these are good or potentially bad investments.

Also, if there are any recommendations for any other non-fund investments which I perhaps should be considering I would welcome any suggestions.

Thanks!

bigadaj

No direct experience of the investements you've suggested though you're aware that they are unregulated and high risk so probably the opposite of what you claim to want in reducing risk. There is an argument to say that diversification, even in high risk investments, can reduce the overall risk of a portfolio but I personally wouldn't be keen.

If you want reduced volatility then you are talking about moving down the risk curve. This would traditionally be such things as bonds and gilts, though many consider these are currently due for a correction particularly as interest rates rise and quantitative easing may be unwound.

Alternatives could include property and infrastructure funds but again many think these might be overvalued as so many people have chased value and returns, particularly in lower risk investments.

If it were me I'd remain heavy in equities but ensure these were well diversified in sector, geography and type. Some money in bonds and property and infrastructure might reduce volatility but it's difficult to find value.

I'd prefer to put money into smaller companies funds than invest in the areas you've suggested eventhough this area has massively outperformed in the last year or two, as such funds at least spread risks across many companies, meaning a failure of one or two companies won't of themselves be catastrophic.

Linton

Why do you want to invest in unregulated investments when there are thousands of funds out there? I think such investments are best left to the very rich who can afford to put up with a few major losses on the off-chance of striking gold.

dunstonh

I have spoken to a couple of professionals who have suggested amongst other things Dolphin GmbH, Overseas Car Park Spaces, Jules Holland Jazz Clubs and various Care Home Investments.

When you say professionals, can you indicate who you actually mean? Those options are unregulated high risk investments with little or no consumer protection and certainly not what you would expect to see for an average consumer and certainly not what you would expect for someone getting close to retirement.

Interestingly both of these professionals are telling me that they are confident enough that they have actually invested their own as well as clients money in these opportunities.

Which is sales speak and should put you on guard. I'm an adviser and most of my recommendations do not match the same places I invest. There may be a bit of overlap in some places but everyone has different levels of knowledge, risk profiles, amounts etc, and if they all invested like me, I would be open to mis-sale complaints.

Do you really want to put your money into unregulated investments with 100% loss potential?

All of these offer a fixed rate of return of between 8-15% and are unregulated.

Remember that fixed rates and guarantees are not the same in the unregulated world as they are in the regulated world. Guaranteed in regulated world means your money is protected. Guaranteed in the unregulated world still means you can lose 1005% of your money or the return.

bigadaj

That's a hell of a potential loss dunstonh.

xylophone

However, I am a little concerned with the potential volatility of shares as my retirement date looms

Yet you are considering what seem to be high risk investments? You are about to go into drawdown?

http://www.whatinvestment.co.uk/investment-decisions/sipps-and-retirement/2401507/the-what-investment-guide-to-income-drawdown.thtml might be worth a look?

grey_gym_sock

if you want to reduce risk, then gilts and investment-grade corporate bonds (not high-yield bonds) are the obvious places to go.

if you're going to buy an annuity, that is effectively going 100% into gilts, so it makes sense to switch gradually into gilts earlier, rather than doing it all at once, which leaves you vulnerable to shares crashing just before you sell them.

OTOH, if you're going to use drawdown, then you'll want to keep some shares in your drawdown pot (or it won't have much prospect of growth), but almost certainly much less than 100%, so some reduction in shares may again make sense, but in this case more slowly.

i think the risks of bonds are popularly overstated now. they are still safer than shares. there is more risk with longer-dated bond/gilts, since they are more vulnerable if interest rates rise - and you don't get much compensation for taking on that risk. there is not too much risk with some shorter-dated gilts and/or investment-grade corporate bonds, perhaps making at least some of them index-linked.

and it's the risk of the overall portfolio that really matters. mixing a few safer bonds into a portfolio of 100% shares will surely reduce the overall risk.

Bosun

Thanks for all of the input. I realise the potential implications of unregulated investments, but as a small-time landlord I am perhaps a little more comfortable with property type investments than shares - especially when you consider how funds have
performed over the last 15 years or so with little real growth.

If these are inherently risky, are there any regulated products which might offer a guaranteed growth, albeit at perhaps a lower rate which I could consider? I am looking to try to grow my fund safely and consistently over the next 5 -10 years in order to provide me with a half decent pot from which to drawdown.

Is there no-one on this forum who has actual first hand experience of any of these investments mentioned in my original post, either good or bad?

dunstonh

I realise the potential implications of unregulated investments, but as a small-time landlord I am perhaps a little more comfortable with property type investments than shares - especially when you consider how funds have
performed over the last 15 years or so with little real growth.

What makes you think they havent grown over 15 years? That is certainly not the case.

Is there no-one on this forum who has actual first hand experience of any of these investments mentioned in my original post, either good or bad?

I have come across a number of unregulated schemes. In each case, complaints have been made to the firm that set them up as being unsuitable. Some are still on the go but the resolved ones have resulted in successful complaints.

These types of schemes are considered an option for a sophisticated investor with sufficient capacity for loss. Also, a sophisticated investor would not likely fall foul of the many dodgy schemes that exist (offshore property is rife with scams).

Your views on conventional investments alone suggests limited understanding of investments. So, totally unsuited to this style of investment.

Bravepants

I think a split between gilts and/or bonds, with some of your fund (maybe even half) in a FTSE tracker (lots of big, secure companies) for growth. No way will I be taking any sort of high risks with my nest egg when I get close to retirement!

Bosun

dunstonh wrote: »

What makes you think they havent grown over 15 years? That is certainly not the case.

I have come across a number of unregulated schemes. In each case, complaints have been made to the firm that set them up as being unsuitable. Some are still on the go but the resolved ones have resulted in successful complaints.

These types of schemes are considered an option for a sophisticated investor with sufficient capacity for loss. Also, a sophisticated investor would not likely fall foul of the many dodgy schemes that exist (offshore property is rife with scams).

Your views on conventional investments alone suggests limited understanding of investments. So, totally unsuited to this style of investment.

Thank-you for your comments (even if I do disagree with your second to last one! ), but I didn't actually say they hadn't grown, but that IMO there was little real growth. I'm very happy to be corrected if I'm wrong, but my understanding is that the FTSE100 is approximately at the same level today as it was around 15years ago? Also the FTSE250 has grown by less than 5%pa over the last 10 years. Take into consideration the effects of inflation and while it might have been a bit of a sweeping generalisation, I really don't see that level of growth as particularly impressive, certainly compared to the housing market. Hence the reason for me wanting to explore other options to improve my fund performance.


Again I would welcome further comments and/or discussion on what other options there may be to invest 'safely' outside of the stock markets please where I might be able to find safe, consistent returns?