SIPP Investment Suggestion

abdul56

Hello,

I intend to start investing in a SIPP for the first time. I will invest about £100 a month. I was thinking of a multi-asset fund. I hand a long time ago Prudential Adventurous Portfolio P Acc. However there TER was too high so I left.

I am looking for something in the same category. I'm currently 30 yrs old and dont mind the risk. I was thinking of HSBC World Selection Dynamic Portfolio C Acc.

Does anyone have any other suggestions.

Many thanks in advance for any useful comments.

dunstonh

Why do you need a SIPP if you have nil balance and £100pm going in?

HSBC World Selection Dynamic Portfolio C

A fund that can be obtained cheaper on a personal pension but its not a particularly notable fund. So, why do you want to pay so much for a fund like that using an advanced pension wrapper that doesnt appear to be needed (and therefore paying for nothing)?

BLB53

You could probably do a lot worse than the Vanguard LifeStrategy 80 (or 60) fund - low cost, globally diverse equities and bonds, automatic rebalancing, simple no fuss.

Write up this w/end on diy investor if interested http://www.diyinvestoruk.blogspot.co.uk/2015/04/vanguard-lifestrategy-one-stop-solution.html

Not sure how it compares with Pru fund but sure to be a lot less expensive!

abdul56

dunstonh wrote: »

Why do you need a SIPP if you have nil balance and £100pm going in?

I don't understand what you mean by why I need a SIPP. I would like to start saving for a pension. I guess earlier the better.

With the added tax relief, I think it would sound a reasonable suggestion.

Aegis

abdul56 wrote: »

I don't understand what you mean by why I need a SIPP. I would like to start saving for a pension. I guess earlier the better.

With the added tax relief, I think it would sound a reasonable suggestion.

Many SIPPs are complex and have fairly high fixed charged, making them unsuitable for small balances. That said, there are also platform SIPPs which are included in the cost of the investment solutions. These are generally better value than full SIPPs for someone starting out.

I'd caution against using a full SIPP, but a platform SIPP might well be suitable.

Jsscmm

abdul56 wrote: »

I don't understand what you mean by why I need a SIPP. I would like to start saving for a pension. I guess earlier the better.

With the added tax relief, I think it would sound a reasonable suggestion.

There are other forms of pension which may be more appropriate based on that contribution level but still get tax relief. I'm not an expert on them (or other things you may say!) but I know that they exist.

Linton

abdul56 wrote: »

I don't understand what you mean by why I need a SIPP. I would like to start saving for a pension. I guess earlier the better.

With the added tax relief, I think it would sound a reasonable suggestion.

There are cheaper and simpler ways of saving for a pension than a SIPP if all you want to do is to put money regularly into a small number of standard funds. Look up "Personal Pensions". SIPPs are more appropriate if you want greater flexibility to invest directly in (for example) shares, want a very wide range of funds from a wide range of fund managers to chose from, or want convenient online access for frequent movement of money around your portfolio.

zagfles

Don't be put off saving by the comments above - but do look at personal pensions as well as SIPPs. Sipps aren't a bad idea, it's just most have fixed annual charges of something like £120 a year which wouldn't make them worthwhile for a small amount.

Fidelity and HL are among the few that have pure % charges (for the normal running of the SIPP), not fixed charges, although HL have transfer out charges, I don't think Fidelity do. Fidelity are a bit cheaper as well.

A PP might be a little cheaper but the difference would likely be trivial until you have more than a few thousand in.

dunstonh

I don't understand what you mean by why I need a SIPP. I would like to start saving for a pension. I guess earlier the better.

It is good to start planning for your retirement. However, in choosing a pension, you can select from stakeholder pensions, personal pensions or SIPPs. SIPPs are the advanced investor option. Generically more expensive than the other two options (although exceptions can apply).

So, why have you chosen as SIPP over a stakeholder pension or personal pension?

The fund you have chosen is not an advanced option. So, you would be paying around 4 times more than is possible on a more conventional option.

snooksnufc

Is it not the case that a SIPP with a low cost online company such as Fidelity could be used by someone wishing to take advantage of minimal charges. So taking one of their tracker funds only and then not altering for 20 years would be cheaper than a stakeholder pension which can only be obtained cheaply online via for example Cavendish at around 0.7%. (BTW according to the Which Money service you can't get a stakeholder pension for less than 1% AMC??)

So you could find a low cost SIPP provider (e.g. Fidelity) only select a tracker fund and then sit back and pay in your monthly contributions? You then have the tax advantages of a stakeholder providing you are paying more than £100 a month in, and the lower cost of the SIPP?

There's a weight of evidence that after asset allocation, cost has the biggest impact on returns. A sipp and tracker should work out cheaper than a stakeholder.

zagfles

snooksnufc wrote: »

Is it not the case that a SIPP with a low cost online company such as Fidelity could be used by someone wishing to take advantage of minimal charges. So taking one of their tracker funds only and then not altering for 20 years would be cheaper than a stakeholder pension which can only be obtained cheaply online via for example Cavendish at around 0.7%. (BTW according to the Which Money service you can't get a stakeholder pension for less than 1% AMC??)

So you could find a low cost SIPP provider (e.g. Fidelity) only select a tracker fund and then sit back and pay in your monthly contributions? You then have the tax advantages of a stakeholder providing you are paying more than £100 a month in, and the lower cost of the SIPP?

There's a weight of evidence that after asset allocation, cost has the biggest impact on returns. A sipp and tracker should work out cheaper than a stakeholder.

Yes, you can get trackers for under 0.1% OCF, so even with platform charge you're looking under 0.5%, which for the sort of amount the OP is putting in is pretty cheap. About £3 in the OP's first year! I doubt any PP would be much cheaper.